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2024 SCC OnLine DRAT 16

†
In the Debts Recovery Appellate Tribunal
(BEFORE ANIL KUMAR SRIVASTAVA, CHAIRPERSON)

Alluri Vijaya Lakshmi … Appellant;

Versus
Union Bank of India Represented by its Authorised
Officer/Chief Manager and Others …
Respondents.
‡
Appeal No. 107 of 2023
Decided on August 6, 2024
Advocates who appeared in this case :
Mr. Nemani Srinivas for Appellants;
Mr. Dipanjan Datta
Mr. Subhojit Chowdhury for Respondent Bank.
The Judgment of the Court was delivered by
ANIL KUMAR SRIVASTAVA, CHAIRPERSON
THE APPELLATE TRIBUNAL:
Heard the Learned Counsel for the parties and perused the record.
2. Instant appeal has arisen against judgment and order dated 1st
July, 2022, passed by Learned DRT, Visakhapatnam, dismissing S.A. 46
of 2015 (Smt. Alluri Vijaya Lakshmi v. Andhra Bank).
3. As per the pleadings of the parties, Appellant is Borrower of the
Respondent Bank Andhra Bank (presently Union Bank of India) while
the Respondents No. 2, 3 and 4 are the Auction Purchasers.
Respondent No. 5 has no direct bearing on the matter. Certain credit
facilities were extended by the Bank in favour of the Appellant wherein
repayments were being made by the Appellant but got irregular and
the loan account was classified as N.P.A. Demand Notice, under Section
13 (2) of the SARFAESI Act (hereinafter referred to as the Act), was
issued on 3rd July, 2013 for an amount of Rs. 2,08,31,256.00. A
representation was made which was not considered by the Bank.
Subsequently, some amounts were paid by the Appellant. Request for
th th
‘One Time Settlement’ was made on 29 January, 2014 and 6 August,
2014 but was not considered. Possession Notice was issued on 4th July,
2014. Subsequent thereto, some development took place about the
‘One Time Settlement’. In the meantime order, under Section 14 of
SARFAESI Act, was obtained by the Bank from the District Magistrate,
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nd
Godavari on 2 February, 2015.
th
4. Sale Notice was issued on 6 February, 2016 and publication was
th
made on 11 February, 2016 fixing the date of sale on 17th March,
2016. Pending these proceedings, a fresh Sale Notice was issued on
th
14 February, 2016 and published in Eenadu Newspaper in Telgu fixing
the E-Auction date on 17th March, 2016. Sale was conducted on 17th
March, 2016 in favour of Respondents No. 2 to 4 and Sale Certificate
th
was also issued and registered on 18 March, 2016.
5. Challenging the action of the Bank, an application, being I.A. 128
of 2016, was moved in the pending SARFAESI Application for
amendment which was allowed and amendment was carried out.
6. After hearing the Learned Counsel for the parties, Learned DRT
recorded a finding that Bank has followed the procedure as per law.
Compliance of Rule 8(6) and 9(1) of the Security Interest
(Enforcement) Rules, 2002 (hereinafter referred to as the Rules) was
duly made. Accordingly, dismissed the SARFAESI Application. Feeling
aggrieved, Appellant preferred this appeal.
7. Learned Counsel for Appellant would submit that there is violation
of Rule 8 (6) and 9 (1) of the Rules. It is submitted that the Sale
Notice dated 13th February, 2016 (purportedly shown as 14th February,
th
2016) was published in newspaper in Telgu Eenadu on 14 February,
th
2016 and the sale was fixed on 17 March, 2016. It is submitted that it
was against the provisions of Rule 8 (6) and 9 (1) of the Rules relying
upon CELIR LPP v. Bafna Motors (Mumbai) Private Limited [(2024) 2
SCC 1], Sri Sai Annadhatha Polymers v. Canara Bank (2018 SCC
OnLine Hyd 178) and Mathew Varghese v. M. Amritha Kumar [(2014) 5
SCC 610]. It is further submitted that Sale Notice was not personally
served upon the Borrower.
8. Per contra, Learned Counsel for Respondent opposed the prayer
and submits that the action of the Bank was in accordance with law.
Compliance of the Rules was made.
9. The only controversy in this matter is on the issue as to whether
in the case of subsequent sale fresh 30 days notice under Rule 8 (6) is
required or not?
Rules 8(6) and 9(1) of the Security Interest (Enforcement) Rules,
2002 are as under:
“8. Sale of immoveable secured assets
(6) The authorised officer shall serve to the borrower a notice of
thirty days for sale of the immovable secured assets, under sub-rule
(5):”
“9. Time of sale, issue of sale certificate and delivery of
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possession, etc.
(1) No sale of immovable property under these rules, in first
instance shall take place before the expiry of thirty days from the
date on which the public notice of sale is published in newspapers as
referred to in the proviso to sub-rule (6) of rule 8 or notice of sale
has been served to the borrower:”
“Section 13 (8) SARFAESI Act reads as under:
“(8) Where the amount of dues of the secured creditor together
with all costs, charges and expenses incurred by him is tendered to
the secured creditor at any time before the date of publication of
notice for public auction or inviting quotations or tender from public
or private treaty for transfer by way of lease, assignment or sale of
the secured assets -
(i) the secured assets shall not be transferred by way of lease,
assignment or sale by the secured creditor; and
(ii) in case, any step has been taken by the secured creditor for
transfer by way of lease or assignment or sale of the assets
before tendering of such amount under this sub-section, no
further step shall be taken by such secured creditor for transfer
by way of lease or assignment or sale of such secured assets]”
10. We are conscious of the fact that in a recent judgment in CELIR
LPP v. Bafna Motors (Mumbai) Private Limited [((2024) 2 SCC 1] the
Hon'ble Apex Court has dealt with all the issues relating to the auction
sale as well as compliance of the provisions of the Act as well as the
Rules. The Hon'ble Apex Court has dealt with the issue on the sanctity
of public auction. Hon'ble the Apex Court has placed reliance upon a
judgment in Valji Khimji And Company v. Official Liquidator of
Hindustan Nitro Product (Gujarat) Limited [(2008) 9 SCC 299] wherein
it was held that once an auction is confirmed, the same can be
interfered only on very limited grounds as otherwise no auction would
ever be complete.
11. Hon'ble Apex Court in Bafna Motors (supra) has reiterated the
case of K. Kumara Gupta v. Sri Markendaya and Sri Omkareswara
Swamy Temple [(2022) 5 SCC 710] wherein the Hon'ble Apex Court in
paragraph 17 it has held that:
“17. The sale pursuant to the public auction can be set aside in
eventuality where it is found on the basis of material on record. That
the property had been sold away at a throwaway price and/or on a
wholly inadequate consideration because of the fraud and/or
collusion and/or after any material irregularity and/or illegality is
found in conducing/holding the public auction. After the public
auction is held and the highest bid is received and the property is
sold in a public auction in favour of a highest bidder, such a sale
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cannot be set aside on the basis of some offer made by third parties
subsequently and that too when they did not participate in the
auction proceedings and made any offer and/or the offer is made
only for the sake of making it and without any serious intent. In the
present case, as observed hereinabove, though Shri Jagat Kumar
immediately after finalising the auction stated that he is ready and
willing to pay a higher price, however, subsequently, he backed out.
If the auction-sale pursuant to the public auction is set aside on the
basis of such frivolous and irresponsible representations made by
such persons then the sanctity of a public auction would be
frustrated and the rights of a genuine bidder would be adversely
affected.”
12. Further Hon'ble Apex Court has reiterated in Case Law and has
held in Eva Agro Feeds Private Limited v. Punjab National Bank [2023
SCC OnLine SC 1138] wherein it was held that there can be no absolute
or unfettered discretion on the part of the Liquidator to cancel an
auction which is otherwise valid. Hence it was held by the Hon'ble Apex
Court that in the case of Bafna Motors (supra) that:
“86. Thus, what is discernible from above is that, it is the duty of
the courts to zealously protect the sanctity of any auction conducted.
The courts ought to be loath in interfering with auctions, otherwise it
would frustrate the very object and purpose behind auctions and
deter public confidence and participation in the same.
87. Any other interpretation of the amended Section 13 (8) will
lead to a situation where multiple redemption offers would be
encouraged by a mischievous borrower, the members of the public
would be dissuaded and discouraged from in participating in the
auction process and the overall sanctity of the auction process would
be frustrated thereby defeating the very purpose of the SARFAESI
Act. Thus, it is in the larger public interest to maintain the sanctity
of the auction process under the SARFAESI Act.”
“96. More than a decade back, this Court had expressed serious
concern despite its repeated pronouncements in regard to the High
Courts ignoring the availability of statutory remedies under the
RDBFI Act and the SARFAESI Act and exercise of jurisdiction under
Article 226 of the Constitution. Even after, the decision of this Court
in Satyawati Tondon (supra), it appears that the High Courts have
continued to exercise its writ jurisdiction under Article 226 ignoring
the statutory remedies under the RDBFI Act and the SARFAESI Act.
Conduct of the Bank
97. The genesis of the entire case lies in the illegitimate conduct
of the Bank in placing different concerns above the clear provisions
of the law. First, there was failure on the part of the Bank to issue
sale certificate in favour of the auction purchaser despite the fact
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that the entire payment of auction bid was made. Secondly,

although the right of redemption clearly stood lapsed under Section
13 (8) of the SARFAESI Act and auction having taken place wherein
full bid amount was received, yet the Bank proceeded to accept the
offer of full payment of the Borrower which is clearly impermissible
in law. Once the auction notice is published in accordance with
Section 13 (8) of the SARFAESI Act, then unless and until the
auction is held to be bad and illegal in the facts of the case, the right
of redemption of mortgage is not available to the borrower.”
13. In view of the law laid down by the Hon'ble Apex Court, now we
have to scrutinize whether the procedure, described in Rules 8 (6) and
9 (1) of The Rules, is followed by the secured creditors or not?
14. Now it is to be seen as to what are the rights of the Borrower
available to him under Section 13 (8) of the Act? At this stage it would
be apposite to refer to the provisions of Section 13 (8) of the Act as
was viewed in the old Act as well as in the amended Act of 2016 which
are as under:
“Pre-amendment Section 13(8) of the SARFAESI Act (8) If the
dues of the secured creditor together with all costs, charges and
expenses incurred by him are tendered to the secured creditor at any
time before the date fixed for sale or transfer, the secured asset shall
not be sold or transferred by the secured creditor, and no further
step shall be taken by him for transfer or sale of that secured asset.
“Post-amendment Section 13(8) of the SARFAESI Act (8) Where
the amount of dues of the secured creditor together with all costs,
charges and expenses incurred by him is tendered to the secured
creditor at any time before the date of publication of notice for public
auction or inviting quotations or tender from public or private treaty
for transfer by way of lease, assignment or sale of the secured assets
-
(i) the secured assets shall not be transferred by way of lease
assignment or sale by the secured creditor, and
(ii) in case, any step has been taken by the secured creditor for
transfer by way of lease or assignment or sale of the assets
before tendering of such amount under this sub-section, no
further step shall be taken by such secured creditor for transfer
by way of lease or assignment or sale of such secured assets.”
15. In the case of Mathew Varghese (supra) the Hon'ble Apex Court
has considered the importance of right of redemption of the Borrower.
Although the case of Mathew Varghese (supra) was under the
provisions of the old Act but the difference in the old Act as well as in
the amended Act, as would appear from the provisions itself, is to the
effect that in the old Act the right of redemption was available to the
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Borrower till the deed is executed while under the amended provisions
right is curtailed to an extent that the right of redemption is available
only till the date of publication of Sale Notice. However, as far as right
of redemption is concerned, the law laid down in the case of Mathew
Varghese (supra) still holds good, as has been reiterated by the Hon'ble
Apex Court in the case of Bafna Motors (supra). In Mathew Varghese
(supra) the Hon'ble Apex Court held that by virtue of the stipulation
contained in Section 13 (8) read with Rules 8 (6) and 9 (1), the
owner/Borrower should have clear notice of 30 days before the date and
time when the sale or transfer of the secured asset would be made as
that alone would enable the owner/Borrower to take all efforts to retain
his or her ownership by tendering the dues of the secured creditor
before that date and time. It is further held in paragraph 33.3 that:
“33.3. Be that as it may, the paramount objective is to provide
sufficient time and opportunity to the borrower to take all efforts to
safeguard his right of ownership either by tendering the dues to the
creditor before the date and time of the sale or transfer, or ensure
that the secured asset derives the maximum price and no one is
allowed to exploit the vulnerable situation in which the borrower is
placed.”
16. It is further held in paragraph 34 that:
“x x x. The underlying purport of such a requirement is to ensure
that under no circumstances, the rights of the owner till such right is
transferred in the manner known to law is infringed. Merely because
the provisions of the SARFAESI Act and the Rules enable the secured
creditor to take possession of such an immovable property belonging
to the owner and also empowers to deal with it by way of sale or
transfer for the purpose of realising the secured debt of the
borrower, it does not mean that such wide power can be exercised
arbitrarily or whimsically to the utter disadvantage of the borrower.”
17. It is further held in paragraph 35 that:
“35. X x x x x. Therefore, a reading of Rules 8 and 9, in particular,
sub-rules (1) to (4) and (6) of Rule 8 and sub-rule (1) of Rule 9
makes it clear that simply because a secured interest in a secured
asset is created by the borrower in favour of the secured creditor, the
said asset in the event of the same having become a non-performing
asset cannot be dealt with in a light-hearted manner by way of sale
or transfer or disposed of in a casual manner or by not adhering to
the prescriptions contained under the SARFAESI Act and the
abovesaid Rules mentioned by us.”
18. It was further held in paragraph 38 that “until the sale is
complete by registration of sale, the mortgagor does not lose the right
of redemption. It was also made clear that it was erroneous to suggest
that the mortgagee would be acting as the agent of the mortgagor in
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selling the property.” The law laid down in Ram Kishun v. State of U.P.
[(2012) 11 SCC 511] was reiterated wherein paragraph 13, 14 and 28
it was held that:
“13. Undoubtedly, public money should be recovered and recovery
should be made expeditiously. But it does not mean that the
financial institutions which are concerned only with the recovery of
their loans, may be permitted to behave like property dealers and be
permitted further to dispose of the secured assets in any
unreasonable or arbitrary manner in flagrant violation of the
statutory provisions.
14. A right to hold property is a constitutional right as well as a
human right. A person cannot be deprived of his property except in
accordance with the provisions of a statute. (Vide Lachhman Dass v.
Jagat Ram [(2007) 10 SCC 448] and State of M.P. v. Narmada
Bachao Andolan [(2011) 7 SCC 639] Thus, the condition precedent
for taking away someone's property or disposing of the secured
assets, is that the authority must ensure compliance with the
statutory provisions.
28. In view of the above, the law can be summarised to the effect
that the recovery of the public dues must be made strictly in
accordance with the procedure prescribed by law. The liability of a
surety is coextensive with that of the principal debtor. In case there
are more than one surety the liability is to be divided equally among
the sureties for unpaid amount of loan. Once the sale has been
confirmed it cannot be set aside unless a fundamentalprocedural
error has occurred or sale certificate had been obtained by
misrepresentation or fraud.
(emphasis added)”
19. It was further held in Mathew Varghese (supra) in paragraph 43
that:
“43. The above principles laid down by this Court also make it
clear that though the recovery of public dues should be made
expeditiously, it should be in accordance with the procedure
prescribed by law and that it should not frustrate a constitutional
right, as well as the human right of a person to hold a property and
that in the event of a fundamental procedural error occurred in a
sale, the same can be set aside.”
20. Ultimately in paragraph 53 of the judgment, Hon'ble Apex Court
held that once the sale does not take place pursuant to notice issued
under Rule 8 (6) and 9 (1) read along with Section 13 (8) for which the
entire blame cannot be thrown on the Borrower. It is imperative that for
effective sale, the procedure, prescribed above, will have to be followed
afresh as the notice issued earlier would lapse.
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21. Division Bench of the Hon'ble Andhra Pradesh High Court in Sri
Sai Annadhatha Polymers (supra) has taken care of the amended
provisions of Rule 13 (8). It was held that:
“21. However, the amended provisions of Section 13(8) of the
SARFAESI Act bring in a radical change, inasmuch as the right of the
borrower to redeem the secured asset stands extinguished
thereunder on the very date of publication of the notice for public
auction under Rule 9(1) of the Rules of 2002. In effect, the right of
redemption available to the borrower under the present statutory
regime stands drastically curtailed and would be available only till
the date of publication of the notice under Rule 9(1) of the Rules of
2002 and not till completion of the sale or transfer of the secured
asset in favour of the auction purchaser. However, It is significant to
note that Rule 8(6) of the Rules of 2002 still continues to remain the
same and thereunder, the authorized officer of the secured creditor
must necessarily serve upon the borrower a notice of thirty days for
sale of the immovable secured asset taking recourse to one of the
options available under Rule 8(5) thereof.”
22. It was further held that “Therefore, even after the amendment of
Section 13 (8) of the SARFAESI Act, 2002 (hereinafter referred to as
the Act) such right of redemption would stand terminated immediately
upon publication of the Sale Notice under Rule 9 (1) of the Rules. A
secured creditor is bound to offer to the Borrower a clear 30 days notice
period under Rule 8 (6) to enable him to exercise his right to
redemption. In consequence, a notice under Rule 9 (1) of the Rules,
2002 cannot be published prior to expiry of this thirty days period. In
the new scenario, post amendment of the Section 13 (8) of the
SARFAESI Act, such right of redemption would stand terminated
immediately upon publication of the Sale Notice under Rule 9 (1) of the
Rules.”
23. In Bafna Motors (supra) Hon'ble Apex Court considered the issue
of redemption of mortgagee under Section 16 of the Transfer of
Property Act, viz-a-viz, SARFAESI Act. It is held in paragraph 49 that:
“49. Thus, prior to the amendment of Section 13(8) of the
SARFAESI Act, this Court consistently held, that the borrower shall
continue to have a right of redemption of mortgage until the
execution of the conveyance of the secured asset by way of a
registered instrument. Furthermore, this Court in Mathew Varghese
(supra) found no inconsistency between the unamended Section 13
(8) of SARFAESI Act and the general right of redemption under
Section 60 of the Act 1882.”
24. Thereafter, Hon'ble Apex Court with approval considered the
judgment of the Hon'ble Telangana High Court in Sri Sai Annadhatha
Polymers (supra). The Hon'ble Apex Court has also considered the
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judgment of the Hon'ble Telangana High Court in K.V.V. Prasad Rao

Gupta v. State Bank of India (2021 SCC OnLine TS 328) wherein
reliance is placed on Sri Sai Annadhatha Polymers (supra). It was held
by the Hon'ble Telangana High Court in paragraph 21 that:
“21. Thus from the above judgments it is clear that under Rule 8
(6) of the Rules of 2002, the petitioners are entitled for a thirty day
notice period enabling them to clear the loan and to redeem the
property as envisaged under Section 13(8) of the SARFAESI Act, and
that if they fail to repay the amount within the stipulated period,
after expiry of said period of 30 days, the secured creditor is entitled
to issue publication of sale notice under Rule 9(1), and that on
publication of such notice, the right of borrower to redeem the
property stands extinguished.”
25. Hon'ble Apex Court also considered that approval of its own
judgment in the case of Sakina v. Bank of India [(2021) 12 SCC 761]
as regards the provisions of Section 13 (8) are concerned. In paragraph
15 of the Sakina (supra) it was held that:
“15. Be it noted that on 1-9-2016 amendment to Section 13(8) of
the 2002 Act came into force as a result of which the dues of the
secured creditor together with all costs, charges and expenses
incurred by him are required to be tendered to the secured creditor
at any time before the date of publication of notice for public auction
or inviting quotations or tender from public or private treaty for
transfer by way of lease, assignment or sale of the secured assets.”
26. It was held in paragraph 68 that:
“68. However, with the advent of the 2016 Amendment, Section
13(8) of the SARFAESI Act now uses the expression “before the date
of publication notice for public auction or inviting quotations or
tender from public or private treaty for transfer by way of lease,
assignment or sale of the secured assets” which by no stretch of
imagination could be said to be in consonance with the general rule
under the Act 1882 that the right of redemption is extinguished only
after conveyance by registered deed. Thus, in the light of clear
inconsistency between Section 13(8) of the SARFAESI Act and
Section 60 of the Act 1882 the former special enactment overrides
the latter general enactment in light of Section 35 of the SARFAESI
Act. Thus, the right of redemption of mortgage is available to the
borrower under the SARFAESI Act only till the publication of auction
notice and not thereafter, in light of the amended Section 13(8).”
27. Hon'ble Apex Court in paragraph 88 in Bafna Motors (supra) held
that
“88. In view of the aforesaid discussion, we hold that as per the
amended Section 13(8) of the SARFAESI Act, once the borrower fails
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to tender the entire amount of dues with all cost & charges to the
secured creditor before the publication of auction notice, his right of
redemption of mortgage shall stand extinguished/waived on the date
of publication of the auction notice in the newspaper in accordance
with Rule 8 of the Rules of 2002.”
28. Hence it is absolutely clear that the right of redemption has been
granted in favour of the Borrower which is a sacrosanct right.
29. Hon'ble Apex Court, in the case of Bafna Motors (supra), has
reiterated the laws laid down in National Spot Exchange Limited v. Anil
Kohli, Resolution Professional for Dunar Foods Limited [(2022) 11 SCC
761] that:
“102. x x x x where the law is clear the consequence thereof must
follow. The High Court has no option but implement the law. The
relevant observations made in it are being reproduced below : -
“15.1. In Mishri Lal [BSNL v. Mishri Lal, (2011) 14 SCC 739 :
(2014) 1 SCC (L&S) 387], it is observed that the law prevails over
equity if there is a conflict. It is observed further that equity can
only supplement the law and not supplant it.
15.2. In Raghunath Rai Bareja [Raghunath Rai Bareja v. Punjab
National Bank, (2007) 2 SCC 230], in paras 30 to 37, this Court
observed and held as under : (SCC pp. 242-43)
“30. Thus, in Madamanchi Ramappa v. Muthaluru Bojjappa [AIR
1963 SC 1633] (vide para 12) this Court observed : (AIR p. 1637)
12…. [What is administered in Courts is justice according to
law, and considerations of fair play and equity however important
they may be, must yield to clear and express provisions of the
law.”
31. In Council for Indian School Certificate Examination v. Isha
Mittal [(2000) 7 SCC 521] (vide para 4) this Court observed : (SCC
p. 522)
‘4…. Considerations of equity cannot prevail and do not permit
a High Court to pass an order contrary to the law.’
32. Similarly, in P.M. Latha v. State of Kerala [(2003) 3 SCC 541 :
2003 SCC (L&S) 339] (vide para 13) this Court observed : (SCC p.
546)
‘13. Equity and law are twin brothers and law should be applied
and interpreted equitably but equity cannot override written or
settled law.
33. In Laxminarayan R. Bhattad v. State of Maharashtra [(2003) 5
SCC 413] (vide para 73) this Court observed : (SCC p. 436)
‘73. It is now well settled that when there is a conflict between
law and equity the former shall prevail.’
34. Similarly, in Nasiruddin v. Sita Ram Agarwal [(2003) 2 SCC
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577] (vide para 35) this Court observed : (SCC p. 588)

‘35. In a case where the statutory provision is plain and
unambiguous, the court shall not interpret the same in a different
manner, only because of harsh consequences arising therefrom.’
35. Similarly, in E. Palanisamy v. Palanisamy [(2003) 1 SCC 123]
(vide para 5) this Court observed : (SCC p. 127)
‘5. Equitable considerations have no place where the statute
contained express provisions.
36. In India House v. Kishan N. Lalwani [(2003) 9 SCC 393] (vide
para 7) this Court held that : (SCC p. 398)
‘7. … The period of limitation statutorily prescribed has to be
strictly adhered to and cannot be relaxed or departed from for
equitable considerations.’ …”
30. Now it is to be seen as to whether in the case of subsequent
sale, 30 days notice, under Rule 8 (6) of the Rules, is required or not?
Whether 15 days notice, before issuing notice under 1st Proviso to Rule
9 (1) of the Rules, is required or not? It was held by Hon'ble Apex
Court in Bafna Motors (supra) in paragraph 37 that:
“37. From the above provisions under Rule 8(6) it is clear that the
authorised officer of the Bank shall serve on the borrower a notice of
thirty days for sale of immovable property, and that if the sale of
such secured assets is by way of public auction, the Bank/secured
creditor, shall cause publication of such notice in two leading
newspapers, one in vernacular, language having sufficient circulation
in the locality by setting the out the terms of sale, mentioned in the
said provision; and under sub-rule (1) of Rule 9, such sale of
immovable of property under these Rules shall not take place before
the expiry of thirty days from the date on which the public notice of
sale is published in newspapers as referred to in the proviso to sub-
rule (6), or notice of sale has been served to the borrower.”
31. It has been held by the Hon'ble Apex Court in Mathew Varghese
(supra) in paragraph 53 that:
“53. We, therefore, hold that unless and until a clear 30 days'
notice is given to the borrower, no sale or transfer can be resorted to
by a secured creditor. In the event of any such sale properly notified
after giving 30 days' clear notice to the borrower did not take place
as scheduled for reasons which cannot be solely attributable to the
borrower, the secured creditor cannot effect the sale or transfer of
the secured asset on any subsequent date by relying upon the
notification issued earlier. In other words, once the sale does 9 not
take place pursuant to a notice issued under Rules 8 and 9, read
along with Section 13(8) for which the entire blame cannot be
thrown on the borrower, it is imperative that for effecting the sale,
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the procedure prescribed above will have to be followed afresh, as

the notice issued earlier would lapse. In that respect, the only other
provision to be noted is sub-rule (8) of Rule 8 as per which sale by
any method other than public auction or public tender can be on
such terms as may be settled between the parties in writing. As far
as sub-rule (8) is concerned, the parties referred to can only relate
to the secured creditor and the borrower. It is, therefore, imperative
that for the sale to be effected under Section 13(8), the procedure
prescribed under Rule 8 read along with Rule 9(1) has to be
necessarily followed, inasmuch as that is the prescription of the law
for effecting the sale as has been explained in detail by us in the
earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read
along with Section 29 and Rule 15. In our considered view any other
construction will be doing violence to the provisions of the SARFAESI
Act, in particular Sections 13(1) and (8) of the said Act.”
32. Right of redemption of the Borrower is a sacrosanct right as
provided under the law. The amended provisions of Section 13 (8) of
the Act bring in a radical change, inasmuch as the right of the borrower
to redeem the secured asset stands extinguished thereunder on the
very date of publication of the notice for public auction under Rule 9 (1)
of the Rules. In effect, the right of redemption available to the borrower
under the present statutory regime stands drastically curtailed and
would be available only till the date of publication of the notice under
Rule 9 (1) of the Rules and not till completion of the sale or transfer of
the secured asset in favour of the Auction Purchaser. However, it is
significant to note that Rule 8 (6) of the Rules still continues to remain
the same and thereunder, the Authorized Officer of the secured creditor
must necessarily serve upon the borrower a notice of 30 days for sale of
the immovable secured asset taking recourse to one of the options
available under Rule 8 (5) thereof. Therefore, even if the amendment of
Section 13 (8) of the Act, Secured Creditor is bound to afford to the
Borrower a clear 30 days notice period under Rule 8 (6) to enable him
to exercise his right of redemption. In consequence, a notice under
Rule 9 (1) cannot be published prior to expiry of 30 days period. In the
new scenario post amendment of Section 13 (8) of the Act, such right
of redemption would stand terminated immediately upon publication of
the Sale Notice under Rule 9 (1) of the Rules. Proviso attached to Rule
9 (1) simply provides that if the sale of immoveable property by one of
the methods specified by Sub-rule (5) of Rule 8 fails, sale is required to
be conducted again. The Authorised Officer shall serve, affix and
publish notice of sale on not less than 15 days to the Borrower for any
subsequent sale. It means that in case of subsequent sale, the period
of 30 days, as required under Rule 9 (1) is curtailed to 15 days. This
proviso of Rule 9 (1) in no manner curtailed the period of notice
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provided under Rule 8 (6). Had it been the intention of the Legislature,
that period provided under Rule 8 (6) would also have to be amended
by the legislature. But intentionally Rule 8 (6) is not amended but the
period in subsequent sale is curtailed to 15 days. It means that even in
the case of subsequent sale, provisions of Rule 8 (6) have to be
followed by the Authorised Officer. Accordingly, it is incumbent upon
the Authorised Officer, even in case of subsequent sale, to comply the
provisions of Rule 8 (6) as well as proviso to Rule 9 (1). Law nowhere
curtails the right to redemption available to the Borrower under Section
13 (8) of the Act in case of a subsequent sale. Accordingly, I am of the
considered view that even in case of subsequent sale, Authorised
Officer is required to issue 30 days notice under Rule 8 (6) and
thereafter 15 days notice under Proviso attached to Rule 9 (1).
33. Having considered the submission made by the Learned Counsel
for the parties, I am of the considered opinion that Bank has not
followed the mandatory provisions of Rule 8 (6) and 9 (1) of the Rules.
Further notice under Rule 8 (6) of the Rules was not served upon the
Borrower which is in violation of the law laid down by the Hon'ble Apex
Court in Mathew Varghese (supra).
34. Accordingly, I am of the considered view that Learned DRT erred
in dismissing the SARFAESI Application. Impugned order suffers from
material illegality and irregularity. Thus, appeal is liable to be allowed
and the impugned order is liable to be set aside.
ORDERED
st
Appeal is allowed. The impugned judgment and order dated 1 July,
2022, passed by Learned DRT, Visakhapatnam, dismissing S.A. 46 of
2015 (Smt. Alluri Vijaya Lakshmi v. Andhra Bank), is set aside.
Consequently, S.A. 46 of 2015 is allowed. Sale conducted by the
Respondent Bank on 17.3.2016 is also set aside. However, Bank is
directed to refund the sale proceeds along with interest at the prevalent
rate of interest from the date of sale till the date of actual payment to
the Auction Purchaser within a period of thirty days.
Respondent No. 1, Bank, would be at liberty to proceed afresh to
recover its debts in accordance with law.
No order as to costs.
Copy of the order be supplied to Appellant and the Respondents and
a copy be also forwarded to the concerned DRT.
File be consigned to Record room.
Order signed, dated and pronounced in open Court.
———
†
Kolkata Bench

‡
Arising out of S.A. 481 of 2014 in DRT-I, Hyderabad
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