New Delhi, September 23, 2025 - In a detailed ruling on mortgage redemption rights, the Supreme Court today overturned a Madras High Court order that had quashed a bank auction sale and allowed the original borrowers to reclaim their property even after the sale was completed. The bench, led by Justice J.B. Pardiwala, held that once the statutory timeline under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act expires, borrowers cannot seek redemption merely by later paying the dues.
Background
The dispute arose from loans of ₹5 crore and ₹30 lakh taken by KPK Oils and Proteins India Pvt. Ltd. in 2016. When the borrowers defaulted, their account was classified as a non-performing asset in December 2019. The bank issued notices under the SARFAESI Act and eventually auctioned 1.92 acres of mortgaged land in Tamil Nadu’s Tiruppur district.
In February 2021, M. Rajendran and others successfully bid ₹1.25 crore, deposited the entire amount, and received a sale certificate on March 22, 2021. The borrowers later cleared their dues but only after the auction was confirmed. The Debt Recovery Tribunal dismissed their challenge, yet the Madras High Court, citing the borrower’s right of redemption under Section 13(8) of the SARFAESI Act, quashed the sale and directed the bank to refund the auction money with 9 percent annual interest to the purchasers.
Court’s Observations
The Supreme Court disagreed with the High Court’s interpretation. “The amended Section 13(8) clearly states the borrower must tender all dues before the date of publication of the auction notice,” the bench observed. Justice Pardiwala stressed that the 2016 amendment tightened the window for redemption: “Any right of redemption ceases once the public auction notice is published. Courts cannot revive it after the sale certificate is issued.”
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The bench also pointed to its recent precedent in Celir LLP v. Bafna Motors (2024), which clarified that borrowers lose the right to redeem after the statutory cut-off. “Equity cannot override an express legislative mandate,” the judgment noted.
Decision
Allowing the appeals of the auction purchasers, the Supreme Court set aside the Madras High Court’s 2023 order and upheld the validity of the bank’s auction sale. The borrowers’ writ petition was dismissed, confirming the purchasers’ title to the property.
With this ruling, the Court reaffirmed that once an auction is lawfully completed under the SARFAESI framework, subsequent payments by borrowers cannot undo the sale.
Case: M. Rajendran & Others v. KPK Oils and Proteins India Pvt. Ltd. & Others
Citation: 2025 INSC 1137, Civil Appeal Nos. 12174–12175 of 2025
Decision Date: 23 September 2025
