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2021 (12) TMI 1462 - HC - Indian LawsExercise of right of redemption of mortgage - Till what time or date can the right of redemption of the mortgage be exercised by the mortgagors/borrowers in the light of the amendment to Section 13(8) of the SARFAESI Act? - HELD THAT - Admittedly, what is stated in page-13 was passed in the Lok Sabha and the Rajya Sabha and then it became the Act 44 of 2016 and came into effect on 01.09.2016 - But the important thing to note is that this Report does not indicate that the Committee had even considered Section 60 of the Transfer of Property Act, 1882, which provides the general law of right to redeem a mortgaged asset of a mortgager vis-a-vis the provisions of the SARFAESI Act. It no where says that there was an intention to bring about a change with regard to the time before which a mortgagor can exercise his right to redeem the mortgage. It is clear that the legislature did not have any intention to deal with the right of mortgagor to redeem the mortgage when they amended Sec. 13(8) or to modify it in any manner; and amendment cannot be said to have intended to modify the existing law which continued even when the un-amended Section 13(8) of the SARFAESI Act was in force. The amended Sec. 13(8) was intended to only deal with the date when the secured creditor's right to transfer the secured asset should stop and nothing more. The amended Section 13(8) of the SARFAESI Act merely prohibits asecured creditor from proceeding further with the transfer of the secured asset by way of lease, assignment or sale; a restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor; the payment of the amount mentioned in Section 13(8) of the SARFAESI Act ties the hands of the mortgagee (secured creditor) from exercising any of the powers conferred under the Act; that redemption comes later; extinction of the right of redemption comes much later than the sale notice; and the right of redemption is not lost immediately upon the highest bid made by a purchaser in an auction being accepted - It is held that such a right would continue till the execution of a conveyance i.e. issuance of sale certificate in favour of the mortgagee. Whether the petitioners are entitled to any relief? - If so, to what relief? - HELD THAT - In the instant case since the right of redemption of the petitioners has not got extinguished till date because of non-confirmation of sale and non-issuance of sale certificate to the respondents 2 and 3, and since thepetitioners have made substantial payments amounting to ₹ 80 Lacs out of the total dues of ₹ 2,28,81,882.00 as on 29.03.2019, and have shown a bona fide intention to pay the rest of the dues within a short time, the relief granted to the petitioners subject to what is mentioned below. Subject to the petitioners paying the entire balance outstanding dues with applicable interest to the 1st respondent-Bank within four weeks from today, the 1st respondent-Bank shall close the loan account of the petitioners and restore possession of their residential property to them - If not, this Writ Petition shall stand dismissed with costs of ₹ 25,000/- without reference to this Court - petition allowed.
Issues Involved:
1. Right of redemption of the mortgage under Section 13(8) of the SARFAESI Act. 2. Entitlement to relief for the petitioners. 3. Maintainability of the writ petition. Issue-wise Detailed Analysis: 1. Right of Redemption of the Mortgage: The primary issue was determining the time frame within which a mortgagor/borrower can exercise the right of redemption under the amended Section 13(8) of the SARFAESI Act. The court examined whether the right to redeem the mortgage extends until the issuance of the sale certificate or is limited to the date of publication of the sale notice. The court referred to the general law under Section 60 of the Transfer of Property Act, 1882, which provides that a mortgagor has the right to redeem the mortgage until the execution of a conveyance. This principle was upheld in several Supreme Court cases, including Murarilal v. Devkaran (1965), Narandas Karsondas v. S.A. Kamtam (1977), and Mathew Varghese v. M. Amritha Kumar (2014). The court noted that the amendment to Section 13(8) of the SARFAESI Act, effective from 01.09.2016, states that the right of redemption is available until the date of publication of the sale notice. However, the court emphasized that this amendment did not intend to alter the fundamental right of redemption under the Transfer of Property Act, which continues until the issuance of the sale certificate. The court also referred to the Telangana and Andhra Pradesh High Court's decision in M/s. Concern Readymix, which held that the right of redemption is not lost immediately upon the highest bid being accepted but continues until the execution of the conveyance. Thus, the court concluded that the right of redemption under the amended Section 13(8) of the SARFAESI Act continues until the issuance of the sale certificate, aligning with the general law under the Transfer of Property Act. 2. Entitlement to Relief for the Petitioners: The petitioners sought to quash the auction notice and restore possession of their residential property, arguing that they had paid a substantial amount towards the loan and were willing to clear the remaining dues. The court noted that the petitioners had paid ?80 Lacs by the date of filing the writ petition and had shown a bona fide intention to settle the dues by depositing ?1.75 Crore in a no-lien account. The court found that the 1st respondent-Bank's failure to respond to the petitioners' proposal for settlement and its silence on the deposit of ?1.75 Crore was unreasonable. The court emphasized that the petitioners' right of redemption had not been extinguished as the sale certificate had not been issued to the auction purchasers (respondents No. 2 and 3). The court also noted that the petitioners had made substantial payments and were willing to clear the remaining dues within a reasonable time. Therefore, the court allowed the writ petition, subject to the petitioners paying the entire balance outstanding dues with applicable interest to the 1st respondent-Bank within four weeks. If the petitioners complied, the 1st respondent-Bank was directed to close the loan account and restore possession of the residential property to the petitioners. The auction purchasers were to be refunded their deposit with interest. 3. Maintainability of the Writ Petition: The 1st respondent-Bank contended that the writ petition was not maintainable as the petitioners had a statutory remedy under the SARFAESI Act. The court acknowledged the Supreme Court's view that a writ petition should not be entertained when an alternative remedy is available under the SARFAESI Act. However, the court noted that the writ petition had been pending for more than 34 months, and relegating the petitioners to the remedy under the SARFAESI Act at this stage would be a travesty of justice. The court also highlighted that there were no Presiding Officers posted in the Debts Recovery Tribunal at Chandigarh, making it uncertain when the petitioners could avail of the alternative remedy. Given the significant issue raised regarding the right of redemption under the amended Section 13(8) of the SARFAESI Act, the court rejected the plea of non-maintainability and proceeded to decide the writ petition on merits. Conclusion: The court allowed the writ petition, directing the petitioners to pay the entire balance outstanding dues with applicable interest to the 1st respondent-Bank within four weeks. If complied with, the 1st respondent-Bank was to close the loan account and restore possession of the residential property to the petitioners. The auction purchasers were to be refunded their deposit with interest. If the petitioners failed to comply, the writ petition would stand dismissed with costs.
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