M. RAJENDRAN & ORS. V. KPK OILS AND PROTEINS INDIA PVT. LTD. & ORS.

Citation: 2025 INSC 1144

Court: Supreme Court of India

Bench: Justice J.B. Pardiwala, Justice R. Mahadevan

Date of Judgment: 22 September 2025

Relevant Statutes / Key Provisions:

• Section 13 (8) of the SARFEASI Act, 2002
• Rules 8 & 9 of the SARFEASI Act, 2002
• Section 17 of the SARFEASI Act (alternative remedy)

Brief Facts:

            The present case came out of recovery proceedings started under the SARFAESI Act, 2002, by a secured creditor against a defaulting borrower. The borrower had availed financial assistance from the bank and created a security interest over immovable property. Upon default in repayment of dues, the account was marked as Non-Performing Asset. After following the statutory procedure under the SARFAESI Act, the secured creditor issued a demand notice under Section 13 (2). As the borrower failed to clear the dues within the stipulated time, the bank proceeded further and took steps under Section 13 (4). A sale notice was therefore issued in accordance with Rules 8 & 9 of the SARFAESI Rules.

Pursuant to the sale notice, a public auction was conducted. The appellants participated in the auction and emerged as successful bidders. The sale was confirmed in their favour and a sale certificate was issued. Possession of the property was also handed over. Subsequently, the borrower approached the High Court of Madras by filing a writ petition. The borrower claimed that even after issuance of the sale notice and completion of auction, the right of redemption under Section 13(8) of the SARFAESI Act still subsisted. It was argued that since the borrower was willing to clear the outstanding dues, equity demanded that redemption be allowed.

The High Court accepted the borrower’s plea, set aside the sale certificate issued in favour of the auction purchasers, and restored the right of redemption. Aggrieved by this order, the auction purchasers approached the Supreme Court.

Issues:

• Whether the borrower’s right of redemption under Section 13(8) of the SARFAESI Act survives after the publication of the sale notice.
• Whether the High Court was justified in exercising writ jurisdiction under Article 226 despite the availability of an alternative statutory remedy under Section 17 of the SARFAESI Act.
• Whether the SARFAESI Rules require issuance of more than one sale notice before completion of sale.

Appellants’ Arguments:

The appellants, who were the auction purchasers, argued that the High Court had committed a serious error in restoring the borrower’s right of redemption. It was submitted that Section 13(8) of the SARFAESI Act had been amended and, as per the amended provision, the borrower’s right of redemption comes to an end upon publication of the sale notice. They contended that once a sale notice is issued and the auction process is set in motion, the borrower cannot be permitted to redeem the property. Allowing redemption after that stage would defeat the purpose of the SARFAESI Act, which is to ensure speedy recovery of dues and certainty in enforcement proceedings.

The appellants further submitted that they were bona fide purchasers who had participated in a lawful auction conducted strictly in accordance with the SARFAESI Rules. Their rights could not be unsettled merely because the borrower later arranged funds to clear the dues.

It was also argued that the High Court ought not to have exercised writ jurisdiction when the borrower had an effective alternative remedy under Section 17 of the SARFAESI Act. The appellants submitted that repeated interference by writ courts undermines the statutory scheme and causes uncertainty in auction sales.

Respondents’ Arguments:

The respondents, who were the borrowers, argued that the right of redemption is a valuable and substantive right and should not be taken away lightly. They submitted that redemption should be permitted until the sale is fully concluded and the transaction reaches finality.

The respondents relied on principles of equity and fairness. They contended that since the borrower was willing to repay the entire outstanding amount, denying redemption would result in undue hardship.

It was also argued that there were procedural irregularities in the auction process and that the sale was not conducted in a completely fair manner. On this basis, the respondents justified the High Court’s interference.

The respondents further contended that writ jurisdiction could be exercised in exceptional cases to prevent injustice, even if an alternative remedy was available.

Judgment:

The Supreme Court allowed the appeal and set aside the judgment of the Madras High Court. The Court held that the High Court had erred in restoring the borrower’s right of redemption and interfering with the auction sale.

The Court undertook a detailed examination of Section 13(8) of the SARFAESI Act, particularly after its amendment, and clarified the stage at which the borrower’s right of redemption comes to an end.

Ratio Decidendi:

• Extinguishment of Right of Redemption:
  The Supreme Court held that after the amendment to Section 13(8) of the SARFAESI Act, the borrower’s right of redemption stands extinguished upon publication of the sale notice. The right does not survive till the issuance or confirmation of the sale certificate. Once the sale notice is issued, the borrower can no longer claim redemption.
• Interpretation of SARFAESI Rules:
  The Court clarified that Rules 8 and 9 of the SARFAESI Rules contemplate issuance of one valid sale notice. There is no requirement of issuing multiple or repeated notices. As long as the statutory requirements are met, the sale process is valid.
• Limits on Writ Jurisdiction:
  The Court reiterated that where a statutory remedy under Section 17 of the SARFAESI Act is available, the High Court should ordinarily refrain from exercising writ jurisdiction under Article 226. Interference in such matters disrupts the recovery mechanism under the Act.
• Protection of Auction Purchasers:
  The Court emphasized that bona fide auction purchasers are entitled to certainty and protection. Their rights cannot be lightly disturbed once they have lawfully acquired property through statutory auctions.
• Need for Legislative Consistency:
  The Court noted that there is some lack of clarity between the wording of Section 13(8) and the SARFAESI Rules. It observed that legislative clarification would help reduce unnecessary litigation in future.

Final Decision:

The Supreme Court allowed the appeal filed by the auction purchasers. The auction sale conducted under the SARFAESI Act was upheld. The borrower was held to have lost the right of redemption upon publication of the sale notice. The judgment of the Madras High Court restoring the right of redemption was set aside.

Significance of the Judgment:

This judgment is important as it settles the law on the point at which a borrower’s right of redemption comes to an end under the SARFAESI Act. By holding that redemption is extinguished upon publication of the sale notice, the Court has brought clarity and certainty to enforcement proceedings.

The decision strengthens the position of secured creditors and auction purchasers, while also limiting excessive judicial interference through writ petitions. It reinforces the objective of the SARFAESI Act to ensure speedy and effective recovery of dues.

References:

1. Rajendran & Ors. v. KPK Oils and Proteins India Pvt. Ltd. & Ors., Supreme Court, decided on 22 September 2025
2. SARFAESI Act, 2002
3. Security Interest (Enforcement) Rules, 2002.