Excelsior Correspondent
SRINAGAR, Dec 11: The High Court has held that loan defaulter’s right to redeem a secured asset stands extinguished the moment the Auction Notice under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is published against him by the bank.
The division bench of the High Court dismissed the plea of borrower challenging the notice under provisions of SARFAESI Act against him. The court said a borrower’s right to redeem a secured asset stands extinguished the moment the Auction Notice is published, if dues are not cleared before such publication.
The bench concluded that the writ petition was an attempt to derail statutory proceedings after prolonged inaction. “The petitioner has made an abortive attempt just to delay the process after having failed to respond to all the notices issued under the SARFAESI Act.”
The court ruled that once the Auction Notice is published, the right of redemption of secured assets extinguishes with the borrower in the event he fails to repay his dues and redeem the asset before publication of the Auction Notice.
The Court also took note that the successful bidder of the auction property had already deposited the entire consideration, reinforcing the finality of the auction process. In view of these findings the court concluded that the writ petition was an attempt to derail statutory proceedings after prolonged inaction.
The court said that the borrower has no unfettered right to tender such amount of dues, as stipulated in Section 13(8) of the notice, after the date of publication of notice for public auction or inviting quotations or tender from public or private treaty.
The writ petition was filed by M/s Gogi Motor Store, challenging the Tender-cum-Auction Notice issued by Citizen’s Co-operative Bank for auction of the petitioner-borrower’s residential house.
The petitioner-firm had availed a Cash Credit Limit of ?49 lakh in July 2019 by mortgaging his residential property. The account remained regular only till September 2022, after which it became irregular and eventually classified as a Non-Performing Asset by May 2023. The Bank issued a demand notice under Section 13(2) for ?53,43,639/- on 20 July 2023.
As the petitioner did not respond, the Bank proceeded under Section 13(4), took symbolic possession, published the possession notice and thereafter secured an order from the District Magistrate under Section 14 for taking physical possession despite repeated intimation including a notice the petitioner did not clear the dues.
Follow our WhatsApp channel
