The right to redeem mortgaged property under the SARFAESI Act is extinguished once the auction notice is published, indicating no entitlement to challenge the sale thereafter.

JUDGMENT :

VIJAYKUMAR A. PATIL, J.

1. This intra Court appeal is filed under Section 4 of the Karnataka High Court Act, 1961, challenging the order dated 14.12.2022 passed the learned Single Judge in W.P.No.19756/2021.

2. Brief facts leading to the filing of this appeal are that the appellants applied for loan with respondent No.1- Bank, wherein the cash credit limit of Rs.2,00,00,000/- and term loan of Rs.30,00,000/- was sanctioned. Thereafter, the account of the appellants became a Non-Performing Asset (NPA) due to non-repayment of loan amount. Thereafter, respondent No.3 issued notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'The Act' for short) and the possession of the secured asset was symbolically taken under Section 13(4) of the Act. The respondent No.3-Bank issued notice to auction the property fixing the reserve price of the property as Rs.9,37,00,000/-. The action of the bank was assailed by appellants in S.A.No.174/2018 and S.A.No.212/2019. Both the applications were dismissed by the Debt Recovery Tribunal (DRT) on 31.10.2020. The respondent No.1-Bank issued a notice of sale under Rule 6(2), Rule 8(6) read with Rule 6(2) and 9(1) of the Security Interest (Enforcement) Rules, 2002 (for short 'The Rules'), along with copy of e- auction notice to appellants. The respondent No.1-Bank, on 07.10.2021, issued sale certificate in favour of respondent No.4, which was assailed by the appellants before the learned Single Judge in W.P.No.19756/2021, which came to be dismissed. Being aggrieved this appeal.

3. Sri.B.N.Mahesh Chandra, learned counsel appearing for the appellants submits that the property was valued by the respondent-Bank at Rs.9,37,00,000/-, however, it was fraudulently sold at Rs.5,78,00,000/-. It is submitted that the officials of respondent-Bank, in collusion with the buyer, sold the property worth Rs.15,00,00,000/- at Rs.5,78,00,000/-, which amounts to fraud. It is further submitted that the respondent-Bank ought to have sold only a portion of the property to recover their dues instead of selling the whole property. It is also submitted that the borrower has right to seek redemption at any stage in view of non-compliance of the Rules. It is contended that the learned Single Judge has failed to consider that it was the duty of the secured creditor to ensure that the maximum price is received from the secured asset instead of clandestinely selling the property for a meagre sum. It is further contended that even after the sale certificate is issued, the owner of the property has an opportunity to redeem the mortgaged property, otherwise injustice would be caused to the borrower. It is also contended that the learned Single Judge has failed to appreciate that the property is under- valued and sold to respondent No.4 for a meagre sum, which is not even 1/3^rd of the market value of the secured asset. In support of his contentions, he placed reliance on the following decisions:

i. Celir LLP vs. Sumati Prasad Bafna and Others , 2024 SCC OnLine SC 3727

ii. Ram Kishun and Others vs. State of Uttar Pradesh and Others , (2012) 11 SCC 511

iii. K. Kumara Gupta vs. Sri Markendaya and Sri Omkareswara Swamy Temple and Others , (2022) 5 SCC 710

iv. United Bank of India vs. Satyawati Tondon and Others , (2010) 8 SCC 110

v. M/s. Palpap Ichinichi Software International Limited vs. M/s. Indian Bank , 2011 SCC OnLine Mad 1502

Hence, he seeks to allow the appeal.

4. Per contra, Sri.S.Rajendra, learned counsel appearing for respondent No.4-buyer supports the impugned order of the learned Single Judge and submits that the property was brought for sale