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IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
VIVEK RUSIA, PRADEEP MITTAL, JJ.
Kamla Devi and Others – Appellants
Versus
Bank of India and Others – Respondents
Writ Petition No. 19856 of 2015, Writ Petition No. 5555 of 2017
Decided On : 12-02-2026
(1) Constitution of India -- Art. 226 -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- S. 13 -- scope of writ jurisdiction -- issues regarding non-compliance of provisions of SARFAESI Act -- denied by respondent -- such disputed questions of fact cannot be adjudicated in exercise of writ jurisdiction. [Paras 15 & 22]
(2) Constitution of India -- Art. 226 -- delay -- borrower had knowledge of sale but failed to take any action within prescribed period -- auction proceedings attained finality -- cannot be challenged after five years by way of writ petition. [Para 16]
(3) Security Interest (Enforcement) Rules, 2002 -- R. 8(5) -- sale of mortgaged property by private treaty -- is permissible but ordinarily only after attempt to sell property through public auction or tender has failed -- sale by private treaty should ideally be conducted with written consent of borrower. [Paras 17 & 18]
(4) Registration Act, 1908 -- S. 17(1) -- sale certificate issued to auction purchaser upon confirmation of sale is mere evidence of title -- does not require compulsory registration. 2024 SCC Online SC 3372 followed. [Para 19]
(5) Auction -- sale certificate -- sale certificate issued to auction purchaser upon confirmation of sale is mere evidence of title -- does not require compulsory registration -- if legal heirs of auction purchaser seek to register sale certificate in their favour, or request issuance of another sale certificate in place of auction purchaser, it does not amount to non-issuance of original sale certificate -- held -- sale certificate has already been issued in favour of auction purchaser, consequently, right of redemption stands closed upon issuance of sale certificate. [Para 19]
(6) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- S. 13 -- Security Interest (Enforcement) Rules, 2002 -- Rr. 8 and 9(4) -- Transfer of Property Act, 1882 -- S. 60 -- Registration Act, 1908 -- S. 17(1) -- right of redemption -- petitioners allege that Bank entered into private treaty with a third party without written consent/willingness of borrower, and request release of mortgaged properties -- petitioners are the wife and sons of auction purchaser -- auction purchaser deposited some amount -- after his death, petitioners deposited remaining amount with Bank and obtained release of one property from mortgage -- Bank issued notice releasing property from mortgage -- held -- auction proceeding was conducted with knowledge and implied consent of petitioners -- alternative remedy before Debts Recovery Tribunal was available but petitioners did not take any action -- petitioners ought to have approached competent authority within prescribed period of limitation -- Bank has issued sale certificate therefore borrower’s right of redemption does not subsist -- Bank directed to hand over sale certificate to legal heirs of auction purchaser -- if legal heirs desire to register sale certificate, Bank shall take appropriate steps to have it registered in accordance with law. 2024 SCC Online SC 3372 and 2025 LiveLaw (SC) 931 followed. (1977) 3 SCC 247, (2014) 5 SCC 610 and 2012 (1) BJ 832 referred to. [Paras 20, 26 & 27]
(7) Constitution of India -- Art. 226 -- scope of writ jurisdiction -- time-barred remedy cannot be revived or granted by way of writ petition. [Paras 22 to 23]
(8) Mortgage -- right of redemption -- relief of redemption cannot ordinarily be treated as time-barred -- fundamental principle of mortgage law is “once a mortgage, always a mortgage” until right of redemption is lawfully extinguished. [Para 23]
(9) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- S. 13 (as amended in 2016) -- extinguishment of right of redemption -- if proceedings were initiated prior to 2016 amendment (i.e., default and consequential action occurred before 1.9.2016), unamended provision would apply -- borrower would retain right of redemption until sale certificate is issued. 2025 LiveLaw (SC) 931 followed. [Paras 24 & 25]
¼1½ Hkkjr dk lafo/kku & vuqPNsn 226 & foÙkh; vkfLr;ksa dk çfrHkwfrdj.k vkSj iquxZBu rFkk çfrHkwfr fgr dk çorZu vf/kfu;e] 2002 & /kkjk 13 & fjV vfèkdkfjrk dh O;kfIr & ljQslh vf/kfu;e ds mica/kksa ds vuuqikyu ls lacaf/kr fook|d & çR;FkhZ }kjk çR;k[;ku fd;k x;k & rF; ds ,sls fookfnr ç'uksa dks fjV vf/kdkfjrk ds ç;ksx esa U;k;fu.khZr ugha fd;k tk ldrkA ¼iSjk 15 ,oa 22½
¼2½ Hkkjr dk lafo/kku & vuqPNsn 226 & foyac & m/kkj ysus okys dks foØ; dh tkudkjh Fkh ijarq fofgr vof/k esa dksbZ Hkh dkjZokbZ djus esa vlQy jgk & uhykeh dk;Zokgh vafre gks xbZ & ik¡p o"kZ i'pkr~ fjV ;kfpdk ds ek/;e ls vk{ksi ugha fd;k tk ldrkA ¼iSjk 16½
¼3½ çfrHkwfr fgr ¼çorZu½ fu;e] 2002 & fu- 8¼5½ & çkbosV laf/k ls caèkd laifÙk dk foØ; & vuqKs; gS ijarq lkekU;r% yksd uhykeh ;k fufonk ds ek/;e ls laifÙk ds foØ; dk ç;Ru vlQy gksus ds i'pkr~ gh & vkn'kZr% çkbosV lafèk ls foØ; m/kkj ysus okys dh fyf[kr lgefr ls fd;k tkuk pkfg,A ¼iSjk 17 ,oa 18½
¼4½ jftLVªhdj.k vf/kfu;e] 1908 & /kkjk 17¼1½ & foØ; dh iqf"V gksus ij uhyke Øsrk dks tkjh fd;k x;k foØ; çek.ki= gd dk lk{; ek= gS & vfuok;Z jftLVªhdj.k visf{kr ughaA 2024 ,llhlh v‚uykbu ,llh 3372 vuqlfjrA ¼iSjk 19½
¼5½ uhykeh & foØ; çek.k&i= & foØ; dh iqf"V gksus ij uhyke Øsrk dks tkjh fd;k x;k foØ; çek.ki= gd dk lk{; ek= gS & vfuok;Z jftLVªhdj.k visf{kr ugha & ;fn uhyke Øsrk ds fof/kd okfjl vius i{k esa foØ; çek.ki= jftLVj djkuk pkgrs gSa] vFkok uhyke Øsrk ds LFkku ij ,d vU; foØ; çek.ki= tkjh fd, tkus dk vuqjks/k djrs gSa] rks ;g ewy foØ; çek.ki= tkjh ugha fd, tkus ds leku ugha & vfHkfu/kkZfjr & foØ; çek.ki= igys gh uhyke Øsrk ds i{k esa tkjh fd;k tk pqdk gS] Qyr% foØ; çek.ki= tkjh fd, tkus ij ekspu dk vf/kdkj lekIr gks x;kA ¼iSjk 19½
¼6½ foÙkh; vkfLr;ksa dk çfrHkwfrdj.k vkSj iquxZBu rFkk çfrHkwfr fgr dk çorZu vf/kfu;e] 2002 & /kkjk 13 & çfrHkwfr fgr ¼çorZu½ fu;e] 2002 & fu- 8 rFkk 9¼4½ & laifÙk varj.k vf/kfu;e] 1882 & /kkjk 60 & jftLVªhdj.k vf/kfu;e] 1908 & /kkjk 17¼1½ & ekspu dk vf/kdkj & ;kphx.k dk vfHkdFku gS fd cSad us m/kkj ysus okys dh fyf[kr lgefr@jtkeanh ds fcuk fdlh ijO;fä ls çkbosV laf/k dj yh] rFkk ca/kd laifÙk NksM+s tkus dk vuqjks/k fd;k & ;kphx.k uhyke Øsrk dh iRuh vkSj iq= gSa & uhyke Øsrk us dqN jde fuf{kIr dh & mlds ej.kksijkar ;kphx.k us cSad esa 'ks"k jde fuf{kIr dj ,d laifÙk dks ca/kd ls NqM+k;k & cSad us laifÙk dks ca/kd ls eqä dj lwpuki= tkjh fd;k & vfHkfu/kkZfjr & uhykeh dk;Zokgh ;kphx.k dh tkudkjh vkSj foof{kr lgefr ls dh xbZ Fkh & _.k olwyh vf/kdj.k ds le{k vkuqdfYid mipkj miyC/k Fkk ijarq ;kphx.k us dksbZ dkjZokbZ ugha dh & ;kphx.k dks ifjlhek dh fofgr vof/k ds Hkhrj l{ke çkf/kdkjh ds le{k tkuk pkfg, Fkk & cSad foØ; çek.ki= tkjh dj pqdk gS vr% m/kkj ysus okys dk ekspu dk vf/kdkj vfLrRo esa ugha gS & uhyke Øsrk ds fof/kd okfjlksa dks foØ; çek.ki= lkSaius dk cSad dks funs'k & ;fn fof/kd okfjl foØ; çek.ki= jftLVªh—r djkuk pkgsa rks cSad mls fof/k ds vuqlkj jftLVªh—r djkus ds fy, leqfpr dne mBk,xkA 2024 ,llhlh v‚uykbu ,llh 3372 rFkk 2025 ykboy‚ ¼,llh½ 931 vuqlfjrA ¼1977½ 3 ,llhlh 247] ¼2014½ 5 ,llhlh 610 rFkk 2012 ¼1½ chts 832 fufnZ"VA ¼iSjk 20] 26 ,oa 27½
¼7½ Hkkjr dk lafo/kku & vuqPNsn 226 & fjV vf/kdkfjrk dh O;kfIr & le;oftZr mipkj fjV ;kfpdk ds ek/;e ls iqu:Tthfor ;k çnku ugha fd;k tk ldrkA ¼iSjk 22 ls 23½
¼8½ ca/kd & ekspu dk vf/kdkj & ekspu ds vuqrks"k dks lkekU;r% le;oftZr ugha ekuk tk ldrk & ca/kd fof/k dk ewy fl)kar gS fd ^^ca/kd gks tkus ij lnSo ca/kd** tc rd fd ekspu dk vf/kdkj fof/kiwoZd fuokZfir ugha gksrkA ¼iSjk 23½
¼9½ foÙkh; vkfLr;ksa dk çfrHkwfrdj.k vkSj iquxZBu rFkk çfrHkwfr fgr dk çorZu vf/kfu;e] 2002 & /kkjk 13 ¼2016 esa ;Fkk la'kksf/kr½ & ekspu ds vf/kdkj dk fuokZiu & ;fn dk;Zokgh 2016 ds la'kks/ku ds iwoZ vkjaHk dh xbZ Fkh ¼vFkkZr~ O;frØe vkSj ikfj.kkfed dkjZokbZ 1-9-2016 ds iwoZ gqbZ½ rks vla'kksf/kr mica/k ykxw gksxk & foØ; çek.ki= tkjh fd, tkus rd ekspu dk vf/kdkj mèkkj ysus okys ds ikl jgsxkA 2025 ykboy‚ ¼,llh½ 931 vuqlfjrA ¼iSjk 24 ,oa 25½
ORDER :
1. Since both these writ petition involve a common issue, they are heard and decided together by this common order. References to the annexures and documents are taken from W.P. No. 19856 of 2015 for the sake of convenience.
2. The case, in brief, in W.P. No. 5555 of 2017 is that Late V.P. Singh, the husband of Petitioner No. 1 and father of Petitioner Nos. 2 to 4, is deceased. He, along with Petitioner No. 1, had constituted a partnership firm in the name and style of M/s R&R Oil Mills. The firm was the borrower. The firm availed an overdraft facility from the respondent Bank and mortgaged the following properties: (i) land measuring 7,200 sq. ft. situated at Khasra No. 77/1, Gwarighat, Narmada Road, Jabalpur (M.P.) and (ii) two plots, each measuring 2,400 sq. ft., situated at Khasra No. 77/17, Gwarighat Ward, Jabalpur (M.P.) (hereinafter referred to as the “mortgaged properties”). M/s R&R Oil Mills failed to repay the outstanding dues. Consequently, the respondent Bank initiated recovery proceedings under Section 13(4) of the SARFAESI Act, 2002. A sale notice was published in the newspaper dated 23.01.2010 by the Bank, and the auction was scheduled for 10.02.2010. However, the Bank failed to auction the mortgaged properties on the said date. Thereafter, it is alleged that the Bank entered into a private treaty with a third party under the guise of an auction, without informing the petitioners or obtaining their written consent. Subsequent to the scheduled auction date, the petitioners secured the release of one of the mortgaged properties measuring 6,000 sq. ft. by paying Rs. 24 lakhs towards the outstanding dues of M/s R&R Oil Mills. The petitioners claim that they became aware of the alleged private treaty only when Respondent No. 2, Sunita Singh, filed Civil Suit No. 119-A/2013 against the respondent Bank seeking execution of a sale deed in respect of the mortgaged properties. She claimed that the properties had been purchased by her late husband, Shri V.P. Singh, who died on 06.07.2011, and that the Bank had failed to execute the sale deed in her favour. The petitioners remain in possession of the mortgaged properties and are regularly paying property taxes and other dues. One of the mortgaged properties was let out to M/s Hathway Cable & Datacom Ltd. up to 30.09.2015. The Petitioners submitted a representation dated 02.11.2015 to the respondent Bank protesting the alleged private treaty conducted without their consent and requesting release of the mortgaged properties. Respondent Bank failed to respond to the said representation and did not release the mortgaged properties. Petitioner No. 1 also issued Cheque No. 680685 in favour of the Bank for Rs. 28 lakhs and requested the Bank not to create any third-party interest in the mortgaged properties.
3. It is submitted that the petitioners have filed this petition raising the following grounds. The Bank acted in an arbitrary and illegal manner, contrary to the provisions of the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002. The Bank’s letter dated 28.09.2012 addressed to Respondent No. 2 clearly indicates that no auction was held on 10.02.2010, nor was any fresh publication issued or notice of extension of the auction date served upon the petitioners. Therefore, the alleged private treaty and related proceedings are illegal, null and void, and not binding upon the petitioners. Entire action of the respondent Bank is contrary to the provisions of the SARFAESI Act, 2002, the Security Interest (Enforcement) Rules, 2002, Section 60 of the Transfer of Property Act, 1882, and Article 300A of the Constitution of India.
4. It is submitted that the private treaty entered into by the respondent Bank is illegal, arbitrary, and not binding upon the petitioners. No notice was served upon the petitioners as mandatorily required under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 framed under the SARFAESI Act, 2002. That the respondent Bank co
Procedural violations in auction processes under the SARFAESI Act invalidate proceedings, emphasizing the right of redemption and proper valuation of secured assets.
Compliance with statutory notice requirements is imperative in mortgage auctions; failures may invalidate the sale, preserving the mortgagor's right of redemption until formal sale registration.
The SARFAESI Act mandates exhausting statutory remedies before seeking extraordinary relief under Article 226; procedural compliance is essential, and the auction process cannot be set aside absent s....
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
The right of redemption under SARFAESI Act is extinguished after the issuance of a sale certificate, rendering claims by lessees during such proceedings legally unsustainable.
Court ruled that non-compliance with SARFAESI rules voided sale; observed that the rights of borrowers can be waived through their conduct and failure to assert them timely.
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