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2021 Supreme(Online)(Guj) 460
GUJARAT HIGH COURT
G. R. Udhwani, J.
Kiran Cold Storage (M/s.) v. Authorised Officer Bank of Baroda
Securitisation Application No. 257 of 2019
The debtor's right to redeem a mortgage under the SARFAESI Act must be exercised within stipulated timelines.
Headnote:In this judgment, the court examined a petition seeking to quash notices and sale proceedings issued under the SARFAESI Act regarding a loan transaction. The findings determined that the petitioner failed to exercise their right to redeem the mortgage in a timely manner as required by law. Key issues included whether the debt was unsecured and the petitioner’s right to redeem the mortgage under the Transfer of Property Act. The court found that the amendment of S.13(8) of the SARFAESI Act necessitated timely action from the debtor to avoid asset transfer. Consequently, the court ruled that the petition was dismissed as the petitioner did not fulfill necessary obligations.
| Table of Content |
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| 1. petitioner sought to quash proceedings under sarfaesi. (Para 1 , 2) |
| 2. court analyzed contentions regarding loan terms and debt classifications. (Para 3 , 4 , 5 , 6) |
| 3. court clarified conditions for mortgage redemption and statutory obligations. (Para 7 , 9 , 10 , 11 , 12) |
| 4. court established misinterpretation of redemption rights and time frames. (Para 8) |
| 5. final ruling dismissed the petition based on above considerations. (Para 13) |
1. Following main reliefs have been prayed in this petition.
"9(A). YOUR LORDSHIP be pleased to issue writ of certiorari or any other writ, order or direction in the nature of certiorari and be pleased to quash and set aside the judgment dated 21.02.2020 passed in Securitisation Application No. 257 of 2019.
(B) YOUR LORDSHIP be farther pleased to quash and set aside the S.13(2) notice dated 21.02.2019, symbolic possession dated 03.06.2019 as well as auction notice dated 18.11.2019 and consequent sale proceedings issued pursuant to such an illegal and arbitrary demand.
(C) xxxx xxxx xxxx
(D) xxxx xxxx xxxx"
In the civil application the following main relief is prayed for.
"13(A) YOUR LORDSHIP be pleased to allow this application and be pleased to direct the opponent no.1 to accept the due amount from the applicants and to release the mortgaged property in favour of applicant.
(B) xxxx xxxx xxxx
(C) xxxx xxxx xxxx"
2. The petitioner is indebted to the respondent No.1 - bank; initially the over - draft facility was availed of to an extent of Rs.100/- lakhs which was subsequently enhanced to Rs. 3.50 crores. These transactions were concededly secured by mortgage and then again funded interest termed loan (for short "FITL") was advanced to the petitioner on 15.12.2017, which, according to the petitioner was an unsecured transaction. The assets have been declared as non - performing assets and the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 , (for short "SARFAESI Act") have been invoked against the petitioner on the premise that the facilities aforesaid were secured under SARFAESI Act. In the proceedings with the tribunal, an application No. 257 of 2019 came to be unsuccessfully preferred by the petitioner wherein one of the contentions of the petitioner that FITL was unsecured debt came to be dispelled. Instead of availing the alternative remedy, the petition is filed on the premise that, in view of the legal questions sought to be raised in this petition, the alternative remedy would not be efficacious. The respondents, however, have urged this court to dismiss the petition for availability of alternative remedy.
3. In addition to the above contention, the rival contentions has given rise the following issues:
(1) Whether FITL is an unsecured debt disentitling the first respondent to invoke the provisions of SARFAESI Act.
(2) Whether the petitioner has a right to redeem the mortgage under the provisions of Transfer of Property Act independent of S.13 of SARFAESI Act.
4. To assert the right to redeem, learned counsel for the petitioner has invited attention of this court to the decisions: (1) Mathew Varghese v. M. Amritha Kumar [ AIR 2015 SC 50 : (2014 AIR SCW 5581)] and (2) Dwarika Prasad v. State of Uttar Pradesh [ AIR 2018 SC 1286 : (2018 (4) ALJ 226)].
4.1. Learned counsel for the petitioner has also invited attention of this court to the notice issued under S.13(2) of the SARFAESI Act, mortgage deed qua over - draft facilities, averments by the respondents in the affidavit, the sanction letter of FITL, the provision of different rates of interest in the terms of two different facilities, separate loan and separate guarantee agreement, separate operation of two accounts; to make his submission good that only over - draft facilities was secured; FITL was unsecured and that the security contemplated in the agreement as to FITL having remained unfulfilled by the petitioner, the FITL remained unsecured as also it was un
