A borrower’s right to redeem a mortgaged property under the SARFAESI Act is not extinguished until the auction sale is formally concluded by the issuance of a sale certificate, allowing for a One-Time Settlement if the auction process has not attained finality.

SUVIR SEHGAL, J.

1. This singular order shall dispose of both the above noted writ petitions as they are interconnected.

2. Brief background leading to litigation may be noticed. M/s RKB Healthcare Private Limited (hereafter referred to as ‘the borrower’) was sanctioned a financial assistance in shape of term loan of Rs.12 crores vide letter dated 09.08.2011 (Annexure P-2) by the then Allahabad Bank (hereafter referred to as ‘the Bank’) for setting up a Healthcare and Wellness Unit in District Gurugram by creating a mortgage charge on borrowers’ properties as well as on land in the name of Sudhir Bajaj, falling in village Shikhopur, District Gurugram. Due to default in repayment of installments, loan account was classified as non-performing asset (NPA) on 01.05.2016 and proceedings were initiated under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereafter referred to as ‘the SARFAESI Act’). By orders dated 15.05.2018 and 02.08.2019 (Annexures P-10 and 15 respectively), District Magistrate ordered delivery of physical possession of mortgaged land to bank. Borrowers approached this Court by filing a writ petition and by order 27.09.2019 (Annexure P-16), this Court restrained the bank from taking possession of property mentioned in order, Annexure P-15. Bank floated a One-Time Settlement (OTS) and on an application submitted by borrowers, letter dated 21.02.2020 (Annexure P-17) was issued by bank accepting OTS for an amount of Rs.6.17 crores. Borrowers made a part payment under OTS but due to outbreak of the pandemic, a request was made for extension of time which was rejected by bank on 07.11.2020 (Annexure P-25). Writ petition filed by borrowers were disposed of by this Court on 26.11.2020 (Annexure P-24). Bank again approached the District Magistrate and under order dated 11.01.2022 (Annexure P-32), possession of mortgaged land was taken and handed over to bank. A sale notice dated 03.02.2022 (Annexure P-37) was issued by bank under the Security Interest (Enforcement) Rules, 2002 (hereafter referred to as ‘the 2002 Rules’) for sale of secured asset. After making some more payment, borrowers again approached this Court by filing CWP No.3616 of 2022, which was entertained and following order was passed by a Division Bench of this Court on 03.03.2022:-

“Having heard learned counsel for the parties at length, it is clear that the petitioners have paid Rs.3,12,50,000/- to the respondent-Bank of which Rs.2 crores had been paid on 24.02.2022. According to him, this amounts to a substantial payment towards the OTS of Rs.6.17 crore sanctioned on 21.02.2020 leaving the balance of Rs.3,12,50,000/-. He states that the petitioners are willing to pay a further amount of Rs.50 lakhs today. According to him, there was an order passed by the District Magistrate, Gurugram which was reviewed by the said Officer without having jurisdiction to do so and this point was specifically raised in CWP-27941-2019 but the same was not considered and the said Writ Petition came to be disposed of on 26.11.2020 (P24). He submits that the petitioners are entitled to raise the said issue apart from the petitioner’s contention of extension of time for payment of OTS amount can be favourably considered by this Court.

Mrs. Munisha Gandhi, learned senior counsel for the respondent-Bank contends that there was a rejection of the OTS granted to the petitioners on 07.12.2020 but the same has been challenged only now by the petitioners keeping quiet for almost a year. It is also contended that the OTS granted on 21.02.2020 cannot be taken as being ‘live’ as on date a