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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION 
CIVIL APPEAL NO    S.     5920 – 5923/2021     
[Arising out of Special Leave Petition (Civil) No.8614­8617 of
2020]
S. KARTHIK & ORS.  ...APPELLANT(S)
VERSUS
N. SUBHASH CHAND JAIN & ORS.     .... RESPONDENT(S)
J U D G M E N T  
B.R. GAVAI, J. 
1. Leave granted.
2. This   case   is   a   classic   example   as   to   how   an
ingenious   litigant,   by   taking   recourse   to   a   series   of
proceedings   one   after   the   other,   has   been   successful   in
blocking   the   enforcement   of   a   security   interest,   created   in
favour   of   a   secured   creditor,   thereby   defeating   the   very
purpose for  which the Securitisation and Reconstruction of
Financial   Assets   and   Enforcement   of   Security   Interest   Act,

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2002   (hereinafter   referred   to   as   ‘the   SARFAESI   Act’)   was
enacted.
3. The   present   appeals   challenge   the   common
judgment   and   order   dated   18.11.2019   passed   by   the   High
Court   of   Judicature   at   Madras   in   Writ   Petition   Nos.   30710
and   30712   of   2019   filed   by   respondent   No.1­N.   Subhash
Chand   Jain   herein   (hereinafter   referred   to   as   ‘the   auction
purchaser’)   and   in   Writ   Petition   Nos.   28034   and   28036   of
2019 filed by the appellants herein, thereby disposing of all
the four writ petitions. 
4. The   facts,   in   brief,   giving   rise   to   the   present
appeals are as under:
Ace Concrete Private Limited (hereinafter referred
to   as   ‘the   borrower’)   was   a   company   engaged   in   the
manufacture   and   sale   of   ready   mixed   concrete   and   related
business activities.
The   borrower   had   availed   loans   from   respondent
No.5  –Indian   Overseas  Bank   (hereinafter   referred  to   as  ‘the
respondent­Bank’).     The   appellants   and   respondent   Nos.   2
to 4 herein had mortgaged their four properties as collateral
security   and   executed   guarantee   for   the   credit   facility
granted   to   the   borrower.     As   per   the   sanction   of   the

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respondent­Bank   dated   30.3.2010,   the   respondent­Bank
extended   financial   assistance   to   the   tune   of
Rs.21,14,00,000/­   to   the   borrower.   The   guarantees,   which
were signed and executed by the appellants and respondent
Nos. 2 to 4, were for an amount of Rs.22,74,74,000/­.  
It   appears   that   thereafter   there   was   a
transaction/Memorandum   of   Understanding   between   the
borrower   and   one   M/s.   AKR   Holdings   Private   Limited
(hereinafter referred to as ‘AKR Holdings’), as per which the
entire share­capital of the borrower was to be transferred to
AKR   Holdings   and   the   Management   was   also   to   be
transferred   in   favour   of   AKR   Holdings.     As   per   the
agreement,   AKR   Holdings   was   to   take   over   the   entire
liability   of   the   borrower  and   also   to  get   the   four   mortgaged
properties released to the appellants and respondent Nos. 2
to   4.     It   is,   however,   the   contention   of   the   appellants   that
the   said   AKR   Holdings   in   collusion   with   the   respondent­
Bank sold all the assets of the borrower hypothecated to the
respondent­Bank   and   also   did   not   get   the   mortgaged

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properties released, as agreed.  The borrower was, therefore,
categorised as ‘Non­Performing Asset (NPA)’ on 1.4.2011.
The respondent­Bank on 23.5.2011 issued notice
under   Section   13(2)   of   the   SARFAESI   Act   for   a   liability   of
Rs.20,24,05,000/­.   It   is   the   contention   of   the   appellants
that the respondent­Bank instead of proceeding against the
actual borrowers, i.e., the new Management, who had taken
over   the   control/management   of   the   borrower,   invoked   its
power   mala   fidely   against   the   subsisting   guarantors .     As
such,  vide  reply   dated 11.7.2011,  the appellant  Nos. 1 and
6,   and   respondent   Nos.   3   and   4   denied   the   claim   of   the
respondent­Bank.  According to the appellants, ignoring the
same,   on   25.8.2011,   the   respondent­Bank   took   symbolic
possession of all the four properties.   The respondent­Bank
issued   a   sale   notice   dated   21.1.2012   (First   Sale   Notice)   in
respect of all the four mortgaged properties claiming a sum
of  Rs.23,39,54,702/­ as outstanding.   The date of sale was
scheduled to be 27.2.2012.  
On   20.2.2012,   the   appellants   and   respondent
Nos.   2   to   4   filed   a   Securitisation   Application   being   S.A.
No.69   of   2012   before   the   Debts   Recovery   Tribunal­III,

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Chennai   (hereinafter   referred   to   as   ‘the   DRT,   Chennai’),
thereby   praying   to   quash   the   First   Sale   Notice   dated
21.1.2012.   The  DRT,  Chennai,  vide order  dated  27.2.2012
granted   an   interim   stay   restraining   the   respondent­Bank
from   proceeding   further   with   the   First   Sale   Notice   dated
21.1.2012   for   a   period   of   30   days.     However,   this   was
subject to deposit of 50% of the outstanding amount within
the said period.  
On   28.3.2012,   a   sum   of   Rs.12.25   crores   was
remitted to the respondent­Bank after sale of the mortgaged
property at Item ‘B’ in the Schedule of Properties.   The said
sale   was   through   a   private   treaty.     According   to   the
appellants, they had already deposited an amount of Rs.50
lakh on 17.8.2011 and 23.8.2011, i.e., prior to the issuance
of the First Sale Notice dated 21.1.2012.  
Vide   order   dated   2.7.2012,   the   DRT,   Chennai,
dismissed   S.A.   No.69   of   2012   filed   by   the   appellants   and
respondent Nos. 2 to 4.   
After   the   dismissal   of   S.A.   No.69   of   2012,   the
respondent­Bank   issued   a  fresh   sale  notice  dated  9.7.2012
(Second   Sale   Notice)   calling   upon   the   appellants   and

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respondent   Nos.   2   to   4   to   pay   the   revised   outstanding
amount   of   Rs.11,99,53,926/­   within   10   days.     The   date   of
sale   for   the   remaining   three   mortgaged   properties   was
scheduled to be 20.7.2012.  
Being   aggrieved   by   the   said   Second   Sale   Notice
dated   9.7.2012,   the   appellants   and   respondent   Nos.   2   to   4
filed S.A. No.227 of 2012 before the DRT, Chennai, thereby
praying   to   quash   the   Second   Sale   Notice   dated   9.7.2012,
inter   alia,   on   the   ground   that   the   auction/sale   has   been
fixed before the expiry of 30 days from the date of service of
Second   Sale   Notice.     There   is   some   dispute   with   regard   to
the   actual   date   of   filing   of   the   said   S.A.No.227   of   2012.
However,   for   adjudication   of   the   present   appeals,   it   is   not
necessary to go into the said aspect.  
On   20.7.2012,   the   mortgaged   properties   at   Item
‘A’   and   Item   ‘D’   of   the   Schedule   of   Properties   mentioned   in
the   First   Sale   Notice   dated   21.1.2012   were   sold   for   a   sale
consideration of Rs.4,86,21,000/­ to the auction purchaser.
Vide   interim   order   dated   24.7.2012,   the   DRT,
Chennai, directed the appellants and respondent Nos. 2 to 4
to deposit Rs. 1 crore to show their  bona fides  and granted a

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month’s time to procure prospective purchasers to clear the
entire   dues   by   selling   the   mortgaged   properties.
Accordingly, an  amount  of  Rs.1 crore came to  be deposited
on 31.7.2012.  
The   claim   of   the   appellants   and   respondent   Nos.
2   to   4   before   the   DRT,   Chennai,   in   S.A.   No.   227   of   2012
came to be resisted by the respondent­Bank by filing a reply
statement dated 2.8.2012. 
The DRT, Chennai, passed an interim order dated
7.8.2012,   thereby   restraining   the   respondent­Bank   from
bringing   the   mortgaged   properties   for   sale   pursuant   to   the
Second   Sale   Notice   dated   9.7.2012   for   a   period   of   30   days
subject to deposit of Rs.4,80,00,000/­ by the appellants and
respondent Nos. 2 to 4 within the said period, failing which
the said interim order dated 7.8.2012 was to stand vacated.
However,   instead   of   complying   with   the   said
order, the guarantors filed an application being  I.A. No.437
of   2012   in   S.A.   No.227   of   2012.     By   the   said   application,
they   sought   a   direction   that   the   amount   so   directed   to   be
deposited (i.e. Rs.4,80,00,000/­) by the   DRT, Chennai,   vide
order   dated   7.8.2012,   should   be   permitted   to   be   deposited

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either   in   the   purchasers   account   or   in   separate   suspense
account in the Indian Overseas Bank, Kilpauk Branch.  This
was   on   the   pretext   of   an   ongoing   investigation   by   the   CBI
with   regard   to   some   fraudulent   activities   of   the   Officers   of
the   respondent­Bank .       The   said   I.A.   No.437   of   2012   came
to   be   dismissed   by   the   DRT,   Chennai,   on   12.9.2012.     Vide
the   said   order   dated   12.9.2012,   the   respondent­Bank   was
granted   liberty   to   proceed   with   the   sale   and   the   main   S.A.
No.227   of   2012   was   directed   to   be   posted   for   final   hearing
on 20.9.2012
After the deposit of the balance sale consideration
by   the   auction   purchaser   on   12.9.2012,   a   sale   certificate
came to be issued on 13.9.2012.  
Being aggrieved by  the order  passed by the DRT,
Chennai,   dated   12.9.2012,   Civil   Revision   Petition   No.3487
of 2012 came to be filed before the High Court of Judicature
at Madras.  Another Civil Revision Petition No.3597 of 2012
came   to   be   filed   against   the   interim   order   passed   by   the
DRT,   Chennai,   dated   7.8.2012   in   S.A.   No.   227   of   2012
before the Madras High Court.

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During   the   pendency   of   the   said   Civil   Revision
Petitions before the Madras High Court, a Third Sale Notice
dated   27.9.2012   was   issued   by   the   respondent­Bank   for
recovery of a sum of Rs.6,76,07,054/­. The date of sale was
scheduled to be 30.10.2012.  
Vide   various   interim   orders   passed   in   the   said
Civil   Revision   Petitions,   the   Madras   High   Court   restrained
the   respondent­Bank   and   the   auction   purchaser   from
taking   physical   possession   of   the   mortgaged   properties.
During   the   pendency   of   the   said   Civil   Revision   Petitions,   a
sum   of   Rs.12   crore   was   paid   to   the   respondent­Bank
against   the   sale   of   mortgaged   property   at   Item   ‘C’   of   the
Schedule of Properties in First Sale Notice dated 21.1.2012,
owned by respondent No.3­Shanthi Sivasamy. 
Vide   common   order   dated   29.7.2013,   the   High
Court   dismissed   the   said   Civil   Revision   Petitions.     The
appellants   and   respondent   Nos.   2   to   4   challenged   the   said
order   dated   29.7.2013   before   this   Court   by   filing   Special
Leave   Petition   (Civil)   Nos.   28402   and   28403   of   2013.   This
Court   vide   order   dated   7.7.2014   issued   notice   in   the   said
Special   Leave   Petitions   confined   to   the   question   as   to

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whether   any   excess   payment   made   by   the   appellants   and
respondent   Nos.   2   to   4   was   to   be   refunded   by   the
respondent­Bank.     This   Court   also   directed   the   Debts
Recovery   Appellate   Tribunal,   Chennai   (hereinafter   referred
to as ‘the DRAT, Chennai’), to dispose of M.A.(S.A.) No.70 of
2014 expeditiously and preferably within a month’s time. 
The said Special Leave Petition (Civil) Nos. 28402
and   28403   of   2013   filed   by   the   appellants   and   respondent
Nos.   2   to   4   were   permitted   to   be   withdrawn   by   this   Court
vide   order   dated   17.4.2015.     While   granting   leave   to
withdraw,   this   Court   observed   that   since   the   special   leave
petitions are withdrawn, there will be no impediment for the
Tribunal to pass final orders. 
It   appears   that   in   the   meantime   on   21.6.2013
since   the   appellants   and   respondent   Nos.   2   to   4   were
unrepresented,   the   S.A.   No.227   of   2012   came   to   be
dismissed   in   default   by   the   DRT,   Chennai.   An   application
being  M.A. No.112 of  2013 was  preferred  by   the appellants
and respondent Nos. 2 to 4 to recall the said dismissal order
dated   21.6.2013.     The   said   application   was   rejected   on
20.9.2013.     The   said   order   came   to   be   challenged   by   the

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appellants and respondent Nos. 2 to 4 before the High Court
by   filing   C.R.P.   PD.   No.4410   of   2013.     However,   the   said
C.R.P.   PD.   No.4410   of   2013   came   to   be   dismissed   by   the
High   Court   vide   order   dated   3.12.2013   with   liberty   to   the
appellants   and   respondent   Nos.   2   to   4   to   approach   the
DRAT,   Chennai.     It   appears   that   the   appellants   and
respondent  Nos.  2 to  4 approached the  DRAT, Chennai,  by
filing   M.A.   (S.A.)   No.70   of   2014.   The   DRAT,   Chennai,   vide
order dated 10.7.2014 allowed the said M.A. (S.A.) No.70 of
2014 and directed the DRT, Chennai, to restore S.A. No.227
of 2012 and dispose of the same in accordance with law as
expeditiously as possible.  
It   also   appears   from   the   record   that   there   were
certain   proceedings   initiated   at   the   instance   of   the   auction
purchaser   praying   for   transfer   of   the   proceedings   from   the
DRT­III, Chennai, which was seized of S.A. No.227 of 2012,
wherein   the   auction   purchaser   reached   upto   the   High
Court, but could not succeed. 
It   appears   from   the   record   that   in   the   meantime
the   third   respondent­Shanthi   Sivasamy   filed   I.A.   No.903   of
2016   in   S.A.   No.227   of   2012   seeking   refund   of   the   excess

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amount   of   Rs.4.48   crore   lying   with   the   respondent­Bank
claiming that she was the owner  of the mortgaged property
situated at  Chrompet, Chennai, that  was sold and that  the
excess   money   lying   with   the   respondent­Bank   belonged   to
her.  
The   DRT,   Chennai,   vide   order   dated   25.6.2018,
allowed S.A. No.227 of 2012 and set aside the Second Sale
Notice dated 9.7.2012 and consequent sale of the mortgaged
properties   and   imposed   cost   of   Rs.50,000/­   on   the
respondent­Bank for wilfully violating the provisions of law.
Vide   the   said   order   dated   25.6.2018,   the   DRT,   Chennai,
directed   the   respondent­Bank   to   refund   the   amounts   paid
by   the   auction   purchaser   along   with   10%   interest   per
annum.     It   further   directed   the   respondent­Bank   to   refund
the   surplus   sum   of   Rs.4.48   crore   to   the   third   respondent­
Shanthi Sivasamy with 10% interest per annum.
The   aforesaid   order   dated   25.6.2018   passed   by
the DRT, Chennai, came to be challenged before the DRAT,
Chennai, by the respondent­Bank as well as by the auction
purchaser by filing appeals being R.A. (S.A.) No.143 of 2018
and R.A. (S.A.) No. 141 of 2018 respectively.

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Vide   common   order   dated   6.9.2019,   the   DRAT,
Chennai,   allowed   both   the   appeals   and   set   aside   the   order
dated 25.6.2018 passed by the DRT, Chennai.   It, however,
maintained   the   direction   of   the   DRT,   Chennai,   insofar   as
the   payment   of   excess   amount   to   the   third   respondent   is
concerned.  
The   said   order   dated   6.9.2019   passed   by   the
DRAT,   Chennai,   came   to   be   challenged   by   the   appellants
before the High Court by filing Writ Petition Nos. 28034 and
28036 of 2019.   The auction purchaser also challenged the
said   order   dated   6.9.2019   passed   by   the   the   DRAT,
Chennai,   before   the   High   Court   by   filing   Writ   Petition   Nos.
30710 and 30712 of 2019.
Vide   the   impugned   common   order   dated
18.11.2019,   all   the   four   writ   petitions   were   disposed   of.
Hence, the present appeals by way of special leave. 
5. We   have   heard   Shri   K.V.   Viswanathan,   learned
Senior   Counsel   appearing   on   behalf   of   the   appellants,   Ms.
Anitha Shenoy, learned Senior Counsel appearing on behalf
of   the   respondent­Bank,   Mr.   K.K.   Mani,   learned   counsel
appearing on behalf of the auction purchaser and Mr. Saju

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Jakob,   learned   counsel   appearing   on   behalf   of   respondent
No.3.  
6. Shri   K.V.   Viswanathan,   learned   Senior   Counsel
appearing on behalf of the appellants, submitted that in the
Second   Sale   Notice   dated   9.7.2012,   the   period   given   for
paying revised outstanding dues was only 10 days.  Learned
Senior   Counsel   submitted   that   the   date   fixed   for   auction
was immediately on the next day, i.e., the 11 th
 day.  Learned
Senior   Counsel   therefore   submits   that   the   said   notice   was
in blatant breach of Rule 8(6) and Rule 9(1) of the Security
Interest   (Enforcement)   Rules,   2002   (hereinafter   referred   to
as   ‘the   said   Rules’).     It   is   submitted   that   the   said   Rules
statutorily   mandate   that   there   must   be   30   days’   time   gap
between   the   date   of   notice   and   the   date   of   sale   of   the
immovable assets.  
Relying on the judgment of this Court in the case
of   Mathew   Varghese   v.   M.   Amritha   Kumar   and   others 1
,
the learned Senior Counsel submits that if the sale does not
take place pursuant to a notice issued under Rules 8 and 9
of the said Rules, then the procedure prescribed by the said
1   (2014) 5 SCC 610

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Rules   will   have   to   be   followed   afresh,   and   a   fresh   notice   of
30 days’ period will have to be given. 
Relying on the judgment of this Court in the case
of   Vasu P. Shetty v. Hotel Vandana Palace and others 2
,
Shri   K.V.   Viswanathan,   learned   Senior   Counsel,   would
submit   that   the   sale,   which   is   in   breach   of   the   mandatory
requirements imposed by the Rules, would be null and void.
He submits that it has been held by  this  Court in  the  case
of   Vasu   P.   Shetty   (supra)   that   the   earlier   attempts   of   the
borrower   to   thwart   the   sale   would   not   constitute   a   waiver,
and   the   Bank   could   not   be   relieved   from   its   obligation   to
follow the mandatory procedure contained in the Rules.  He
further   submits   that   this   Court,   in   the   case   of   J.   Rajiv
Subramaniyan   and   another   v.   Pandiyas   and   others 3
,
has reiterated the same legal position.  
Learned Senior Counsel further  submits that the
respondent­Bank   also   understood   that   even   for   a
subsequent   notice,   a   30   days’   mandatory   period   has   to   be
provided   inasmuch   as   in   the   First   Sale   Notice   dated
21.1.2012, and in the Third Sale Notice dated 27.9.2012, a
2   (2014) 5 SCC 660
3   (2014) 5 SCC 651

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period   of   more   than   one   month   has   been   provided.     It   is
only with regard to the Second Sale Notice dated 9.7.2012, a
period   of   only   10   days   has   been   provided.     It   is   submitted
that   this   has   been   done   in   haste   and   with   a   mala   fide
intention. 
Learned   Senior   Counsel   would   further   submit
that the contention of the respondent­Bank that the Second
Sale   Notice   dated   9.7.2012   is   a   continuation   of   the   First
Sale   Notice   dated   21.1.2012   is   totally   erroneous.     He
submitted   that   the   schedule   of   the   properties   in   the   First
Sale   Notice  dated  21.1.2012  and   in   the  Second   Sale  Notice
dated   9.7.2012   is   totally   different.   Not   only   that,   but   the
amount called upon to be paid is also totally different. 
Shri   Viswanathan   further   submits   that   the
finding   of   all   the   Authorities,   i.e.,   the   DRT,   Chennai,   the
DRAT,   Chennai,   as   well   as   the   High   Court,   that   the   third
respondent­Shanthi   Sivasamy   was   entitled   to   the   excess
amount   is   contrary   to   the   record   and   the   pleadings.     He
submitted that the amount that was received, was received
from   the   sale   of   all   the   four   mortgaged   properties   of   which
two   were   sold   through   a   private   treaty   and   the   remaining

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two were sold through an auction sale.  As such, the excess
amount, which was generated, was on account of the sale of
all the four mortgaged properties and not only on account of
the   sale   of   the   mortgaged   property   of   the   respondent   No.3.
He   further   submits   that   it   was   a   consistent   stand   of   the
appellants   as   well   as   the   respondent   Nos.   2   to   4   that   the
said   amount   was   required   to   be   kept   by   the   respondent­
Bank in an Escrow account so that in the event the auction
sale   in   respect   of   properties   at   Item   ‘A’   and   Item   ‘D’   of   the
Schedule  of  Properties in  First Sale Notice dated 21.1.2012
is   set   aside,   the   amount   can   be   refunded   to   the   auction
purchaser  with  interest.   It is, however,  submitted that  the
said amount has, in an illegal manner, been permitted to be
withdrawn   by   the   respondent   No.3,   along   with   interest
accrued thereon. 
Shri   Viswanathan,   learned   Senior   Counsel,
further submits that the present appeals need to be allowed
by   quashing   and   setting   aside   the   sale   in   respect   of
properties at Items ‘A’ and ‘D’ of the Schedule of Properties
in   the   First   Sale   Notice   dated   21.1.2012.     He   further

18
submits   that   a   direction   needs   to   be   issued   to   respondent
No.3   to   pay   back   the   amount   to   the   respondent­Bank,
which   should   be   directed   to   utilise   the   said   amount   to
compensate the auction purchaser.  
7. Ms.   Anitha   Shenoy,   learned   Senior   Counsel
appearing   on   behalf   of   the   respondent­Bank,   submits   that
the Second Sale Notice dated 9.7.2012 cannot be construed
to   be   a   fresh   notice,   but   a   continuation   of   the   First   Sale
Notice   dated   21.1.2012.     Learned   Senior   Counsel   submits
that   the   Second   Sale   Notice   dated   9.7.2012   was   issued   in
line   with   the   law   laid   down   by   the   Division   Bench   of   the
Madras High Court in the case of   Kalpesh P.C. Surana v.
Indian Bank 4
.     It is submitted that it has been held in the
case   of   Kalpesh   P.C.   Surana   (supra)   that   though   a   30
days’   period   is   to   be   provided   for   auction   sale   in   the   First
Notice,   there   is   no   requirement   under   the   law   to   provide   a
30 day’s clear period in the subsequent notice.  She further
submits that though the DRT, Chennai, the DRAT, Chennai,
and the High Court had granted several opportunities to the
appellants to make the payments, they have defaulted to do
4   (2010) 3 CTC 287

19
so.   It is submitted that only in pursuance to the directions
of   the   DRT,   Chennai,   dated   12.9.2012,   the   sale   was
completed   in   favour   of   the   auction   purchaser.     Learned
Senior   Counsel   therefore   submits   that   since   the
respondent­Bank   has   always   acted   in   compliance   with   the
orders passed by the Tribunals and the High Court, no fault
could be attributed to the respondent­Bank.  
8. Shri   K.K.   Mani,   learned   counsel   appearing   on
behalf   of   the   respondent   No.1­the   auction   purchaser,
submitted   that   on   account   of   the   litigation,   though   the
auction   purchaser   has   deposited   the   entire   amount   in   the
year   2012   itself,   he   is   deprived   of   the   benefit   of   the   said
sale. Learned counsel relying on the judgment of this Court
in the case of   Dwarika Prasad v. State of Uttar Pradesh
and   others 5
,   submitted   that   though   the   appellants   have
lost before all the forums in several rounds of litigation and
that  the auction  purchaser  by  virtue of  law is the owner  of
the   properties   since   2012   onwards,   he   is   being   deprived   of
the   benefit   of   the   rent   from   the   properties   at   Items   ‘A’   and
‘D’   of   the   Schedule   of   Properties   in   First   Sale   Notice   dated
5   (2018) 5 SCC 491

20
21.1.2012,   which   rent   is   being   received   by   the   appellants.
Learned counsel also relying  on the judgment of this Court
in   the   case   of   Shakeena   and   Anr.   v.   Bank   of   India   &
Ors. 6
,   further submits that the role of the respondent­Bank
in the present case also needs to be noted.  He submits that
though   the   respondent­Bank   could   very   well   have   taken
steps under Section 14 of the SARFAESI Act for recovery of
physical   possession,   for   last   9   years,   the   respondent­Bank
has not taken any steps.  
9. Shri   Saju   Jakob,   learned   counsel   appearing   for
respondent   No.3­Shanthi   Sivasamy,   submits   that   all   the
appellants   are   either   Promoters/Directors   or   their   direct
relatives.     He   submits   that   respondent   No.3   is   not   directly
related   to   any   of   the   Promoters   or   Directors   but   is   related
only   through   marriage   of   her   daughter   in   one   of   the
appellants’   family.     He   submits   that   the   amount   of   Rs.12
crore   received   by   the   respondent­Bank   was   with   regard   to
Third   Sale   Notice   dated   27.9.2012,   which   was   only   with
respect   to   the   mortgaged   property   at   Item   ‘C’   in   the
Schedule  of  Properties in  First Sale Notice dated 21.1.2012
6   2019 SCC Online SC 1059

21
owned   exclusively   by   her.     He   submits   that   since   the   said
sale   notice   was   for   an   amount   of   Rs.6,76,07,054/­,   the
excess   amount   of   Rs.4.48   crore   was   lying   with   the
respondent­Bank   in respect  of sale of  the  said property.   It
is submitted that the amount towards the First and Second
Sale Notice was already accounted by the respondent­Bank
through sale of the mortgaged properties at Items ‘A’, ‘B’ and
‘D’   in   the   Schedule   of   Properties   in   the   First   Sale   Notice
dated   21.1.2012,   which   properties   belonged   either   to
Promoters/Directors   or   their   family   members.     Learned
counsel   submits   that   since   the   Third   Sale   Notice   dated
27.9.2012 was only for an amount of Rs.6,76,07,054/­ and
in   respect   of   the   property   owned   by   the   respondent   No.3,
there   is   no   error   in   directing   refund   of   the   excess   amount
along with interest to the respondent No.3.  
10. The   sheet­anchor   of   the   contentions   made   on
behalf of the appellants is that even in case of Second Sale
Notice dated 9.7.2012, a mandatory period of 30 days has to
be provided.   It is therefore the submission on behalf of the
appellants that since the Second Sale Notice dated 9.7.2012

22
does not provide for 30 days’ mandatory period and provides
for   a   period   of   only   10   days,   the   said   notice   and   the
consequent sale is invalid in law.   Heavy  reliance  has been
placed on the judgment of this Court in the case of  Mathew
Varghese  (supra).  
11. This   Court   in   the   case   of   Mathew   Varghese
(supra) has elaborately considered the provisions of Section
13(1), 13(8), 35 and 37 of the SARFAESI Act so also Rules 8
and   9   of   the   said   Rules.     We,   therefore,   do   not   wish   to
burden   the   present   judgment   by   reproducing   all   those
provisions   since   they   have   already   been   reproduced   and
considered   in   the   case   of   Mathew   Varghese   (supra).     We
only refer to the relevant paragraphs, which are relied upon
by the learned counsel for the parties. 
12. Before adverting to the observations made by this
Court   in   the   case   of   Mathew   Varghese   (supra),   it   will   be
relevant to note the facts therein. 
The first and second respondents therein stood as
guarantors   in   respect   of   a   credit   facility   granted   by   the
fourth   respondent   Bank   therein   in   favour   of   a   Company
called ‘Jerry Merry Exports Pvt. Ltd.’.     As guarantors, they

23
created   an   equitable   mortgage   in   favour   of   the   fourth
respondent   Bank   therein   by   depositing   the   title   deeds   of
their   property.     When   the   transaction   became   a   non­
performing   asset,   the   respondent­Bank   issued   notices
under   Section   13(2)   and   13(4)   of   the   SARFAESI   Act.     The
guarantors  filed  a  Securitisation  Application  (S.A.)  No.20 of
2007   before   the   DRT,   Ernakulam,   challenging   the
possession   notice   issued   under   Section   13(4)   of   the
SARFAESI   Act.     After   issuance   of   notices   under   Section
13(2) and 13(4) of the  SARFAESI  Act,   the respondent­Bank
issued   a   notice   on   14.8.2007   to   the   guarantors   as   well   as
others of its intention to sell the property under Rule 8(6) of
the said Rules by fixing a reserve price of Rs.1,25,00,000/­.
On  23.8.2007,  the respondent­Bank  published its notice of
sale   of   property   in   Indian   Express   and   Mathrubhoomi,
inviting   tenders­cum­auction   from   the   public.     The
guarantors   vide   notice   dated   30.8.2007   were   informed   by
the   respondent­Bank   about   the   publication   made   on
23.8.2007.     In   pursuance   of   the   tender   notice,   the
appellant­Mathew Varghese and one M/s Kent Construction

24
submitted   their   tenders   on   30.8.2007   and   1.9.2007
respectively.     The   guarantors   filed   a   writ   petition   being   WP
No.27182 of 2007 before the Kerala High Court challenging
the proceedings initiated under the SARFAESI Act.  The said
writ petition was disposed of by a learned single judge of the
Kerala   High   Court   by   order   dated   20.9.2007.     The   High
Court after taking note of the Original Application (OA) filed
by   the   respondent­Bank   as   well   as   Securitisation
Application (SA) filed by the guarantors, directed the DRT to
hear the parties and dispose of the cases without any delay.
While   disposing   of   the   writ   petition,   the   High   Court   also
gave liberty to the parties to settle the liability and directed
the respondent­Bank to defer  the sale posted on 25.9.2007
by   six   weeks.     While   doing   so,   the   High   Court   imposed   a
condition on the guarantors to deposit a sum of Rs.10 lakh
before   the   date   of   sale,   i.e.,   25.9.2007.     As   such,   the   sale,
which   was   scheduled   to   be   held   on   25.9.2007,   was
postponed.     Even   after   the   expiry   of   period   of   six   weeks
prescribed   in  the   order   of  the   High  Court   dated   20.9.2007,
the sale was not effected.   It was the case of the guarantors

25
that   in   pursuance   of   the   order   passed   by   the   High   Court,
they   had   deposited   a   sum   of   Rs.10   lakh   with   the
respondent­Bank.   The said S.A. No.20 of 2007 came to be
dismissed   by   the   DRT   vide   order   dated   27.12.2007.
Immediately   on   the   next   day,   i.e.,   28.12.2007,   the
respondent­Bank   accepted   the   tender   of   the   appellant­
Mathew   Varghese   and   asked   him   to   deposit   25%   of   the
amount on that day itself, which was accordingly deposited.
He   was   asked   to   pay   the   balance   amount   within   15   days.
Mathew   Varghese   deposited   the   balance   amount   on
11.1.2008.     After   deposit   of   25%   of   the   bid   amount   on
31.12.2007   by   Mathew   Varghese,   the   fourth   respondent­
Bank   confirmed   the   sale   in   his   favour   and   granted   him
further time of 15 days for depositing the balance amount.  
13. It is only upon deposit of the balance amount by
Mathew Varghese on 11.1.2008 and the confirmation of the
sale in his favour, the fourth respondent­Bank informed the
guarantors   on   2.2.2008   about   the   confirmation   of   the   sale
in   favour   of   Mathew   Varghese   and   also   the   receipt   of   the
entire   consideration.     The   respondent­Bank   directed   the

26
guarantors   to   collect   the   balance   amount   available   with   it.
As   such,   the   guarantors   filed   Review   Petition   in   the   Writ
Petition,   which   was   disposed   of   on   20.9.2007.     The   said
review petition was dismissed on 12.2.2008 giving liberty to
the   guarantors   to   challenge   the   sale.     The   guarantors
thereafter   filed   another   Writ   Petition   being   Writ   Petition
No.5876 of  2008 on 18.2.2008, challenging  the vires of the
2002 Rules.   It was their specific case that the respondent­
Bank   had   acted   surreptitiously   in   selling   the   property
without   informing   them.     The   said   writ   petition   was
dismissed by  the  learned  single  judge of  the  High  Court by
order dated 12.6.2009.   Being aggrieved thereby, an appeal
was   carried   before   the   Division   Bench   of   the   High   Court.
The Division Bench of the High Court took the view that the
sale   was   not   conducted   in   a   fair   and   proper   manner
inasmuch   as   when   the   sale   was   initially   postponed   by   six
weeks   from   25.9.2007,   the   respondent­Bank   ought   to   have
renotified the sale or at least extended the time for receiving
further   tenders.     The   Division   bench   set   aside   the   sale   by
imposing a condition that the guarantors furnish a demand

27
draft   of   Rs.2,00,00,000/­   from   a   local   branch   of   a
nationalized   bank   in   favour   of   Mathew   Varghese   and   hand
over   the   same   to   him   within   a   period   of   two   months   from
the   date   of   the   order.     The   Division   Bench   further   directed
that   if   payment   was   not   made,   as   directed,   the   sale   in
favour  of Mathew  Varghese would stand  confirmed and the
writ   appeal   would   automatically   stand   dismissed.     There
were   further   directions   to   the   sub­Registrar   with   regard   to
restoration of the property etc.  
14. The guarantors did not make the payment within
the   said   date,   as   directed   by   the   Division   Bench.     Instead,
an application was filed by the guarantors, thereby seeking
for   further   six   weeks’   time   to   effect   the   payment   of
Rs.2,00,00,000/­   to   Mathew   Varghese.     In   the   said
application,   the   Division   Bench   passed   an   order   dated
18.6.2010   extending   the   time   period   till   20.6.2010.     It
appears that the guarantors had agreed to sell the property
in favour of Mr. Koshi Phillip.   The High Court therefore by
the   said   order   dated   18.6.2010   directed   said   Mr.   Koshi
Phillip to deposit an amount of Rs.2,03,00,000/­ before the

28
respondent­Bank and further directed that on such deposit
being   made,   the   sale   made   by   the   respondent­Bank     in
favour   of   Mathew   Varghese   stood   cancelled   and   the
respondent­Bank should effect the sale in favour of said Mr.
Koshi   Phillip.     In   this   background,   Mathew   Varghese   had
approached this Court.
15. It   will   be   relevant   to   refer   to   the   following
observations of this Court in the case of  Mathew Varghese
(supra):
“ 29.1.   A   plain   reading   of   sub­section   (8)
would   show   that   a   borrower   can   tender   to
the secured creditor the dues together with
all costs, charges and expenses incurred by
the secured creditor  at any time before the
date   fixed   for   sale  or   transfer.  In  the  event
of   such   tender   once   made   as   stipulated   in
the said provision, the mandate is that the
secured   asset   should   not   be   sold  or   trans ­
ferred by  the  secured creditor. It is  further
reinforced to the effect that no further step
should also be taken by  the secured credi ­
tor for transfer or sale of the secured asset.
The   contingency   stipulated   in   the   event   of
the   tender   being   made   by   a   debtor   of   the
dues   inclusive   of   the   costs,   charges,   etc.,
would  be  that  such   tender   being   made   be ­
fore   the   date   fixed   for   sale   or   transfer,   the
secured   creditor   should   stop   all   further
steps for effecting the sale or transfer. That

29
apart, no further step should also be taken
for transfer or sale.
29.2.   When we analyse in depth the stipu ­
lations   contained   in   the   said   sub­section
(8),   we   find   that   there   is   a   valuable   right
recognised   and   asserted   in   favour   of   the
borrower,   who   is   the   owner   of   the   secured
asset   and   who   is   extended   an   opportunity
to take all efforts to stop the sale or trans ­
fer till the last minute before which the said
sale or transfer is to be effected. Having re ­
gard   to   such   a   valuable   right   of   a   debtor
having been embedded in the said sub­sec ­
tion,   it   will   have   to   be   stated   in   uncontro ­
verted   terms   that   the   said   provision   has
been   engrafted   in   the   S ARFAESI   Act   primar ­
ily with a view to protect the rights of a bor ­
rower,   inasmuch   as,   such   an   ownership
right is a constitutional right protected un ­
der Article 300­A of the Constitution, which
mandates that no person shall be deprived
of his property save by authority of law.
29.3.   Therefore,   dehors   the   extent   of   bor ­
rowing   made   and   whatever   costs,   charges
were incurred by the secured creditor in re ­
spect of such borrowings, when it comes to
the question of realising the dues by bring ­
ing the property entrusted with the secured
creditor  for  sale to realise money  advanced
without approaching any court or tribunal,
the   secured   creditor   as   a   TRUSTEE   cannot
deal   with   the   said   property   in   any   manner
it   likes   and   can   be   disposed   of   only   in   the
manner prescribed in the   S ARFAESI   Act.

30
29.4.   Therefore, the creditor should ensure
that the borrower was clearly put on notice
of   the   date   and   time   by   which   either   the
sale   or   transfer   will   be   effected   in   order   to
provide the required opportunity to the bor ­
rower   to   take   all   possible   steps   for   retriev ­
ing   his   property   or   at   least   ensure   that   in
the   process   of   sale   the   secured   asset   de ­
rives the maximum benefit and the secured
creditor   or   anyone   on   its   behalf   is   not   al ­
lowed   to   exploit   the   situation   of   the   bor ­
rower by virtue of the proceedings initiated
under   the   S ARFAESI   Act.   More   so,   under
Section   13(1)   of   the   S ARFAESI   Act,   the   se ­
cured creditor is given a free hand to resort
to sale of the property without approaching
the court or Tribunal.
30.   Therefore,   by   virtue   of   the   stipulations
contained   under   the   provisions   of
the   S ARFAESI   Act,   in   particular,   Section
13(8), any  sale or transfer  of a secured as ­
set, cannot take place without duly inform ­
ing   the   borrower   of   the   time   and   date   of
such sale or transfer in order to enable the
borrower to tender the dues of the secured
creditor   with   all   costs,   charges   and   ex ­
penses   and   any   such   sale   or   transfer   ef ­
fected   without   complying   with   the   said
statutory requirement would be a constitu ­
tional   violation   and   nullify   the   ultimate
sale.
31.   Once   the   said   legal   position   is   ascer ­
tained, the statutory prescription contained
in Rules 8 and 9 have also got to be exam ­

31
ined   as   the   said   Rules   prescribe   as   to   the
procedure to be followed by a secured cred ­
itor   while   resorting   to   a   sale   after   the   is ­
suance   of   the   proceedings   under   Sections
13(1) to (4) of the   S ARFAESI   Act. Under Rule
9(1), it is prescribed that no sale of an im ­
movable   property   under   the   Rules   should
take place before the expiry of 30 days from
the date on which the public notice of sale
is  published  in  the  newspapers  as  referred
to in the proviso to sub­rule (6) of Rule 8 or
notice   of   sale   has   been   served   to   the   bor ­
rower.   Sub­rule   (6)   of   Rule   8   again   states
that   the   authorised   officer   should   serve   to
the   borrower   a   notice   of   30   days   for   the
sale   of   the   immovable   secured   assets.
Reading sub­rule (6) of Rule 8 and sub­rule
(1) of Rule 9 together, the service of individ ­
ual  notice  to  the   borrower,  specifying  clear
30   days'   time­gap   for   effecting   any   sale   of
immovable   secured   asset   is   a   statutory
mandate.   It   is   also   stipulated   that   no   sale
should   be   affected   before   the   expiry   of   30
days from the date on which the public no ­
tice of sale is published in the newspapers.
Therefore, the requirement under Rule 8(6)
and Rule 9(1) contemplates a clear 30 days'
individual notice to the borrower and also a
public   notice   by   way   of   publication   in   the
newspapers. In other words, while the pub ­
lication in newspaper should provide for 30
days'   clear   notice,   since   Rule   9(1)   also
states   that   such   notice   of   sale   is   to   be   in
accordance with the proviso to sub­rule (6)
of   Rule  8,  30  days'   clear  notice  to   the   bor ­
rower should also be ensured as stipulated
under  Rule 8(6) as well. Therefore, the use

32
of   the   expression   “or”   in   Rule   9(1)   should
be read as “and” as that alone would be in
consonance   with   Section   13(8)   of
the   S ARFAESI   Act.
32.   The   other   prescriptions   contained   in
the proviso to sub­rule (6) of Rule 8 relates
to   the   details   to   be   set   out   in   the   newspa ­
per  publication,   one  of  which   should   be   in
“vernacular language” with sufficient circu ­
lation   in   the   locality   by   setting   out   the
terms   of   the   sale.   While   setting   out   the
terms of the sale, it should contain the de ­
scription   of   the   immovable   property   to   be
sold,   the   known   encumbrances   of   the   se ­
cured   creditor,   the   secured   debt   for   which
the property is to be sold, the reserve price
below   which   the   sale   cannot   be   effected,
the time and place of public auction or the
time   after   which   sale   by   any   other   mode
would be completed, the deposit of earnest
money   to   be   made   and   any   other   details
which  the  authorised  officer   considers   ma ­
terial   for   a   purchaser   to   know   in   order   to
judge the nature and value of the property.
33.   Such a detailed procedure while resort ­
ing to a sale of an immovable secured asset
is   prescribed   under   Rules   8   and   9(1).   In
our   considered   opinion,   it   has   got   a   twin
objective to be achieved:
33.1.   In the first place, as already stated by
us, by virtue of the stipulation contained in
Section   13(8)   read   along   with   Rules   8(6)
and   9(1),   the   owner/borrower   should   have

33
clear notice of 30 days before the date and
time   when   the   sale   or   transfer   of   the   se ­
cured   asset   would   be   made,   as   that   alone
would   enable   the   owner/borrower   to   take
all efforts to retain his or her ownership by
tendering   the   dues   of   the   secured   creditor
before that date and time.
33.2.   Secondly, when such a secured asset
of   an   immovable   property   is   brought   for
sale,   the   intending   purchasers   should
know the nature of the property, the extent
of   liability   pertaining   to   the   said   property,
any   other   encumbrances   pertaining   to   the
said   property,   the   minimum   price   below
which one cannot make a bid and the total
liability   of   the   borrower   to   the   secured
creditor.   Since,   the   proviso   to   sub­rule   (6)
also   mentions   that   any   other   material   as ­
pect   should   also   be   made   known   when   ef ­
fecting the publication, it would only mean
that   the   intending   purchaser   should   have
entire   details   about   the   property   brought
for  sale  in  order  to  rule  out  any  possibility
of the bidders later on to express ignorance
about  the   factors  connected  with   the   asset
in question.
33.3.   Be that as it may, the paramount ob ­
jective is to  provide sufficient  time and op ­
portunity to the borrower to take all efforts
to   safeguard   his   right   of   ownership   either
by tendering the dues to the creditor before
the date and time of the sale or transfer, or
ensure   that   the   secured   asset   derives   the
maximum   price   and   no   one   is   allowed   to

34
exploit   the   vulnerable   situation   in   which
the borrower is placed.”
16. It   could   thus   be   seen   that   this   Court   has   held
that   the   creditor   should   ensure   that   the   borrower   was
clearly   put   on   notice   of   the   date   and   time   by   which   either
the   sale   or   transfer   will   be   effected   in   order   to   provide   the
required   opportunity   to   the   borrower   to   take   all   possible
steps for retrieving his property or at least to ensure that in
the process of sale, the secured asset derives the maximum
benefit,   and   that   the   secured   creditor   or   anyone   on   its
behalf,   is   not   allowed   to   exploit   the   situation   of   the
borrower.   This  Court  held  that   Rule  9(1)  of  the  said  Rules
prescribed that no sale of an immovable property under the
said   Rules   should   take   place   before   the   expiry   of   30   days
from   the   date   on   which   the   public   notice   of   sale   was
published   in   the   newspapers   or   notice   of   sale   has   been
served   to   the   borrower.   This   Court   further   held   that   the
expression “or” in Rule 9(1) should be read as “and” and as
such   there   should   be   clear   notice   of   30   days   between   the
notice of sale to the borrower so also the publication in the

35
newspaper and the actual date of sale.  This Court held that
this would serve   twin purpose.   Firstly, the owner/borrower
should have clear notice of 30 days before the date and time
when   the   sale   or   transfer   of   the   secured   asset   would   be
made   inasmuch   as,   that   would   enable   the   owner/borrower
to take all efforts to retain his or her ownership by tendering
the   dues  of   the  secured   creditor   before  that   date  and  time.
Secondly,   when   such   a   secured   asset   of   an   immovable
property   is   brought   for   sale,   the   intending   purchasers
should   know   the   nature   of   the   property,   the   extent   of
liability   pertaining   to   the   said   property,   any   other
encumbrances   pertaining   to   the   said   property,   the
minimum price below which one cannot make a bid and the
total   liability   of   the   borrower   to   the   secured   creditor.   This
Court further held that the purpose of the Rule is to ensure
that   the   secured   asset   derives   the   maximum   price,   and   no
one   is   allowed   to   exploit   the   vulnerable   situation   in   which
the borrower is placed.
17. After   referring   to   the   judgment   of   this   Court   in
the   case   of   Narandas   Karsondas   v.   S.A.   Kamtam   and

36
another 7
,   this   Court   in   the   case   of   Mathew   Varghese
(supra) observed thus:
“ 38.   On   a   reading   of   the   above   para ­
graphs,   we   are   able   to   discern   the   ratio
to   the   effect   that   a   mere   conferment   of
power  to  sell  without   intervention   of  the
court   in   the   mortgage   deed   by   itself   will
not deprive the mortgagor of his right to
redemption,   that   the   extinction   of   the
right   of   redemption   has   to   be   subse ­
quent to the deed conferring such power,
that the right of redemption is not extin ­
guished  at  the  expiry  of  the   period,  that
the   equity   of   redemption   is   not   extin ­
guished   by   mere   contract   for   sale   and
that the mortgagor's right to redeem will
survive   until   there   has   been   completion
of   sale   by   the   mortgagee   by   a   registered
deed.   The   ratio   is   also   to   the   effect   that
the power to sell should not be exercised
unless and until notice in writing requir ­
ing   payment   of   the   principal   money   has
been served on the mortgagor. The above
proposition   of   law   of   course   was   laid
down by this Court in   Narandas Karson ­
das   [(1977) 3 SCC 247] while construing
Section   60   of   the   TP   Act.   But   as   rightly
contended by Mr Shyam Divan, we fail to
note   any   distinction   to   be   drawn   while
applying   the   abovesaid   principles,   even
in   respect   of   the   sale   of   secured   assets
created   by   way   of   a   secured   interest   in
favour   of the  secured creditor   under  the
provisions   of   the   S ARFAESI   Act,   read
7  (1977) 3 SCC 247

37
along with the relevant Rules. We say so,
inasmuch   as,   we   find   that   even   while
setting   out   the   principles   in   respect   of
the   redemption   of   a   mortgage   by   apply ­
ing   Section   60   of   the   TP   Act,   this   Court
has   envisaged   the   situation   where   such
mortgage   deed   providing   for   resorting   to
the   sale   of   the   mortgage   property   with ­
out   the   intervention   of   the   Court.   Keep ­
ing   the   said   situation   in   mind,   it   was
held that the right of redemption will not
get   extinguished   merely   at   the   expiry   of
the   period   mentioned   in   the   mortgage
deed. It was also stated that the equity of
redemption   is   not   extinguished   by   mere
contract for sale and the most important
and   vital   principle   stated   was   that   the
mortgagor's   right   to   redeem   will   survive
until   there   has   been   completion   of   sale
by   the   mortgagee   by   a   registered   deed.
The   completion   of   sale,   it   is   stated,   can
be  held   to   be   so  unless   and  until  notice
in writing requiring payment of the prin ­
cipal   money   has   been   served   on   the
mortgagor.   Therefore,   it   was   held   that
until the sale is complete by registration
of   sale,   the   mortgagor   does   not   lose   the
right   of   redemption.   It   was   also   made
clear   that   it   was   erroneous   to   suggest
that   the   mortgagee   would   be   acting   as
the agent of the mortgagor in selling the
property.
39.   When   we   apply   the   above   principles
stated with reference to Section 60 of the
TP Act in respect of a secured interest in

38
a secured asset in favour of the secured
creditor   under   the   provisions   of
the   S ARFAESI   Act   and   the   relevant   Rules
applicable,   under   Section   13(1),   a   free
hand is given to a secured creditor to re ­
sort to a sale without the intervention of
the   court   or   tribunal.   However,   under
Section 13(8), it is clearly stipulated that
the   mortgagor   i.e.   the   borrower,   who   is
otherwise   called   as   a   debtor,   retains   his
full right  to redeem  the property  by  ten ­
dering all the dues to the secured credi ­
tor   at   any   time   before   the   date   fixed   for
sale or transfer. Under sub­section (8) of
Section 13, as noted earlier, the secured
asset   should   not   be   sold   or   transferred
by   the   secured   creditor   when   such   ten ­
der   is   made   by   the   borrower   at   the   last
moment   before   the   sale   or   transfer.   The
said sub­section  also  states that no  fur ­
ther step should be taken by the secured
creditor   for   transfer   or   sale   of   that   se ­
cured   asset.   We   find   no   reason   to   state
that   the   principles   laid   down   with   refer ­
ence   to   Section   60   of   the   TP   Act,   which
is   general   in   nature   in   respect   of   all
mortgages,   can   have   no   application   in
respect of a secured interest in a secured
asset   created   in   favour   of   a   secured
creditor, as all the abovestated principles
apply on all fours in respect of a transac ­
tion   as   between   the   debtor   and   secured
creditor   under   the   provisions   of
the   S ARFAESI   Act.”

39
18. It   could   thus   be   seen   that   this   Court   observed
that   the   equity   of   redemption   is   not   extinguished   by   mere
contract   for   sale   and   that   the   mortgagor's   right   to   redeem
will   survive   until   there   has   been   completion   of   sale   by   the
mortgagee by a registered deed. This Court further observed
that applying the principles stated with reference to Section
60   of   the   Transfer   of   Property   Act   in   respect   of   a   secured
interest in a secured asset in favour of the secured creditor
under  the provisions  of the   SARFAESI  Act   and the  relevant
Rules applicable, a free hand  is given  to  a  secured creditor
to   resort   to   a   sale   without   the   intervention   of   the   court   or
tribunal.     It   has,   however,   been   held   that   under   Section
13(8),   it   is   clearly   stipulated   that   the   mortgagor,   i.e.,   the
borrower,   who   is   otherwise   called   as   a   debtor,   retains   his
full right to redeem the property by tendering all the dues to
the   secured   creditor   at   any   time   before   the   date   fixed   for
sale or transfer. This Court further held that if the tender is
made by the borrower at the last moment before the sale or
transfer, the secured asset should not be sold or transferred
by the secured creditor.   This Court held that there was no

40
reason   as   to   why   the   general   principle   laid   down   by   this
Court   in   the   case   of   Narandas   Karsondas   (supra)   with
reference to Section 60 of the Transfer of Property Act could
not   have   application   in   respect   of   a   secured   interest   in   a
secured asset created in favour of a secured creditor.  It has
been held that  the said principles will apply  on  all fours in
respect of a transaction as between the debtor and secured
creditor under the provisions of  the SARFAESI Act .
19. The most relevant observation of this Court could
be   found   in   paragraph   53   of   the   judgment   in   the   case   of
Mathew Varghese  (supra), which reads thus:
“53.   We,   therefore,   hold   that   unless   and
until a clear 30 days' notice is given to the
borrower,   no   sale   or   transfer   can   be   re ­
sorted   to   by   a   secured   creditor.   In   the
event   of   any   such   sale   properly   notified
after   giving   30   days'   clear   notice   to   the
borrower did not take place as scheduled
for   reasons   which   cannot   be   solely   at ­
tributable   to   the   borrower,   the   secured
creditor   cannot   effect   the   sale   or   trans ­
fer   of   the   secured   asset   on   any   subse ­
quent  date   by  relying  upon   the  notifica ­
tion  issued   earlier.   In  other  words,  once
the sale does not take place pursuant to
a   notice   issued   under   Rules   8   and   9,
read   along   with   Section   13(8)   for   which

41
the   entire   blame   cannot   be   thrown   on
the borrower, it is imperative that for ef ­
fecting   the   sale,   the   procedure   pre ­
scribed   above   will   have   to   be   followed
afresh, as the notice issued earlier would
lapse.   In that respect, the only other provi ­
sion to be noted is sub­rule (8) of Rule 8 as
per   which   sale   by   any   method   other   than
public   auction   or   public   tender   can   be   on
such   terms   as   may   be   settled   between   the
parties   in   writing.   As   far   as   sub­rule   (8)   is
concerned,   the   parties  referred   to   can   only
relate   to   the   secured   creditor   and   the   bor ­
rower.   It   is,   therefore,   imperative   that   for
the sale to be effected under Section 13(8),
the procedure prescribed under Rule 8 read
along   with   Rule   9(1)   has   to   be   necessarily
followed, inasmuch as that is the prescrip ­
tion of the law for  effecting the sale as has
been explained in detail by us in the earlier
paragraphs   by   referring   to   Sections   13(1),
13(8)   and   37,   read   along   with   Section   29
and   Rule   15.   In   our   considered   view   any
other construction will be doing violence to
the   provisions   of   the   S ARFAESI   Act,   in   par ­
ticular   Sections   13(1)   and   (8)   of   the   said
Act.”
(emphasis supplied)
20. This   Court,   in   unequivocal   terms,   held   that
unless   and   until   a   clear   30   days'   notice   is   given   to   the
borrower, no sale or transfer can be resorted to by a secured
creditor.   It   further   held   that   in   the   event   of   any   such   sale
properly   notified   after   giving   a   30   days'   clear   notice   to   the

42
borrower did not take place as scheduled for reasons, which
cannot   be   solely   attributable   to   the   borrower,   the   secured
creditor   cannot   effect   the   sale   or   transfer   of   the   secured
asset   on   any   subsequent   date   by   relying   upon   the
notification   issued   earlier.     This   Court   held   that   once   the
sale does not take place pursuant to a notice issued under
Rules 8 and 9, read with Section 13(8) for  which the entire
blame   cannot   be   thrown   on   the   borrower,   it   is   imperative
that for effecting the sale, the procedure prescribed will have
to be followed afresh.
21. In   the   light   of   these   observations,   we   have   to
consider the factual position in the present matter. 
22. It is not in dispute that an equitable mortgage in
favour of the   respondent­Bank   guaranteeing the loan taken
by the borrower was in respect of four properties.  The chart
showing   the   schedule   of   properties,   the   owners   (as
mentioned in the First Sale Notice dated 21.1.2012) and the
mode of sale is as under:
“SALE NOTICE DT. 21.01.2012 ­
SCHEDULE OF PROPERTIES 
S.NO. SCHEDULE
PROPERTY OWNERS MODE   OF
SALE

43
1 Item­A – 
Vepery
Property Late Mr. C. Surendran,
Mr. C.Ravindran [R­2]
Mrs. R. Rajalakshmi [P­6]
Mr. R. Rajarajan [P­3] 
Mr. R. Rajasekaran [P­2]
Ms. R. Abirami [P­5] Impugned 
auction
sale to 
Respondent
No. 1
2 Item­B –
Madura­
voyal 
Property Late Mr. C. Surendran 
Mrs. R. Sivasakthi [R­4] 
Mrs. R. Rajalakshmi [P­6] Private 
Treaty Sale
3 Item­C – 
Chrompet
Property Mrs. Shanti Sivaswamy 
[R­3] Private 
Treaty Sale
4 Item­ D
Sholingan
allur 
Property Late Mr. C. Surendran 
Mr. S.Karthik [P­1]  Impugned 
auction sale
to 
Respondent
No. 1
23. It   can   thus   be   seen   that   the   properties   at   Items
‘B’ and ‘C’ in the Schedule of Properties in First Sale Notice
dated   21.1.2012   have   been   sold   through   a   private   treaty,
and as such, the said sales are not impugned in the present
appeals.   It is only the properties at Items ‘A’ and ‘D’ in the
Schedule of Properties in First Sale Notice dated 21.1.2012,
which   have   been   sold   consequent   to   Second   Sale   Notice
dated   9.7.2012   by   public   auction   in   favour   of   the   auction
purchaser,   are   impugned.       We   will   therefore   have   to

44
examine   the   correctness   of   the   submission   that   since   the
Second   Sale   Notice   dated  9.7.2012   provided   for   a   period   of
only 10 days, the auction sale held on 20.7.2012 is vitiated
in   view   of   the   law   laid   down   by   this   Court   in   the   case   of
Mathew Varghese   (supra).  For that, it will be necessary to
refer   to   various   orders   passed   by   the   Tribunals   as   well   as
the High Court. 
24. It   is   not   in   dispute   that   the   First   Sale   Notice
dated 21.1.2012 notifying auction sale on 27.2.2012 was for
recovery of Rs.23,39,54,702/­ and in respect of all the four
scheduled properties at  Items ‘A’, ‘B’, ‘C’ and ‘D’.   It is also
not   in   dispute   that   the   First   Sale   Notice   dated   21.1.2012
provided for a clear period of 30 days’ notice.  
25. It   is   pertinent   to   note   that   immediately   after   the
First Sale  Notice was issued on 21.1.2012, a  Securitisation
Application being S.A. No. 69 of 2012 under Section 17(1) of
the SARFAESI Act came to be filed before the DRT, Chennai,
by   the   appellants   and   respondent   Nos.   2   to   4.     It   will   be
relevant   to   refer   to   the   interim   order   passed   by   DRT,
Chennai, on 27.2.2012 in S.A. No. 69 of 2012, which reads
thus:

45
“4.  The   Ld.   Counsel   for   the   applicant
submitted   that   he   can   sell   the   property
within   15   days   and   make   substantial
payment   (entire   sale   consideration)   with
the bank within 15 days and the balance
amount   due   to   the   bank   will   be   settled
within   one   month.   If   an   interim
injunction   is   not   granted   at   this
juncture,   it   will   cause   irreparable   injury
to the applicants.
5.  Hence   in   the   interest   of   justice
interim stay is granted for a period of 30
days   restraining   the   respondent   bank
from  proceeding  further  pursuant to  the
sale   notice   dated   21.01.2012   subject   to
deposit   of   50%   of   the   outstanding
amount   within   the   period.   For
compliance call on 29.03.2012.”
26. It   could   thus   be   seen   that   the   counsel   for   the
applicants   therein,   i.e.,   the   appellants   and   the   respondent
Nos.  2  to  4   herein   submitted  that   the  applicants   could  sell
the property within 15 days and make substantial payment,
i.e., the entire sale consideration with the   respondent­Bank
within   15   days,   and   the   balance   amount   due   to   the
respondent­Bank   will   be   settled   within   one   month.     Acting
on   the   said   statement   made   by   the   appellants   and
respondent Nos. 2 to 4 , the   DRT, Chennai,  granted interim
stay for a period of 30 days restraining the  respondent­Bank

46
from   proceeding   further   pursuant   to   the   First   Sale   Notice
dated   21.1.2012.     However,   this   was   subject   to   deposit   of
50% of the outstanding amount within the said period.  The
matter was kept for compliance on 29.3.2012.  
27. It   is   not   in   dispute   that   during   the   pendency   of
the   said   S.A.   No.69   of   2012,   an   amount   of   Rs.12.25   crore,
which   was   received   from   the   sale   of   mortgaged   property   at
Item ‘B’ through a private treaty on 28.3.2012, was remitted
to the   respondent­Bank .   It is the further contention of the
appellants that they had also deposited a sum of Rs.50 lakh
with   the   respondent­Bank   prior   to   the   receipt   of   First   Sale
Notice   dated   21.1.2012,   and   as   such,   an   amount   of
Rs.12.75 crore was already paid to the respondent­Bank.  
28. When   the   said   S.A.   No.69   of   2012   came   up   for
final   hearing   before   the   DRT,   Chennai,   on   2.7.2012,   the
DRT, Chennai, made the following observation:
“As   I   said   earlier,   the   impugned   Sale
Notice   was   published   in   two   dailies
namely,   New   Sunday   Express   and
Dinamani   on   22.1.2012.   The   applicants
have   no   case   that   these   dailies   have   no
wide circulation in the locality.   It is also
evident   that   Sale   Notice   was   properly
served to the borrower.   It is evident that
there   is   clear   notice   of   30   days   from   the
date   on   which   public   notice   of   sale   is

47
published   in   newspapers.     Therefore,
there   is   no   violation   of   sub­rule   (1)   of
Rule   9   as   contended.     Hence   I   could   not
find any merit in the contention raised by
the Ld. Counsel for the applicants.”
29. With these observations, S.A. No.69 of 2012 came
to   be   dismissed   by   the   DRT,   Chennai,   vide   order   dated
2.7.2012.
30. After the said S.A. No. 69 of 2012 was dismissed,
the   respondent­Bank   issued   a   fresh   notice   on   9.7.2012
(Second Sale Notice), thereby informing the guarantors that
an   amount   of   Rs.   11,99,53,926/­   was   due   to   the
respondent­Bank .  It was therefore informed that sale of the
mortgaged properties at Items ‘A’, ‘C’ and ‘D’ in the Schedule
of Properties in the First Sale Notice dated 21.1.2012 will be
held   on   20.7.2012.     The   Schedule   of   Properties   in   the
Second   Sale   Notice   dated   9.7.2012   consisted   of   three
properties   out   of   four   properties   mentioned   in   the   earlier
notice   dated   21.1.2012   (First   Sale   Notice)   excluding   the
property   mentioned   at   item   ‘B’   in   the   First   Sale   Notice,
which was sold by a private treaty on 28.3.2012.    
31. The   second   round   of   litigation   starts   with   S.A.
No.227 of  2012.   It is  the contention  of the  appellants  that

48
the guarantors had immediately challenged the Second Sale
Notice   dated   9.7.2012   before   the   DRT,   Chennai,   by   filing
S.A. No.227 of 2012 on 18.7.2012.   However, on account of
some   technical   difficulties,   S.A.   No.227   of   2012   could   be
first heard on 24.7.2012.  On 24.7.2012, the  DRT, Chennai,
passed the following order in S.A. No.227 of 2012:
“Advanced.  Both parties present.  Heard.
Petitioner   agreed   to   deposit   Rs.1   crore
within   2.8.2012   to   show   their   bonafides.
They   want   breathing   time   to   procure
prospective   purchaser   to   clear   the   entire
dues   within   one   month   from   today   by
selling   the   remaining   property.     They
want   one   month   time   since   it   is   Aady
month,   no   sale   would   be   taken   place.
Hence for compliance, call on 2.8.2012.”
32. It   could   thus   be   seen   that   the   guarantors
represented   to   the   DRT,   Chennai,   that   they   want   some
breathing   time   to   procure   prospective   purchaser   and   that
they   would   clear   the   entire   dues   of   the   respondent­Bank
within   one   month   from   that   day   by   selling   the   remaining
property.  
33. The   matter   thereafter   came   up   for   hearing   on
7.8.2012   on   which   date   the   DRT,   Chennai,   passed   the
following interim order:

49
“8. The   applicants   have   made   out   a
strong   case   and   the   balance   of
convenience   is   also   in   their   favour.
Therefore,   interim   injunction   is   granted
for   30   days   restraining   the   Authorised
Officer   of   respondent   bank   from   brining
the   properties   described   in   the   Schedule
for   sale   consequent   upon   the   impugned
Auction   Sale   Notice   dated   9.7.2012,
subject   to   deposit   of   Rs.4,80,00,000/­
(Rupees   Four   Crores   Eighty   Lakhs   only)
with   the   respondent   bank   within   the
period, failing which this order will stand
vacated.”
34. Perusal   of   the   aforesaid   interim   order   would
reveal that an interim injunction was granted for a period of
30   days   restraining   the   Authorised   Officer   of   the
respondent­Bank   from   bringing   the   properties   described   in
the   Schedule   for   sale   consequent   upon   the   impugned   Sale
Notice dated 9.7.2012.  This was made subject to deposit of
Rs.4,80,00,000/­ with the respondent­Bank within the said
period.   It was, however, clarified that failing  the same, the
interim order would stand vacated.  The matter was kept for
compliance on 10.9.2012.  
35. However,   instead   of   complying   with   the   said
order, the guarantors filed an application being  I.A. No.437
of   2012   in   S.A.   No.227   of   2012.     By   the   said   application,

50
they   sought   a   direction   that   the   amount   so   directed   to   be
deposited (i.e. Rs.4,80,00,000/­) by the   DRT, Chennai,   vide
order   dated   7.8.2012,   should   be   permitted   to   be   deposited
either   in   the   purchasers   account   or   in   separate   suspense
account in the Indian Overseas Bank, Kilpauk Branch. This
was   on   the   pretext   of   an   ongoing   investigation   by   the   CBI
with   regard   to   some   fraudulent   activities   of   the   Officers   of
the   respondent­Bank . The said I.A. No.437 of 2012 came to
be dismissed by the   DRT, Chennai,   on 12.9.2012.   Vide the
said   order   dated   12.9.2012,   the   respondent­Bank   was
granted   liberty   to   proceed   with   the   sale   and   the   main   S.A.
No.227   of   2012   was   directed   to   be   posted   for   final   hearing
on 20.9.2012.    
36. The   orders   passed   by   the   DRT,   Chennai,   dated
7.8.2012   and   12.9.2012   came   to   be   challenged   by   the
appellants and respondent Nos. 2 to 4  before the High Court
of   Judicature   at   Madras   by   way   of   Civil   Revision   Petitions
being   C.R.P   No.3597   of   2012   and   C.R.P.   No.3487   of   2012
respectively.   On 9.11.2012, the Madras High Court passed
the following order in the said Civil Revision Petitions:

51
“2. Considering   the   submissions   made
by   the   learned   senior   counsel   for   the
petitioners   that   the   Petitioners   are
prepared   to   pay   entire   dues   to   the   Bank
including   the   amount   deposited   by   the
auction   purchaser,   without   prejudice   to
their   other   contentions,   and   taking   into
account   the   fact   that   the   ultimate
beneficiary   in   the   Bank   in   view   of   the
offer of the Petitioners to make the entire
payment,   we   restrain   the   bank   and   the
auction   purchaser   from   taking   physical
possession   of   the   properties   from   the
Petitioners   and   their   tenants,   until
further orders.”
37. It could thus be seen that again a representation
was made to the Division Bench of the High Court that the
appellants   were   prepared   to   pay   entire   dues   to   the
respondent­Bank   including   the   amount   deposited   by   the
auction   purchaser,   without   prejudice   to   their   other
contentions.  Acting on the said representation, the Division
Bench   of   the   High   Court   granted   interim   protection   to   the
appellants. 
38. It   appears   that   in   the   meantime   since   the
property at Item ‘C’ belonging to respondent No.3 could not
be   sold   in   pursuance   of   the   earlier   sale   notices,   a   third
notice dated 27.9.2012 was issued in respect of property at

52
Item   ‘C’.     It   further   appears   that   in   the   said   Civil   Revision
proceedings,   the   Division   Bench   of   the   Madras   High   Court
was informed about the said sale notice and the appellants
again made a representation that they were willing to make
payment of the entire amount.  It will be relevant to refer to
the following part of the order passed by the Division Bench
of   the   Madras   High   Court   dated   15.11.2012   in   the   Civil
Revision proceedings:
“5. Taking   into   consideration   the
affidavit   filed   by   the   Petitioners   agreeing
to   pay   the   entire   amount   within   90   days
and   part   payment   of   Rs.4,80,00,000/­
within   45   days   and   also   in   view   of   the
submission made by the Bank that there
would be no bidders in case permission is
not   granted   to   confirm   the   bid,   we   stay
the   auction   scheduled   to   be   held   on
Friday 16 November 2012.”
 
39. When   the   Civil   Revision   Petitions   were   listed   on
8.1.2013,   the   Division   Bench   of   the   Madras   High   Court
passed the following order:
“2. The   learned   senior   counsel   for   the
petitioners submitted that, the petitioners
have now identified a purchaser by name
Redbrick   Realtors   Private   Limited   and
they   have   agreed   to   purchase   the
property   at   Old   No.99,   New   No.51,   Anna
Salai,   Nagalkeni,   Pammal   Village,
Chromepet,   Chennai­44   (Item   No.4)   for   a

53
total   consideration   of   Rs.12   crores.     The
prospective   purchaser   has   taken   a
demand  draft  for  a   sum   of  Rs.75  lakh   in
the   name   of   respondent   Bank.     Even
though   the   prospective   purchaser   has
agreed   to   settle   the   remaining   amount
within   a   period   of   sixty   days,   during   the
course   of   submission,   the   representative
of   the   prospective   purchaser   sought   90
days   time   to   pay   the   remaining   amount.
The   prospective   purchaser   agreed   to   file
an affidavit indicating that a sum of Rs.6
crore will be paid  on  or  before  28.3.2013
and   the   balance   amount   will   be   paid   on
or before 26.4.2013.
…  … …
5. The   Director,   Redbrick   Realtors
Private   Limited,   is   directed   to   file   an
affidavit   indicating   that   a   sum   of   Rs.6
crores   would   be   paid   by   26   March   2013
and   the   balance   of   Rs.5.25   crore   would
be   paid  on   or   before   26   April   2013.     The
affidavit   should   contain   a   clear
undertaking   that   in   case   of   failure   to
adhere   to   the   time   limit,   the   purchase
has no objection for forfeiting the amount
of Rs.75 lakhs.”
40. On,   22.1.2013,   the   Division   Bench   passed   the
following order:
“2. Pursuant to our earlier orders dated
8.1.2013   and   11.1.2013,   the   Bank   is
permitted   to   appropriate   the   amount   of
Rs.75   lakhs   towards   the   loan   account   of
M/s Ace Concrete Pvt. Ltd.  Similarly, the
amount   of   Rs.6   crore   payable   by   the
prospective   purchaser,   as   per   our   earlier

54
order dated 8.1.2013 shall be paid to the
loan   account   of   M/s   Ace   Concrete   Pvt.
Ltd.     On   such   payment,   the   Bank   is
permitted   to   appropriate   the   said
amount.”
41. It   appears   that   during   the   pendency   of   the
proceedings   before   the   High   Court,   the   mortgaged   property
at   Item   ‘C’   was   sold   by   a   private   treaty,   and   an   amount   of
Rs.   9   crore   was   paid   by   the   purchaser   M/s.   Redbrick
Realtors   Private   Limited   on   different   dates.     It   is   also   the
contention   of   the   appellants   that   an   amount   of   Rs.3   crore
was   deposited   on   2.4.2013   by   late   Shri   C.   Surendran   in
compliance of the undertaking given to the High Court.  
42. When   the   said   Civil   Revision   Petitions   came   up
for hearing on 30.4.2013, a grievance was made on behalf of
the   auction   purchaser   that   even   after   issuance   of   sale
certificate, he was not able to enjoy the fruits of the sale.  It
was also contended that the guarantors were collecting huge
amount   of   rent   of   more   than   Rs.4   lakh,   and   though   the
auction   purchaser   was   the   owner   of   the   property,   he   was
deprived   of   the   same.   It   will   be   relevant   to   refer   to   the

55
following   observations   of   the   Division   Bench   in   the   said
order dated 30.4.2013 passed in the Civil Revision Petitions:
“….According to him, even after  issuance
of   sale   certificate,   as   early   as   on
30.09.2012, they are not able to enjoy the
fruits   of   the   sale.     Further,   according
Petitions,   if   the   petitioner   is   allowed   to
collect   rent   from   the   premises   in
question,   they   have   to   face   hardship   in
getting   back   the   rent   collected   by   the
petitioner   during   the   pendency   of   the
Civil   Revision   Petitions.     In   view   of   this,
we are of the opinion that ends of justice
will be met by directing the petitioners to
deposit   the   amount   collected   by   way   of
rent   before   the   Debt   Recovery   Tribunal
No.III, Chennai. 
2. Consequently,   the   petitioner   is
directed   to   deposit   the   amount   collected
by   way   of   rent   before   the   Debt   Recovery
Tribunal No.III, Chennai.”
43. It   will   be   further   relevant   to   note   that   it   was
sought   to   be   urged   on   behalf   of   the   respondent­Bank   that
balance   amount   of   Rs.4.48   crore   was   lying   with   the
respondent­Bank.     However,   the   EPF   and   ESI   authorities
were   pressuring   to   make   payment   to   them.     The   Division
Bench   of   the   High   Court   vide   order   dated   30.4.2013
therefore directed that status quo be maintained with regard
to the said amount.  

56
44. The   said   Civil   Revision   Petitions   were   finally
heard   and   dismissed   by   the   Division   Bench   of   the   High
Court   on   29.7.2013.   While   dismissing   the   said   Civil
Revision   Petitions,   the   Division   Bench   of   the   High   Court
observed thus:
“10. Under   such   circumstances,   after
the   confirmation   of   sale   and   after   the
issue  of  sale  certificate, when  that  issue
is   not   before   this   Court,   certainly,   we
cannot   entertain   the   request   of   the
learned Senior Counsel appearing for the
petitioners to set aside the sale. Further,
as pointed out earlier, with regard to the
orders   which   are   under   challenge   in
these   Civil   Revision   Petitions,   no
infirmity has been brought to the notice,
of   this   Court.   Consequently,   both   the
Civil   Revision   Petitions   are   dismissed.
Connected   Miscellaneous   Petitions   are
closed. 
Further,   this   Court   is   constrained
to   impose   costs   of   Rs.   5,000/­   on   the
petitioners,   payable   to   the   Chief   Justice
Relief  fund,  far   the   reason   that,   though,
from the very beginning of the argument,
it   was   brought   to   the   notice   of   the
learned Senior Counsel appearing for the
petitioners   that   this   Court   cannot
entertain   any   submission   regarding   the,
alleged   irregularity   or   illegality   in   the
sale   effected   and   this   Court   cannot   set
aside the sale also in the absence of any
challenge   to   the   same,   this   Court   has

57
been   pressurized   by   the   learned   Senior
Counsel   appearing   for   the   petitioners   to
grant   the   relief   of   setting   aside   the
sale   ,and   by   this,   in   the   considered
opinion   of   this   Court,   the   time   of   this
Court has been wasted, Whatever be the
length   of   time   consumed   in   advancing
arguments   with   regard   to   the   relief
sought   in   the   Civil   Revision   Petitions,
certainly, arguments have to be heard by
this   Court,   But,   arguments   at   length
cannot   be   allowed   for   a   relief   which   is
not   sought   in   these   Civil   Revision
Petitions.”
45. It   could   thus   be   seen   that   the   Division   Bench   of
the   High   Court   also   imposed   costs   of   Rs.5,000/­   on   the
petitioners   therein   as   it   was   of   the   view   that   the   learned
counsel for the petitioners therein had exceeded in his limit
while arguing the matter. 
46. Litigation did not stop right there, rather it came
upto this Court by way of Special Leave Petition (Civil) Nos.
28402   and   28403   of   2013.   This   Court   vide   order   dated
7.7.2014   in   the   said   Special   Leave   Petitions,   passed   the
following order:
“Issue   notice   confined   to   the   question   as
to   whether   any   excess   payment   made   by
the   petitioners   is   to   be   refunded   by   the
bank.   We also direct the Debts Recovery
Appellate   Tribunal   to   dispose   of   the
appeal,   M.A.   (S.A.)   No.70/2014,

58
expeditiously  preferably  within a month’s
time.”
47. It could  thus  be seen  that this  Court had  issued
notice   confined   only   to   the   question   as   to   whether   any
excess   payment   made   by   the   petitioners   therein   was   to   be
refunded by the respondent­Bank.  This Court also directed
the   DRAT,   Chennai   to   dispose   of   the   appeal,   M.A.   (S.A.)
No.70/2014, expeditiously preferably within a month’s time.
48. The   said   Special   Leave   Petitions   subsequently
were   permitted   to   be   withdrawn   by   this   Court   vide   order
dated 17.4.2015, which reads thus:
“The special leave petitions are permitted
to be withdrawn.
Since,   the   special   leave   petitions   are
withdrawn,   there   is   no   impediment   for
the Tribunal to pass final orders.”
49. It   appears   that   in   the   meantime   on   21.6.2013
since   the   appellants   and   respondent   Nos.   2   to   4   were
unrepresented,   the   S.A.   No.227   of   2012   came   to   be
dismissed   in   default   by   the   DRT,   Chennai.   An   application
being  M.A. No.112 of  2013 was  preferred  by   the appellants
and respondent Nos. 2 to 4 to recall the said dismissal order
dated   21.6.2013.     The   said   application   was   rejected   by   the

59
DRT, Chennai, vide order  dated 20.9.2013.   The said order
came   to   be   challenged   by   the   appellants   and   respondent
Nos. 2 to 4 before the High Court by filing C.R.P. No.4410 of
2013.  However, the said C.R.P. No.4410 of 2013 came to be
disposed of by the High Court with liberty to the appellants
and respondent Nos. 2 to 4 to approach the DRAT, Chennai.
It   further   appears   that   the   appellants   and   the
respondent  Nos.  2 to  4 approached the  DRAT, Chennai,  by
filing   M.A.   (S.A.)   No.70   of   2014.     The   DRAT,   Chennai,   vide
order dated 10.7.2014 allowed the said M.A. (S.A.) No.70 of
2014 and directed the DRT, Chennai, to restore S.A. No.227
of 2012 and dispose of the same in accordance with law as
expeditiously as possible.
50. It   also   appears   from   the   record   that   there   were
certain   proceedings   initiated   at   the   instance   of   the   auction
purchaser   praying   for   transfer   of   the   proceedings   from   the
DRT­III, Chennai, which was seized of S.A. No.227 of 2012,
which   reached   upto   the   High   Court,   wherein   the   auction
purchaser could not succeed. 
51. It   appears   from   the   record   that   in   the   meantime
the   third   respondent­Shanthi   Sivasamy   filed   I.A.   No.903   of

60
2016   in   S.A.   No.227   of   2012   seeking   refund   of   the   excess
amount   of   Rs.4.48   crore   lying   with   the   respondent­Bank
claiming that she was the owner  of the mortgaged property
situated at  Chrompet, Chennai, that  was sold and that  the
excess   money   lying   with   the   respondent­Bank   belonged   to
her.
52. The third round of litigation begins with the order
passed by DRT, Chennai, dated 25.6.2018 in S.A. No.227 of
2012 in pursuance of the order of the DRAT, Chennai, dated
10.7.2014   restoring   S.A.   No.227   of   2012.   The   relevant
paragraphs   of   the   order   dated   25.6.2018   passed   by   the
DRT, Chennai, in S.A. No.227 of 2012 read thus:
“10.8 From   the   perusal   of   records
and   written   submissions   filed   by   all   the
parties,   It   is   evident   that   the   first
respondent   bank   did   not   follow   the
procedure   as   far   as   the   subject
impugned   sale   notice   is   concerned   as
warranted   under   law   and   it   is   settled
principle   of   law   that   every   notice   of   sale
shall have a distinct cause of action and
hence   requires   the   statutory   compliance
of   Rule   9(1)   of   the   Security   Interest
(Enforcement)   Rules,   2002,   which
mandates   issuance   of   30   days   clear
notice   to   the   borrowers   before   initiating
the   process   of   sale.   As   the   respondent
bank   has   failed   to   adhere   to   the   same,

61
the   sale   notice   dated   9.7.2012
scheduling   the   sale   on   20.7.2012   is
riddled with infirmity and hence is liable
to   be   set   aside.   Accordingly,   owing   to
infirmities the sale notice dated 9.7.2012
is   set   aside,   Consequent   to   which,   the
sale   purported   to   have   been   conducted
and   confirmed   in   favour   of   the   second
respondent over Item 'A' and 'C' schedule
properties is also set aside.
Point 8 (III)
11.0  In the result SA No. 227/2012
is   allowed   setting   aside   the   sale   notice'
dated  9.7.2012 and  the  consequent  sale
of Item 'A' and 'C' schedule properties of
the   subject   impugned   sale   notice   with
costs   of   Rs.∙   50,000   /­   payable   by   the
1st respondent bank to the appellant for
willfully   violating   the   provisions   of   law
and   continuing   their   allegation   on   the
same   ground   for   several   years   without
conceding   to   their   defect   and   correcting
themselves   at   the   first   opportune   time,
This   fact   is   evident,   when   the   same
respondent   bank,   in   the   same   matter,
had   got   issued   yet   another   sale   notice
trying   to   bring   the   Item   'B'   schedule
mentioned   property   of   the   subject
impugned   sale   notice   by   a   sale   notice
dated   27.9.2012   scheduling   the   sale   to
30.10.2012,   which   concludes   that   the
first   respondent   bank   is   very   much
aware  of the  compliance of  provisions of
law,   but   had   willfully,   exhibited   their
disrespect   for   the   same,   owing   to   which
imposition   of   costs   is   necessitated   as   a
deterrent and not to repeat the same. 

62
11. l  Further,   in   view   of   the
foregoing,   the   First   Respondent   bank   is
directed   to   refund   the   amounts   as
received   from   the   2 nd
respondent/auction   purchaser   together
with   interest   @   10%   p.a.   (simple)   from
the   respective   dates   of   receipt   till   the
date of payment in full.
11.2  The further facts of the case is
that   during   the   pendency   of   these
proceedings,   the   appellants   had
augmented   funds   to   the   tune   of   Rs.
5,23,92,946/­   and   remitted   the   same.
Both parties viz., the appellants and the
1 st
  respondent   bank   had   filed   their
calculation   memos   into   this   Tribunal,
where   under   it   has   been   commonly
conceded to  and  accepted that  a sum  of
Rs. 4,48,00,000/­ being the surplus sale
proceeds of 'B' schedule property is lying
with   the   bank   from   the   date   of   deposit
by   the   auction   purchaser   of   item   'B'
schedule   property,   which   was   sold
pursuant   to   the   sale   notice   dated
27.09.2012   scheduling   the   auction   sale
to 30.10.2012, and which sale was never
challenged   and   thus   attained   finality.
Therefore,   the   1 st
  respondent   bank   is
directed   to   refund   the   said   sum   of   Rs.
4,48,00,000/­ (sic however, a sum of Rs.
4,46   crores   is   claimed   by   the   4 th
appellant   in   IA  No.   903/2013)   to   the  4 th
appellant   herein,   who   is   the
owner/mortgagor   of   the   said   Item   'B'
schedule   property   since   that   is   the
property   which   has   been   sold   for
recovering   the   overdue   amounts   after

63
adjusting   the   payments   made   by   the
appellants,   together   with   subsequent
interest   @   10%   p.a.   (simple)   from   the
date   of   receipt   till   the   date   of   actual
payment by the 1 st
 respondent bank.”
53. It   could   thus   be   seen   that   the   DRT,   Chennai,
came   to   the   conclusion   that   the   notice   dated   9.7.2012,
scheduling   the   sale   on   20.7.2012,   was   contrary   to   the
provisions   as   contained   in   Rule   9(1)  of   the   said  Rules,   and
as   such,   was   liable   to   be   set   aside.   Consequently,   the   sale
purported to  have been  conducted and confirmed in  favour
of   the   auction   purchaser   over   Item   ‘A’   and   Item   ‘C’
properties   in   the   Schedule   of   Properties   in   Second   Sale
Notice   dated   9.7.2012   was   also   set   aside.     Vide   the   said
order   dated   25.6.2018,   the   DRT,   Chennai,   directed   the
respondent­Bank   to   refund   the   amounts   as   received   from
the   auction   purchaser   together   with   interest   at   the   rate   of
10%   per   annum.     The   DRT,   Chennai,   also   directed   the
respondent­Bank   to   refund   sum   of   Rs.4.48   crore   with
interest   at   the   rate   of   10%   per   annum   to   respondent   No.3,
who   was   the   owner   and   mortgagor   of   the   property   sold
pursuant to the notice dated 27.9.2012.  While allowing S.A.

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No. 227 of 2012, the DRT, Chennai, had also imposed costs
of Rs.50,000/­ on the respondent­Bank. 
54. Being   aggrieved   thereby,   the   auction   purchaser
as   well   as   the   respondent­Bank   approached   the   DRAT,
Chennai, by filing R.A. (S.A.) No.141 of 2018 and R.A. (S.A.)
No.143   of   2018   respectively.     Vide   common   order   dated
6.9.2019,   the   DRAT,   Chennai,   allowed   the   said   appeals.
The   DRAT,   Chennai,   reversed   the   order   of   the   DRT,
Chennai,   dated   25.6.2018   insofar   as   setting   aside   the   sale
and   imposition   of   costs   is   concerned.     However,   insofar   as
direction to pay amount of Rs.4.48 crore with interest at the
rate of 10% per annum to respondent No.3 is concerned, the
same was maintained. 
55. Being   aggrieved   thereby,   four   writ   petitions   were
filed before the Madras High Court; two writ petitions being
Writ   Petition   Nos.   28034   and   28036   of   2019   were   filed   by
the   appellants   and   two   writ   petitions   being   Writ   Petition
Nos.   30710   and   30712   of   2019   were   filed   by   the   auction
purchaser.  The writ petitions filed by the auction purchaser
was   with   limited   grievance   that   though   he   had   purchased
the   properties,   he   was   deprived   of   the   rent   realised

65
therefrom   since   2012   onwards,   and   therefore,   either   the
borrowers or the respondent­Bank should be directed to pay
him the rent realized from the properties purchased by him
in   the   year   2012   or   in   the   alternative,   to   set   aside   the
auction   and   refund   the   amount   deposited   by   him   with
interest.     Insofar   as   the   present   appellants   are   concerned,
they   were   aggrieved   by   the   finding   of   the   DRAT,   Chennai,
reversing   the   order   passed   by   the   DRT,   Chennai,   setting
aside the sale.  
56. It   will   be   relevant   to   note   that   this   Court   in   the
case of  Mathew Varghese  (supra) itself has held that in the
event   of   any   such   sale   properly   notified   after   giving   a   30
days'   clear   notice   to   the   borrower   does   not   take   place   as
scheduled for the reasons, which are not solely attributable
to the borrower, then the secured creditor cannot effect the
sale   and   he   will   have   to   initiate   the   procedure   de   novo.
Therefore,   the  question,   that   will  have   to   be   considered,  is,
as to whether the sale, which was notified as per the notice
dated   21.1.2012,   could   not   take   place   on   the   date

66
scheduled   in   the   said   notice   for   the   reasons,   which   are
solely attributable to the guarantors or not.  
57. It could be seen that immediately after the notice
was   issued   on   21.1.2012,   the   guarantors   approached   the
DRT,   Chennai,   by   way   of   S.A.   No.69   of   2012.   The
guarantors   gave   an   impression   to   the   DRT,   Chennai,   that
they   can   sell   the   property   within   15   days   and   make   the
payment   of   the   entire   consideration   within   15   days,   and
that the balance amount could be settled within one month.
Acting   on   the   representation   of   the   guarantors ,   the   DRT,
Chennai,   vide   order   dated   27.2.2012   granted   interim   stay
for   a   period   of   30   days,   restraining   the   respondent­Bank
from   proceeding   further,   pursuant   to   the   sale   notice   dated
21.1.2012.   However, this  was subject to  deposit  of 50% of
the   outstanding   amount   within   the   said   period.     It   could
thus   be   seen   that   the   sale   as   per   the   notice   dated
21.1.2012,   which   was   scheduled   to   take   place   on
27.2.2012,   could   not   take   place   on   the   scheduled   date   on
account   of   interim   orders   passed   by   the   DRT,   Chennai,
which were passed on the representation of the guarantors.

67
58. It   is   not   in   dispute   that   notice   dated   21.1.2012
clearly  provided a 30 days’ period as prescribed in the said
Rules.     It   is   also   not   in   dispute   that   as   per   the
representation   made   to   the   DRT,   Chennai,   on   27.2.2012,
the   appellants   did   not   settle   the   entire   amount   within   a
period   of   one   month.     It   appears   that   S.A.   No.69   of   2012
was   pending   till   2.7.2012   and   it   came   to   be   dismissed   on
the   said   date,   i.e.,   2.7.2012.     In   the   meanwhile,   the
appellants had sold the property at Item ‘B’ in the Schedule
of   Properties   in   the   First   Sale   Notice   dated   21.1.2012
through   a   private   treaty   for   an   amount   of   Rs.12.25   crore,
and   the   said   amount   was   deposited   with   the   respondent­
Bank.   However, it is not in dispute that the entire claim of
the   respondent­Bank   was   not   satisfied   till   2.7.2012   on
which   date   the   DRT,   Chennai,   dismissed   S.A.   No.69   of
2012.
59. After dismissal of S.A. No.69 of 2012 on 2.7.2012
by the DRT, Chennai, a fresh notice dated 9.7.2012 (Second
Sale   Notice)   came   to   be   issued   by   the   respondent­Bank   to
the appellants. In the said notice, the Schedule of Properties

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was   the   same   as   that   in   the   First   Sale   Notice   dated
21.1.2012,   except   the   property   at   Item   ‘B’,   which   was   sold
through   a   private   treaty.     Therefore,   in   the   Second   Sale
Notice dated 9.7.2012, the property at Item ‘C’ became Item
‘B’   and   the   property   at   Item   ‘D’   became   Item   ‘C’.     The
amount   claimed   in   the   Second   Sale   Notice   dated   9.7.2012
was Rs.11,99,53,926/­, i.e., the amount claimed in the First
Sale   Notice   dated   21.1.2012   minus   the   amount   realized
from the sale of property at Item ‘B’ through a private treaty.
60. It could thus be seen that the Second Sale Notice
dated   9.7.2012   was   in   continuation   of   the   proceedings   of
the First Sale Notice dated 21.1.2012, which sale could not
be effected only on account of the interim orders passed by
the   DRT,   Chennai,   on   the   representation   made   by   the
appellants and respondent Nos. 2 to 4.   It could further be
seen that even in view of the law laid down by this Court in
the   case   of   Mathew   Varghese   (supra),   since   the   sale
scheduled  on  27.2.2012,  as per  the  First  Sale  Notice  dated
21.1.2012, could not be held due to the reasons attributable
solely   to   the   guarantors,   there   was   no   necessity   of   again

69
following   the   same   procedure   of   providing   a   30   days’   clear
notice.     In   any   case,   the   respondent­Bank   issued   a   fresh
Second   Sale   Notice   on   9.7.2012   to   the   appellants,
scheduling   the   sale   on   20.7.2012.     There   is   a   substantial
distinction of facts in the present case as compared to those
in   the   case   of   Mathew   Varghese   (supra).     In   the   case   of
Mathew   Varghese   (supra)   after   the   dismissal   of   S.A.,   the
respondent­Bank had surreptitiously accepted the tender of
the   auction   purchaser   on   the   very   next   day   of   dismissal   of
S.A.   without   issuing   a   notice   to   the   guarantors/borrowers
and also confirmed the sale, and only after the confirmation
of   sale   and   receipt   of   the   entire   amount,   informed   the
borrowers/guarantors about the sale being confirmed.   It is
not   the   case   here.     In   the   present   case,   after   the   S.A.   was
dismissed on 2.7.2012, the respondent­Bank again issued a
fresh Notice on 9.7.2012 scheduling the sale on 20.7.2012.  
61. The   facts   in   the   case   of   Mathew   Varghese
(supra)   are   also   distinguishable   inasmuch   as   though
between the date of publication of notice in the newspapers
and the date scheduled for sale, a clear 30 days’ period was

70
provided,   but   insofar   as   the   individual   notice   to   the
borrowers/guarantors and the date scheduled for sale, a 30
days’   clear   period   was   not   provided.     And   this   was   with
regard   to   the   very   first   notice.     On   the   aforesaid   premise,
this   Court   in   the   case   of   Mathew   Varghese   (supra)   held
that   the word ‘or’ used in Rule 9 of the said Rules will have
to be read as ‘and’, and that there should be a clear 30 days’
period   between   the   date   of   publication   of   notice   in   the
newspapers   as   well   as   individual   notice   to   the
borrower/guarantor   and   the   date   scheduled   for   sale .
Clearly, in the present case, there has been compliance with
the   same,   insofar   as   the   first   notice   is   concerned,   whereas
in   the   case   of   Mathew   Varghese   (supra),   there   was   no   30
days’ period between individual notice and the date of sale.  
62. The   matter   does   not   rest   at   that.     Immediately
after   the   Second   Sale   Notice   dated   9.7.2012   is   issued,   the
appellants   along   with   respondent   Nos.   2   to   4   filed   S.A.
No.227   of   2012   challenging   the   notice   dated   9.7.2012.
There is some dispute between the parties with regard to the
date   on   which   the   said   S.A.   No.227   of   2012   was   filed.

71
However,   in   the   light   of   the   view   that   we   are   taking,   the
same would not be relevant.  
63. When   the   matter   (S.A.   No.227   of   2012)   came   up
for   hearing   before   the   DRT,   Chennai,   on   24.7.2012,   a
representation   was   made   by   the   appellants   to   the   DRT,
Chennai,   that   they  wanted   some   breathing   time   to   procure
prospective   purchaser   to   clear   the   entire   dues   within   one
month from the said date by selling the remaining property.
The said S.A. No.227 of 2012 thereafter came up for hearing
before   the   DRT,   Chennai,   on   7.8.2012.     On   the   said   date,
the DRT, Chennai, passed an order of interim injunction for
a   period   of   30   days   restraining   the   respondent­Bank   from
giving   effect   to   the   sale   notice   dated   9.7.2012   subject   to
deposit   of   Rs.4.80   crore   within   the   said   period   of   30   days.
The   said   order   dated   7.8.2012   also   made   it   clear   that   on
failure   to   make   such   payment,   the   said   order   would   stand
vacated.  
64. It is not in dispute that in pursuance of the said
order dated 7.8.2012, the appellants have not deposited the
amount   of   Rs.4.80   crore   within   30   days.     It   is   to   be   noted
that the order dated 7.8.2012 was self­operative.  On failure

72
on   the   part   of   the   appellants   to   deposit   the   amount   of
Rs.4.80 crore prior to 7.9.2012, the interim injunction stood
automatically vacated.     It could thus be seen that even on
this   occasion,   the   appellants   had   an   opportunity   for
redemption   of   the   mortgage   and   clearing   their   properties
from   encumbrances.   However,   the   appellants,   even   during
this period, did not avail of the said opportunity.  
65. It   is   to   be   noted   that   in   the   meanwhile,   the
auction   purchaser   had   bid   for   the   properties   at   Items   ‘A’
and   ‘C’   in   the   Schedule   of   Properties   in   the   Second   Sale
Notice dated 9.7.2012 (i.e. the properties at Items ‘A’ and ‘D’
in  the  Schedule of  Properties in  the  First Sale  Notice dated
21.1.2012).   In the said sale, which was held on 20.7.2012,
the auction purchaser was the successful bidder having bid
for   Rs.1,45,66,000/­   and   Rs.3,40,55,000/­   respectively,   in
all totaling to Rs.4,86,21,000/­. Upon payment of the entire
amount,   the   sale   was   confirmed   on   21.7.2012.     Not   only
that,   the   sale   was   duly   registered   on   14.9.2012   after   the
auction   purchaser   had   spent   a   sum   of   Rs.38,89,880/­
towards the registration charges.   It is to be noted that the

73
appellants   instead   of   complying   with   the   directions,   had
filed   I.A.   No.437   of   2012   in   S.A.   No.227   of   2012   seeking
certain   directions   with   regard   to   deposit   of   the   amount   in
some   other   account.     The   DRT,   Chennai,   vide   order   dated
12.9.2012,   dismissed   the   said   I.A.   No.437   of   2012,   and
thereby,   granted   liberty   to   the   respondent­Bank   to   proceed
with the sale.   It is only thereafter, that the sale came to be
registered in favour of the auction purchaser on 14.9.2012.
It is, thus, clear that the sale came to be registered in favour
of   the   auction   purchaser   in   view   of   the   liberty   granted   by
the DRT, Chennai, in its order dated 12.9.2012.  
66. Even   thereafter,   the   guarantors   continued   with
their effort to prolong the proceedings.  Various orders came
to   be   passed  in   the   Civil   Revision   Petitions,  which   we   have
already referred to hereinabove.  In one of the orders passed
by   the   High   Court,   i.e.,   the   order   dated   30.4.2013,   the
appellants   were   also   directed   to   deposit   the   amount
collected   by   way   of   rent   before   the   DRT,   Chennai.     Finally,
finding   that   after   the   confirmation   of   sale   and   after   the
issuance   of   the   sale   certificate,   the   Court   could   not

74
interfere,   the   said   Civil   Revision   Petitions   came   to   be
dismissed on 29.7.2013.  
67. Being   aggrieved   thereby,   the   appellants
approached   this   Court   by   way   of   Special   Leave   Petition
(Civil)   Nos.   28402   and   28403   of   2013,   wherein   this   Court
issued   notice   vide   order   dated   7.7.2014.     The   said   Special
Leave   Petitions   subsequently   were   permitted   to   be
withdrawn   by   this   Court   vide   order   dated   17.4.2015.
However, in view of the observations made by this Court in
its order dated 7.7.2014, the M.A. No.70 of 2014, which was
filed before the DRAT, Chennai, challenging the order of the
DRT,   Chennai   dated   20.9.2013   refusing   to   restore   the   S.A.
No.227 of 2012, which was dismissed in default, was heard
on   10.7.2014   and   the   S.A.   No.227   of   2012   was   restored   to
the   file.   As   already   pointed   out   hereinabove,   the   said   S.A.
No.227   of   2012   was   allowed   by   the   DRT,   Chennai,   vide
order   dated   25.6.2018,   which   order   was   reversed   by   the
DRAT, Chennai, vide order dated 6.9.2019, and the order of
the DRAT, Chennai, dated 6.9.2019 was maintained by the

75
High   Court   vide   the   impugned   judgment   and   order   dated
18.11.2019.  
68. It   could   thus   be   seen   that   the   appellants   had
more than one opportunity for  redemption of the mortgage.
However, from their conduct, it appears that they were only
interested   in   protracting   the   litigation.     It   is   the   appellants
at   whose   intervention   and   on   whose   incorrect
representation, the sale, which was scheduled to be held on
27.2.2012   in   pursuance   of   the   notice   dated   21.1.2012,
could not be held.   Even after the dismissal of S.A. No.69 of
2012   on   2.7.2012,   the   respondent­Bank   again   issued   a
Second   Sale   Notice   on   9.7.2012   scheduling   the   sale   on
20.7.2012   in   which   the   auction   purchaser   emerged   as   a
successful   bidder.     It   is   thus   clear   that   the   appellants   had
enough time from 21.1.2012 till 2.7.2012 for redemption of
their   mortgaged   properties.     However,   they   did   not   avail   of
that opportunity.  Even after the auction purchaser emerged
successful   in   the   bid   and   had   paid   the   bid   money,   an
opportunity   was   given   by   the   DRT,   Chennai,   vide   order
dated   7.8.2012,   to   the   appellants   to   deposit   the   amount   of

76
Rs.4.80   crore   within   one   month.   However,   without
complying   with   the   same,   the   appellants   continued   with
their   dilatory   tactics   by   filing   an   application   being   I.A.
No.437   of   2012   in   S.A.   No.227   of   2012.       Even   thereafter,
they continued with the proceedings before the High Court,
wherein certain interim orders were passed, and finally, the
High Court, finding that in view of the sale being confirmed
and   the   sale   being   registered   no   interference   could   be
warranted, dismissed the Civil Revision Petitions. Thereafter
again,   they   approached   this   Court   by   way   of   Special   Leave
Petitions,   which   were   subsequently   withdrawn.         Ideally,
the litigation ought to have stopped at least at that stage.  
69. However,   after   the   M.A.   No.70   of   2014   was
allowed   and   the   S.A.   No.227   of   2012   was   restored,   it   gave
fresh lease to the litigation, wherein the S.A. No.227 of 2012
was   allowed   by   the   DRT,   Chennai.     The   order   of   the   DRT,
Chennai, was reversed by the DRAT, Chennai, which was in
turn upheld by the High Court vide the impugned judgment.
70. As   we   have   already   discussed   hereinabove,   the
facts in the case of  Mathew Varghese  (supra) and the facts
in the present case are totally different. In any case, in view

77
of   the   observations   made   in   paragraph   53   of   the   judgment
of   this   Court   in   the   case   of   Mathew   Varghese   (supra),   we
are   of   the   view   that   since   the   sale   scheduled   on   27.2.2012
in   pursuance   to   the   notice   dated   21.1.2012   could   not   be
held   on   account   of   the   reasons   solely   attributable   to   the
appellants/guarantors, there was no necessity to provide 30
days’   period   in   the   Second   Sale   Notice   dated   9.7.2012,
which   was   in   continuation   of   the   First   Sale   Notice   dated
21.1.2012.
71. Insofar as the reliance placed on the judgment of
this Court in the case of   J. Rajiv Subramaniyan  (supra) is
concerned, the said judgment relies on the judgment of this
Court   in   the   case   of   Mathew   Varghese   (supra) .     However,
on   facts,   the   issue   in   the   said   case   was   different.     In   the
said   case,   the   property   was   sold   by   the   respondent­Bank
through a private treaty.   This Court found that there were
no   terms   settled   in   writing   between   the   borrowers   and   the
Bank   that   the   sale   can   be   effected   by   a   private   treaty,   and
as such, it was in violation of the provisions of Rule 8 (8) of
the said Rules.  

78
72. In   the   case   of   Vasu   P.   Shetty   (supra),   after   the
first notice was issued, the same was challenged before the
High   Court.     Though   the   High   Court   did   not   grant   stay
against   the   scheduled   auction,   it   granted   stay   against   the
confirmation of sale.   It was the Bank’s case therein that in
view   of   the   partial   stay   order   by   the   High   Court,   nobody
came forward to participate in the auction and the exercise
went   into   futility.     After   dismissal   of   the   writ   petition,   it
came   to   the   notice   of   the   Bank   that   there   were   other
encumbrances   on   the   property,   which   required   the   reserve
price   to   be   changed.   Thereafter,   there   were   proposals
exchanged between the Bank and the borrower with regard
to One Time Settlement (‘OTS’). On failure to arrive at OTS,
a   fresh   notice   came   to   be   issued.     In   the   said   notice,   the
mandatory   period   of   30   days   from   the   date   of   publication
was   not   provided.     The   matter   was   proceeded   in   this
background.  
73. The   present   case   is   totally   on   different   facts.
Though   the   appellants   had   ample   opportunities   for

79
redemption   of   mortgage,   they   failed   to   avail   of   the   said
opportunities.  
74. Even   if   viewed   from   another   angle,   the   claim   of
the   appellants   is   not   sustainable.   The   two­judges   Bench   of
this   Court   in   the   case   of   Mathew   Varghese   (supra) ,   has
heavily relied on the judgment of the three­judges Bench of
this Court in the case of   Narandas Karsondas   (supra).   It
has   been   held   by   this   Court   in   the   case   of   Narandas
Karsondas   (supra),   that   the   right   of   redemption,   which   is
embodied   in   Section   60   of   the   Transfer   of   Property   Act,   is
available   to   the   mortgagor   unless   it   has   been   extinguished
by   the   act   of   parties.     It   has   been   held,   that   only   on
execution   of   the   conveyance   and   registration   of   transfer   of
the   mortgagor’s   interest   by   registered   instrument,   that   the
mortgagor’s right of redemption will be extinguished.  In the
present   case,   the   DRT,   Chennai,   vide   order   dated
12.9.2012,   had   granted   liberty   to   the   respondent­Bank   to
proceed   with   the   sale.     The   sale   came   to   be   registered   in
favour of the auction purchaser on 14.9.2012.   As such, in
any   case,   the   mortgagor’s   right   of   redemption   stood

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extinguished   on   14.9.2012.     The   Division   Bench   of   the
Madras   High   Court   had,   therefore,   rightly   dismissed   the
Civil   Revision   Petitions,   vide   order   dated   29.7.2013.     The
said order of the Madras High Court dated 29.7.2013 came
to   be   challenged   before   this   Court   by   way   of   Special   Leave
Petitions.  This Court, vide order dated 7.7.2014, had issued
limited notice in the said Special Leave Petitions.   However,
vide order dated 17.4.2015, the said Special Leave Petitions
came to be dismissed as withdrawn.  It is in the third round
of litigation, that the DRT, Chennai, allowed the S.A. No.227
of   2012,   vide   order   dated   25.6.2018.     Applying   the   law,   as
laid in the case of  Narandas Karsondas  (supra) and in the
case of   Mathew Varghese   (supra) , the order passed by the
DRT,   Chennai,   dated   25.6.2018,   was   not   sustainable
insofar   as   setting   aside   the   sale   notice   dated   9.7.2012   and
the   consequent   sale.     The   DRAT,   Chennai,   has   rightly
reversed   the   same,   which   has   been   upheld   by   the   High
Court vide the impugned judgment.  
75. It   is   further   relevant   to   note   that,   this   Court   in
the   case   of   Dwarika   Prasad   (supra)   and   in   the   case   of

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Shakeena   (supra) held that the right to redemption stands
extinguished on the sale certificate getting registered. 
76. We   will   have   to   take   into   consideration   the
purpose with which the SARFAESI Act came to be enacted.
Unlike   international   banks,   the   banks   and   financial
institutions  in   India  did  not   have  power  to   take   possession
of securities and sell them.  It was, therefore, noticed, that it
had resulted in slow pace of recovery of defaulting loans and
mounting   levels   of   non­performing   assets   of   banks   and
financial   institutions.     It   was   also   noticed   that   there   were
certain areas in which the banking and financial sector did
not   have   a   level   playing   field   as   compared   to   other
participants   in   the   financial   markets   in   the   world.     It   was
further noticed that the existing legal framework relating to
commercial   transactions   had   not   kept   pace   with   the
changing commercial practices and financial sector reforms.
As   such,   the   SARFAESI   Act   was   enacted   with   the   purpose
for   securitization   and   empowering   banks   and   financial
institutions   to   take   possession   of   the   securities   and   to   sell
them without the intervention of the Court.  

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77. If   we   look   at   the   facts   in   the   present   case,   it
would show that, every attempt has been made to frustrate
the   purpose   of   the   SARFAESI   Act.     The   respondent­Bank
was required to indulge in three rounds of litigations, out of
which, the two have reached upto this Court.  
78. Though   the   auction   purchaser   emerged   as   the
successful   bidder,   in   the   bids   held   on   20.7.2012,   and
though   the   sale   was   confirmed   on   21.7.2012,   and   though
the sale has been registered in his favour on 14.9.2012, for
a period of last 9 years, he could not enjoy the fruits of the
said   sale.       Not   only   that,   but   the   appellants   continued   to
enjoy   the   rent   of   the   properties,   the   ownership   of   which
vests in the auction purchaser.   
79. In   that   view   of   the   matter,   we   do   not   find   any
merit   insofar  as   the  challenge  to   the   notice   dated   9.7.2012
is concerned. 
80. That leaves us with the other issue raised by Shri
K.V.   Viswanathan,   learned   Senior   Counsel.   Shri
Viswanathan   submitted   that   the   amount   received   by   the
respondent­Bank   was   on   account   of   sale   of   all   the   four
properties   mentioned   in   the   First   Sale   Notice   dated

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21.1.2012, and  as such, the direction  to  pay  an amount  of
Rs.4.48   crore   with   interest   only   to   respondent   No.3   is   not
sustainable.  
81. We   find   no   merit   in   this   submission.     The
property   at   Item   ‘B’   of   the   Schedule   of   Properties   in   First
Sale   Notice   dated   21.1.2012   was   sold   through   a   private
treaty   during   the   pendency   of   the   first   round   of   litigation.
The   properties   at   Item   ‘A’   and   Item   ‘D’   of   the   Schedule   of
Properties   in   First   Sale   Notice   dated   21.1.2012   came   to   be
sold   in   pursuance   of   the   sale   taken   place   on   20.7.2012,
which   was   in   pursuance   of   the   Second   Sale   Notice   dated
9.7.2012.   As  such, the  only   property  left was  the property
at   Item   ‘C’   belonging   to   the   respondent   No.3   in   respect   of
which a third notice dated 27.9.2012 came to be issued.   It
is   only   in   pursuance   of   the   said   notice   dated   27.9.2012,
that the property at Item ‘C’ was sold by a private treaty to
M/s. Redbrick Realtors Private Limited.  As such, the excess
amount,   which   remained   with   the   respondent­Bank,   has
rightly   been   directed   to   be   paid   to   respondent   No.3   by   the

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DRT,  Chennai,  which   has  been  concurrently  upheld  by   the
DRAT, Chennai, as well as the High Court.  
82. Even on equitable grounds, rest of the guarantors
are either the Promoters/Directors or their family members,
it   is   only   the   respondent   No.3,   who   happens   to   be   outside
the family and is only connected on account of her daughter
being   married   in   the   family   of   one   of   the
Promoters/Directors.  As such, on equitable grounds, we do
not find any reason to interfere with the said direction. 
83. The   appeals   are   therefore   found   to   be   without
merit,   and   as   such,   are   dismissed   with   costs.     The   appel ­
lants   shall   pay   the   costs   quantified   at   Rs.1,00,000/­   (Ru ­
pees   One   lakh   only)   payable   each   to   the   respondent­Bank
and   the   auction   purchaser.     Pending   applications,   if   any,
shall also stand disposed of.  
84. While dismissing the appeals, taking into consid ­
eration the fact that, though the auction purchaser has be ­
come the owner of the properties at Items ‘A’ and ‘D’ of the
Schedule   of   Properties   in   the   First   Sale   Notice   dated
21.1.2012,   he   could   not   enjoy   the   fruits   of   the   same,   and

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that   the  appellants   have  continued   to   enjoy  the   rent  of   the
properties, we find that this is a fit case wherein the powers
under Article 142 of the Constitution of India need to be in ­
voked.  
85. We,   therefore,   direct   the   appellants   to   handover
the   vacant   and   peaceful   possession   of   the   properties   at
Items   ‘A’   and   ‘D’   of   the   Schedule   of   Properties   in   the   First
Sale   Notice   dated   21.1.2012,   within   a   period   of   8   weeks
from   the   date   of   this   judgment   to   the   auction   purchaser.
We further direct the appellants to pay the rent, received by
them,   from   the   said   properties,   since   15.9.2012   till   date,
within a period of three months from  the  date of  this judg ­
ment.  However, in the facts of this case, we do not intend to
pass any orders with regard to interest on the said amount. 
…….…....................., J.
                             [L. NAGESWARA RAO]
…….…....................., J.
                                                 [B.R. GAVAI]
…….…....................., J.
                                            [B.V. NAGARATHNA]
NEW DELHI;
SEPTEMBER 23, 2021