The Supreme Court has ruled that a borrower’s right to redeem a mortgaged property expires as soon as a notice for its sale is published, in accordance with Rule 9(1) of the Security Interest (Enforcement) Rules, 2002.
Prior to the 2016 amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), the borrower had the option to redeem the property until its sale or transfer. However, the 2016 revision to Section 13(8) now limits the redemption right to the period before the sale notice is issued.
The ruling came while the Court overturned a judgment by the Delhi High Court that had annulled an auction sale of a secured asset. Justice BV Nagarathna and Justice NK Singh noted that the borrower had been provided with sufficient opportunities to settle outstanding dues but failed to do so. The Court emphasized that redemption rights are not limitless.
Arguing on behalf of the borrower, the counsel insisted on the right to redeem the property upon payment of dues. However, the Court clarified that such a right is constrained by statutory limitations, which now specifically terminate once the sale notice is published.
The case, titled Sanjay Sharma v. Kotak Mahindra Bank Ltd., underscores the importance of adhering to timelines and statutory rules in the enforcement of security interests.
