Supreme Court of India · 21 September 2023
CELIR LLP v. Bafna Motors (Mumbai) Pvt Ltd
2023 INSC 838
Court
Supreme Court of India
Bench
Division Bench
Date
21 September 2023
Citation
2023 INSC 838
Background & Facts
CELIR LLP v. Bafna Motors (Mumbai) Pvt Ltd is a 2023 Supreme Court judgment that settles when the borrower's right of redemption of a secured asset comes to an end under the post-2016 Section 13(8) of the SARFAESI Act, and the extent to which a confirmed SARFAESI sale should be protected from interference. Bafna Motors (Mumbai) Pvt Ltd had availed substantial credit facilities and defaulted. The secured creditor proceeded with enforcement under the SARFAESI Act and put the secured asset to auction, with an auction sale notice published under the SARFAESI Rules. CELIR LLP emerged as the highest bidder and successful auction purchaser.
After the auction notice had been published and the auction held in favour of CELIR LLP, the borrower sought to redeem the asset and pursued proceedings to reverse the sale, ultimately obtaining relief from the High Court in exercise of its jurisdiction under Article 226 of the Constitution. CELIR LLP, the confirmed auction purchaser, appealed to the Supreme Court contending that the borrower's right of redemption had already stood extinguished and that the confirmed sale ought not to have been defeated.
The case is of practical importance because it fixes the precise statutory moment at which the borrower can no longer redeem the secured asset under the amended Section 13(8). That moment determines the certainty of title available to auction purchasers and, in turn, market confidence in SARFAESI enforcement and the prices bid at such auctions.
Key Issues Before the Court
Holdings of the Court
Holding 1 — Redemption Ends on Publication of the Auction Notice
The Supreme Court held that under the post-2016 Section 13(8) of the SARFAESI Act, the borrower's right of redemption of the mortgaged or secured asset stands extinguished upon publication of the auction or sale notice under the SARFAESI Rules. From the moment the auction notice is published, the borrower can no longer redeem the secured asset by tendering the outstanding dues. This is a deliberate departure from the earlier statutory scheme.
Holding 2 — Departure From the Pre-2016 Position and Section 60 TPA
The Court contrasted the amended provision with the pre-2016 position. Earlier, the right of redemption was understood to continue until registration of the sale, in line with the equity of redemption recognised under Section 60 of the Transfer of Property Act. The 2016 amendment to Section 13(8) advanced the cut-off: redemption now ends on publication of the auction notice, not on registration or transfer of the secured asset. The earlier, more generous window of redemption no longer applies to SARFAESI enforcement.
Holding 3 — No Redemption by Belated Tender After the Notice
Because the right of redemption is extinguished on publication of the auction notice, the Court held that the borrower cannot defeat the sale by offering to pay the dues after that point. A belated tender, made once the redemption right has ended, does not entitle the borrower to recover the secured asset from the auction purchaser. The certainty introduced by the amended Section 13(8) cannot be undone by a late offer to settle.
Holding 4 — Article 226 Should Not Defeat a Confirmed SARFAESI Sale
The Court held that the rights of the auction purchaser are entitled to protection, and that High Courts should not exercise their writ jurisdiction under Article 226 of the Constitution to defeat a confirmed SARFAESI sale. Where the redemption right had already been extinguished on publication of the auction notice, the High Court ought not to have unsettled the confirmed sale in favour of the borrower.
Practical Implications for Creditors, Borrowers & Auction Purchasers
CELIR LLP v. Bafna Motors fixes a clear, early cut-off for redemption under the amended Section 13(8): publication of the auction sale notice. Secured creditors gain certainty that, once the notice is validly published, the borrower cannot frustrate the auction by a later tender of dues, and the rights of the successful auction purchaser are protected. This advances confidence in SARFAESI auctions and the prices bid at them.
For borrowers, the practical consequence is that the window to redeem the secured asset is narrower than under the pre-2016 position. A borrower who wishes to retain the asset must redeem before the auction notice is published — not at the later stage of registration of sale, as Section 60 of the Transfer of Property Act might once have suggested. After the notice is published, the redemption right is gone, and a writ petition under Article 226 should not be expected to unsettle a confirmed sale.
Relevant Statutory Provisions
Practical Application Note
Whether you are a bank conducting a SARFAESI auction, an investor considering a bid, or a borrower whose secured asset is being auctioned, the CELIR LLP v. Bafna Motors ruling defines when the right of redemption ends. Under the post-2016 Section 13(8), borrowers must redeem before the auction notice is published; after that, a confirmed sale is protected. Our partner-led team advises on all aspects of SARFAESI enforcement — from issuance of Section 13(2) notices to applications before the DRT. This note is general legal information, not legal advice; outcomes turn on the specific facts of each matter.