By: Shaveer Ahmed
Advocate – On – Record, Supreme Court of India
09th September, 2025
Bob Marley’s iconic “Redemption Song” speaks of freedom and reclaiming what is lost, a theme that resonates deeply with the legal idea of a borrower’s right to redeem mortgaged property. Yet, under the SARFAESI Act, this redemption song now plays to a different beat. Before the 2016 amendment to Section 13(8), borrowers could exercise their right of redemption almost until the very end of the sale process. But with the amendment, the tune was cut short: the right now ends the moment an auction notice is published. This article unpacks how the Supreme Court in Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. & Ors[1] interpreted this shift and what it means for borrowers and banks alike.
In this significant ruling the Supreme Court of India delved deep into the tension between borrowers’ rights and banks’ enforcement powers under the SARFAESI Act. At the heart of the dispute lay the borrower’s right to redeem mortgaged property and whether that right survives once a public auction concludes, especially after the 2016 amendment to Section 13(8) of the SARFAESI Act.
Background: The Redemption Dilemma
The case arose after Bafna Motors defaulted on a ₹100 crore loan secured by a mortgage. The Union Bank of India conducted multiple failed auctions before finally accepting a bid from Celir LLP for ₹105.05 crore. After depositing the full amount, Celir awaited the sale certificate.
However, before the certificate could be issued, the borrower approached the High Court with an offer of ₹129 crore, seeking to redeem the property. The High Court allowed the redemption, holding that the borrower’s rights were still intact. Celir, the auction purchaser, approached the Supreme Court.
Section 13(8), SARFAESI Act – Then and Now
The core of the dispute lies in the interpretation of Section 13(8), which regulates the borrower’s right to prevent the sale of mortgaged property by clearing dues.
Pre-Amendment Position (Before 2016 Amendment):
Before the 2016 amendment, Section 13(8) allowed borrowers to halt a sale process at “any time before the date fixed for sale or transfer” of the secured asset. Courts had interpreted this to mean that redemption rights existed until the actual completion of sale, i.e., upon execution and registration of the sale certificate.
This position was fortified in:
Narandas Karsondas v. S.A. Kamtam[2]
Where the Supreme Court underscored that the mortgagor’s right of redemption under Section 60 of the Transfer of Property Act, 1882, remains intact until the actual transfer of ownership through a registered sale deed. The Court held that the mere execution of a contract for sale, acceptance of an offer, or even delivery of possession does not extinguish the mortgagor’s right. Redemption, being a statutory and equitable right, can only be foreclosed by a completed sale—not by an intention to sell.
Mathew Varghese v. M. Amritha Kumar[3]
The Supreme Court held that even under the SARFAESI Act, a borrower still has the right to redeem the mortgaged property after an auction, as long as the sale is not yet completed by properly following Rules 8 and 9 of the SARFAESI Rules. The Court made it clear that until a valid sale certificate is issued, the borrower’s right to reclaim the property by paying off the dues remains. It also said that any procedural lapses in the auction process cannot take away this right. This decision reaffirmed that the SARFAESI Act, as it then stood, did not exclude the applicability of Section 60 of the TPA and that procedural irregularities in auction sales would not defeat a borrower’s right to reclaim the property by clearing dues
Both judgments reaffirmed that under Section 60 of the Transfer of Property Act, 1882, a mortgagor retains the right to redeem until the title is actually transferred. Also before the 2016 amendment to Section 13(8) of the SARFAESI Act, courts read Section 60 TPA and SARFAESI harmoniously.
Post-Amendment Position (After 2016 Amendment):
After the amendment which came into effect on 1 September 2016, Section 13(8) was reworded to mandate that a borrower must clear all dues before the publication of the auction or sale notice. The critical shift lies in this earlier cut-off point, which effectively advances the deadline for redemption to a stage prior to the initiation of the sale process. As clarified by the Supreme Court, this amendment restricts the application of Section 60 of the Transfer of Property Act, which earlier allowed redemption until completion of sale. Post-amendment, SARFAESI prevails over Section 60 TPA in case of any inconsistency, thereby curtailing the borrower’s right to redeem beyond the point of notice publication.
A quick comparison of redemption rights under the SARFAESI regime:
|
Aspect |
Pre-Amendment Section 13(8) |
Post-Amendment Section 13(8) |
|
Triggering Event |
Dues must be tendered before the date fixed for sale or transfer. |
Dues must be tendered before the date of publication of notice for public auction or inviting quotations/tenders. |
|
Effect on Sale/Transfer (Clause i) |
If dues are paid before the date fixed for sale/transfer, the secured asset shall not be sold or transferred. |
If dues are paid before publication of notice, the secured assets shall not be transferred by way of lease, assignment, or sale. |
|
Further Action by Bank (Clause ii) |
No express clause; but implied that no further steps can be taken once dues are paid before the sale date. |
If any step has already been taken for transfer before such payment, no further steps shall be taken by the secured creditor for lease/assignment/sale. |
|
Cut-off for Borrower’s Redemption |
Borrower can redeem the secured asset up to the date fixed for sale. |
Borrower can redeem the secured asset only until the publication of the sale/auction notice. Post-publication, the right to redeem is extinguished. |
|
Nature of Change |
Allowed redemption much closer to the actual sale, often until just before execution. |
Introduced a stricter cut-off, moving the last opportunity for redemption much earlier in the timeline, i.e., before notice publication — bringing more certainty to auction sales. |
|
Impact on Auction Purchasers |
Higher risk of disruption even after bidding, as borrower could redeem before final transfer. |
Greater protection for auction purchasers, as redemption is barred once public notice is issued — enhancing finality and reliability of auctions. |
The Supreme Court’s Verdict in Celir LLP:
In the 2023 decision, the Supreme Court sided with the auction purchaser. It held: The borrower’s right to redeem under the SARFAESI Act must now be exercised before publication of the auction notice.Once the auction has been conducted and a valid sale has been confirmed, the borrower’s right stands extinguished. Equitable considerations cannot override statutory procedures. The SARFAESI mechanism is meant to provide certainty and finality to banks and auction participants.
The court also distinguished earlier precedents (Mathew Varghese, Narandas Karsondas) on the ground that those were based on the pre-amendment legal framework and cannot govern post-2016 cases while also rejecting the reasoning of the Telangana High Court in Amme Srisailam v. Union Bank of India (2022) [4] and earlier in Concern Readymix (2018)[5] which held that Section 60 of the Transfer of Property Act continues to operate alongside Section 13(8), allowing redemption until the issuance of the sale certificate.
Distinction Between Borrower’s and Bank’s Rights
Another critical point addressed was whether a bank can retract a confirmed auction in favour of a more lucrative settlement from the borrower.
The Supreme Court answered no. Once sale is confirmed (under Rule 9(2) of the SARFAESI Rules), the bank is duty-bound to proceed with issuing the sale certificate under Rule 9(6) it cannot, at that stage, accept a private offer from the borrower.
Conclusion: Redemption Rights Narrowed, Certainty Prioritized
The Supreme Court has now provided a clear bright-line rule:
Under the post-amendment regime of Section 13(8), the right to redeem ends the moment the notice for public auction is published. The judgment in Celir LLP crystallizes a modern, commercial interpretation of the SARFAESI Act. This decision also underscores the supremacy of special statutes like SARFAESI over general law principles where the two are in conflict. Borrowers must now act with urgency and cannot wait for the hammer to fall before seeking to redeem.
[1] 2023 SCC OnLine SC 1209
[2](1977) 3 SCC 247
[3] (2014) 5 SCC 610
[4]2022 SCC OnLine AP 3484
[5]2018 SCC OnLine Hyd 783