IN THE HIGH COURT OF ANDHRA PRADESH :

AT AMARAVATI

***

Writ Petition No.15580 of 2022

Between:

1) M/s.Moonlight Poultry Farm, Rep. by its Proprietor

Mrs. Khazi Rasheeda, W/o.Syed Habeebullah, age

about 58 years, occupation - Proprietor, R/o.D.No.

3-19-6, Railway Station Road, Hindupur, Anan tapur

District, Andhra Pradesh and Two others.

…. Petitioners

And

1) The Union Bank of India, rep. by its Chief General

Manager Zonal Office, D.No.32-9-17, 3

rd Floor, Madhu

Mahalaxmi Chambers, Madhu Gardens,

Mogalrajpuram, Vijayawada, Andhra Pradesh & Three

others.

….Respondents.

Writ Petition No.15632 of 2022

Between:

1) M/s.Moonlight Poultry Farm, Rep. by its Proprietor

Mrs. Khazi Rasheeda, W/o.Syed Habeebullah, age

about 58 years, occupation - Proprietor, R/o.D.No.

3-19-6, Railway Station Road, Hindupur, Anantapur

District, Andhra Pradesh and Two others.

…. Petitioners

And

1) The Union Bank of India, rep. by its Chief General

Manager Zonal Office, D.No.32-9-17, 3

rd Floor, Madhu

Mahalaxmi Chambers, Madhu Gardens,

Mogalrajpuram, Vijayawada, Andhra Pradesh & Four

others.

….Respondents.

Writ Petition No.23932 of 2022

Between:

1) M/s.Moonlight Poultry Farm, Rep. by its Proprietor

Mrs. Khazi Rasheeda, W/o.Syed Habeebullah, age

about 58 years, occupation - Proprietor, R/o.D.No.

3-19-6, Railway Station Road, Hindupur, Anantapur

District, Andhra Pradesh and Two others.

….Petitioners

And

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1) The Union Bank of India, rep. by its Chief General

Manager Zonal Office, D.No.32-9-17, 3

rd Floor, Madhu

Mahalaxmi Chambers, Madhu Gardens,

Mogalrajpuram, Vijayawada, Andhra Pradesh & Four

others.

….Respondents.

Date of Judgment pronounced on : 26.08.2022

THE HON’BLE SRI JUSTICE C. PRAVEEN KUMAR

AND

THE HON’BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

1. Whether Reporters of Local newspapers

may be allowed to see the judgments? : Yes/No

2. Whether the copies of judgment may be marked

to Law Reporters/Journals : Yes/No

3. Whether the Lordship wishes to see the fair copy : Yes/No

of the Judgment?

_______________________________

JUSTICE C. PRAVEEN KUMAR

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* THE HON’BLE SRI JUSTICE C. PRAVEEN KUMAR

AND

THE HON’BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

+ Writ Petition No.15580 of 2022

% 26.08.2022

Between:

# 1) M/s.Moonlight Poultry Farm, Rep. by its Proprietor Mrs.

Khazi Rasheeda, W/o.Syed Habeebullah, age about 58

years, occupation- Proprietor, R/o.D.No.3-19-6, Railway

Station Road, Hindupur, Anantapur District, Andhra

Pradesh and Two others.

…. Petitioners

And

$ 1) The Union Bank of India, rep. by its Chief General

Manager Zonal Office, D.No.32-9-17, 3

rd Floor, Madhu

Mahalaxmi Chambers, Madhu Gardens,

Mogalrajpuram, Vijayawada, Andhra Pradesh & Three

others.

….Respondents.

Writ Petition No.15632 of 2022

Between:

# 1) M/s.Moonlight Poultry Farm, Rep. by its Proprietor Mrs.

Khazi Rasheeda, W/o.Syed Habeebullah, age about 58

years, occupation- Proprietor, R/o.D.No.3-19-6, Railway

Station Road, Hindupur, Anantapur District, Andhra

Pradesh and Two others.

…. Petitioners

And

$ 1) The Union Bank of India, rep. by its Ch ief General

Manager Zonal Office, D.No.32-9-17, 3

rd Floor, Madhu

Mahalaxmi Chambers, Madhu Gardens,

Mogalrajpuram, Vijayawada, Andhra Pradesh & Four

others.

….Respondents.

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Writ Petition No.23932 of 2022

Between:

# 1) M/s.Moonlight Poultry Farm, Rep. by its Proprietor Mrs.

Khazi Rasheeda, W/o.Syed Habeebullah, age about 58

years, occupation- Proprietor, R/o.D.No.3-19-6, Railway

Station Road, Hindupur, Anantapur District, Andhra

Pradesh and Two others.

….Petitioners

And

$ 1) The Union Bank of India, rep. by its Chief General

Manager Zonal Office, D.No.32-9-17, 3

rd Floor, Madhu

Mahalaxmi Chambers, Madhu Gardens,

Mogalrajpuram, Vijayawada, Andhra Pradesh & Four

others.

….Respondents.

! Counsel for the Petitioner(s) :1) Sri Mirza Nisar Ahmed Baig

Nizami

Counsel for the Respondents : 1) Ms. V. Dyumani, learned

Standing Counsel for the

Respondent/Bank.

2) Sri Sasanka Bhuvanagiri,

Learned counsel for the

Auction Purchaser.

<Gist :

>Head Note:

? Cases referred:

1)(2014) 5 SCC 610

2) 2019 (1) ALT 698

3) AIR 2022 Punjab and Haryana 23

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THE HON’BLE SRI JUSTICE C. PRAVEEN KUMAR

AND

THE HON’BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

Writ Petition Nos.15580, 15632 & 23932 of 2022

COMMON ORDER:- (per the Hon’ble Sri Justice C. Praveen Kumar)

As these three writ petitions are interconnected, the

same are disposed of by this common order:-

2. Heard Sri Mirza Nisar Ahmed Baig Nizami, learned

counsel for the petitioners, Ms. V. Dyumani, learned

Standing Counsel for the respondent/bank and Sri Sasanka

Bhuvanagiri, learned counsel for the auction purchaser.

3. W.P.No.15580 of 2022 came to be filed to declare the

e-auction dated 24.02.2022, in respect of non-agricultural

land admeasuring Ac.17.56 Cents in Survey Nos.1.1, 1.3, 2.1

& 10.1 situated at Mydgolam Village, Lepakshi Mandal,

Hindupur, for recovery of Rs.2,45,86,880.66 ps., as contrary

to the orders passed in W.P.No.3988 of 2022 and to declare

the action of the fourth respondent in issuing the undated

Notice Memo for execution of warrant as against Section

13(8) of Securitisation and Reconstruction of Financial Assets

and Enforcement of Security Interest Act, 2002 [for short,

“SARFAESI Act”] as bad in law.

4. W.P.No.15632 of 2022 came to be filed to declare the

action of respondent nos.1 to 4 in issuing the Sale

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Confirmation Letter dated 24.05.2022 pursuant to e-auction

dated 24.02.2022 with respect to above land as illegal.

5. W.P.No.23932 of 2020 is filed questioning the action of

the respondents in issuing Sale Certificate dated 02.06.2022,

in favour of fifth respondent therein in respect of the above

property, without adjusting/transferring the amount of

Rs.1,38,50,000/- deposited on 31.05.2022 in the two loan

accounts, as highly illegal, improper and incorrect.

6. The facts, which lead to filing of the above three writ

petitions, are as under:-

(a) The petitioners in all the three writ petitions secured

loan from the respondent/bank under two loan accounts. As

the petitioners committed default in payment of the amount,

both the accounts were declared as Non-Performing Assets

[NPA] and the respondent/bank demanded an amount of

Rs.2,39,90,868.20 ps. and Rs.5,96,012.46 ps. [totalling to

Rs.2,45,86,880.66 ps.] towards outstanding loan amount. At

that point of time, the petitioners made an application for

One Time Settlement [OTS] vide representation dated

15.12.2021. Inaction on the part of the respondent/bank,

lead to filing of W.P.No.30522 of 2021. Pending the said writ

petition, the respondent/bank issued e-auction Sale Notice

for Sale of immovable properties which were mortgaged to the

bank. The e-auction notice was challenged in W.P.No.1534

of 2022. However, the auction did not materialize, and as

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such, both the writ petitions were dismissed as infructuous

on 08.03.2022. Thereafter, a second e-auction notice for sale

of immovable properties mortgaged to the bank came to be

issued. Challenging the same, the petitioners filed

W.P.No.3988 of 2022.

(b) On 23.02.2022, in I.A.No.1 of 2022, this Court

passed the following interim order, which is as under:-

“…Taking into consideration the facts in issue, the auction

shall go on and the same shall not be finalized for a period of

five weeks, subject to petitioners depositing a sum of

Rs.1,00,00,000/- to the credit of loan account within a period of

four weeks from today, in default, the stay stands vacated

automatically and the respondent-Bank can proceed further, in

accordance with law.

‘List after five weeks’.

(c) Thereafter, final order came to be passed in

W.P.No.3988 of 2022 on 21.04.2022, wherein the petitioner

was directed to deposit a sum of Rs.1,00,00,000/- within a

period of four (4) weeks and the balance amount with interest

and other charges within a period of four (4) weeks thereafter.

(d) The claim of the petitioners is that they approached

the respondent/bank on 16.05.2022 and 20.05.2022 to

deposit the amount but on both the occasions, the bank

officials refused to receive the money, on the ground that

they have neither received any order from the High Court nor

their Standing Counsel informed them about the order.

However, on 23.05.2022, the Registry of the High Court

dispatched a copy of the order dated 21.04.2022, which was

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received by the bank on 24.05.2022. It is the case of the

petitioners that they approached the respondent/bank at

Hindupur and offered to pay money enclosing a copy of the

order, but since the period of four weeks elapsed by then the

bank refused to accept the same.

(e) The petitioners also approached the third

respondent-Authorized Officer, Anantapur, but to no avail.

Instead the Regional Manager wanted the entire amount to

be deposited immediately. While things stood thus, the

petitioners received a warrant of execution on 01.06.2022.

Left with no other option, the petitioners paid

Rs.1,38,50,000/- on 31.05.2022, which is the total amount

with accrued interest etc. Infact, the petitioners claim that

they have paid more than the demanded amount. In spite of

the same, the respondent/bank, with the help of Advocate-

Commissioner appointed under Section 14 of SARFAESI Act,

approached the property in dispute for executing the

warrant.

(f) At that stage, the petitioners filed W.P.No.15580 of

2022 before this Court and vide order dated 02.06.2022, this

Court stayed the order of Principal Senior Civil Judge,

Anantapur. Thereafter, W.P.No.15632 of 2022 came to be

filed, questioning the Sale Confirmation letter issued on

24.05.2022, wherein this Court ordered status-quo as on that

day to be maintained with regard to issuance of Sale

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Certificate. In spite of the above orders, the Sale Certificates

came to be issued ante-dating the day, which lead to filing of

W.P.No.23932 of 2022. Not only the Sale Certificate was

issued but the 75% of the auction amount was accepted from

the auction purchaser on 01.06.2022.

7. A counter came to be filed by the respondent/bank

disputing the averments made in the affidavit filed in support

of the writ petitions. The averments in the counter would

indicate that since the petitioners have not complied with the

order dated 21.04.2022, passed in W.P.No.3988 of 2022 ,

namely depositing of Rs.One Crore within four (4) weeks from

the date of the order, the respondent/bank was constrained

to issue Sale Confirmation letter on 24.05.2022 in favour of

the highest bidder and thereafter the Sale Certificate, after

accepting the amount on 01.06.2022. The auction purchaser

also submits that since the amount has been paid by him

within the time fixed by the bank, he is entitled for the

property in dispute.

8. The point that arises for consideration is, whether the

respondent/bank was right in issuing the Sale

Certificate in favour of the auction purchaser though

the petitioners have deposited the entire amount prior

to the date on which the auction purchaser has

deposited the amount?

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9. The principal question that arises for consideration is,

till what time or date can the right of redemption of the

mortgage be exercised by the mortgagers/borrowers in

the light of the amendment to Section 13( 8) of the

SARFAESI Act?

10. In order to appreciate the arguments advanced, it

would be appropriate to extract Section 13(8) of SARFAESI

Act, before and after its amendment.

11. Section 13(8) of the SARFAESI Act before amendment,

reads as under:—

“Sec.13. …

(8) If the dues of the secured creditor together with all costs,

charges and expenses incurred by him are tendered to the

secured creditor at any time before the date fixed for sale or

transfer, the secured asset shall not be sold or transferred by

the secured creditor, and no further step shall be taken by him

for transfer or sale of that secured asset.”

The law relating to the availability of right of redemption after

the amendment to Section 13(8), was enacted in 2016 w.e.f.

01.09.2016, and the same reads as under:-

“Sec.13 …

(8) Where the amount of dues of the secured creditor together

with all costs, charges and expenses incurred by him is tendered

to the secured creditor at any time before the date of publication

of notice for public auction or inviting quotations or tender from

public or private treaty for transfer by way of lease, assignment

or sale of the secured assets,— (i) the secured assets shall not be

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transferred by way of lease assignment or sale by the secured

creditor; and

(ii) in case, any step has been taken by the secured creditor

for transfer by way of lease or assignment or sale of the assets

before tendering of such amount under this sub -section, no

further step shall be taken by such secured creditor for transfer

by way of lease or assignment or sale of such secured assets.”

12. A reading of the amended Section 13(8) of the

SARFAESI Act vis-à-vis the report of the Joint Committee on

the Enforcement of Security Interest and Recovery of Debts

Laws and Miscellaneous Provisions (Amendment) Bill, 2016,

which was made the basis to amend Section 13(8) of the

SARFAESI Act, makes it clear that the legislature did not

have any intention to deal with the right of mortgagor to

redeem the mortgage, when they amended Section 13(8) or to

modify it in any manner; and amendment cannot be said to

have intended to modify the existing law which continued

even when the un-amended Section 13(8) of the SARFAESI

Act was in force. The amended Section 13(8) of the SARFEASI

Act was intended only to deal with the date when the secured

creditor’s right to transfer the secured asset should stop and

nothing more.

13. In order to appreciate the effect of amendment, it will be

appropriate to refer to the judgment of Hon’ble Supreme

Court in Mathew Varghese vs. M. Amritha Kumar and

others

1, wherein the Hon’ble Supreme Court has held that

1

(2014) 5 SCC 610

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the right of redemption of the mortgagor/borrower is not

extinguished until the sale certificate is issued and the sale is

registered in favour of the auction purchaser even where the

sale is held under the SARFAESI Act. It does not get

extinguished on the date fixed for sale, i.e. the date of public

auction/e-auction.

14. Similarly, the Division Bench of High Court of

Telangana in Concern Readymix, rep. by its Proprietor,

Smt. Y. Sunitha Reddy and another vs. Authorised

Officer, Corporation Bank, Hyderabad and another

2,

observed the difference between the unamended Section

13(8) and amended Section 13(8) of the SARFAES I Act, and

held as under:-

“10. The first distinction between the unamended and

amended sub-section (8) of Section 13 is that before

amendment, the facility of repayment of the entire dues

along with the costs, charges and expenses, was available

to the debtor at any time before the date fixed for the sale

or transfer. But after the amendment, the facility is

available upto the time before the date of publication of

notice for public auction or inviting quotations or tender

from public or private treaty. The second distinction is

that the unamended sub-section (8) did not provide for

the contingency when the dues are tendered by the

borrower before the date of completion of the sale or lease

but after the issue of notice. But the amended sub -

section (8) takes care of the contingency where steps have

already been taken by the secured creditor for the

transfer of the secured asset, before the payment was

2

2019 (1) ALT 698

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made. Except these two distinctions, there is no other

distinction.

x x x x

13. What is important to note both from the amended

and unamended provisions of Section 13(8) and Rule 9(1)

is that both of them do not speak in express terms, about

the equity of redemption available to the mortgagor. The

amended Section 13(8) merely prohibits the secured

creditor from proceeding further with the transfer of the

secured assets by way of lease, assignment or sale. A

restriction on the right of the mortgagee to deal with the

property is not exactly the same as the equity of

redemption available to the mortgagor. The payment of the

amounts mentioned in Section 13(8) ties the hands of the

mortgagee (secured creditor) from exercising any of the

powers conferred under the Securitisation Act, 2002.

Redemption comes later . But unfortunately, some

Courts, on a wrong reading of the decision of the

Supreme Court in Mathew Varghese v. M. Amritha

Kumar

3, have come to the conclusion as though Section

13(8) speaks about the right of redemption. The danger of

interpreting Section 13(8) as though it relates to the right of

redemption, is that if payments are not made as per

Section 13(8), the right of redemption may get lost even

before the sale is complete in all respects. But in law it is

not. It may be seen from paragraphs -34 to 36 of the

decision of the Supreme Court in Mathew Varghese that

the Supreme Court took note of Section 60 of the

Transfer of Property Act and the combined effect of Section

54 of the Transfer of Property Act and Section 17 of the

Registration Act to come to the conclusion that the

extinction of the right of redemption comes much later than

the sale notice. Therefore, we should first understand that

the right of redemption is not lost immediately upon the

highest bid made by a purchaser in an auction being

accepted.

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14. Perhaps the Courts were tempted to think that

Section 13(8) speaks about redemption, only on account

of what is found in Rule 3(5) of the Security Interest

(Enforcement) Rules, 2002. Rule 3(5) inserted by way of

amendment with effect from 04-11-2016 states that the

demand notice issued under Section 13(2) should invite

the attention of the borrower to the provisions of Section

13(8), in respect of the time available to the borrower to

redeem the secured assets. Today, it may be convenient

for one borrower to contend that the right of redemption

will be lost immediately upon the issue of notice under

Rule 9(1). But if it is held so, the same would tantamount

to annulling the relevant provisions of the Transfer of

Property Act, which do not stand expressly excluded,

insofar as the question of redemption is concerned.

15. The issue identical to the case on hand came up for

consideration before Punjab and Haryana High Court i n

M/s.Pal Alloys and Metal Indi a Private Limited and

others vs. Allahabad Bank and others

3, wherein the

Division Bench of the High Court after referring to the

authorities on the subject held as under:-

“91. Keeping in mind (i) the Report of the Joint Committee on the

Enforcement of Security Interest and Recovery of Debts Laws

and Miscellaneous Provisions (Amendment) Bill, 2016 discussed

above, (ii) the law laid down by the Supreme Court in Mathew

Varghese (supra) and (iii) the decision in M/s. Concern

Readymix (7 supra) of the Telangana and Andhra Pradesh High

Court, with which we respectfully agree, we hold that the

amended Section 13(8) of the SARFAESI Act merely prohibits a

secured creditor from proceeding further with the transfer of the

secured asset by way of lease, assignment or sale; a restriction

on the right of the mortgagee to deal with the property is not

exactly the same as the equity of redemption available to the

mortgagor; the payment of the amount mentioned in Section

3

AIR 2022 Punjab and Haryana 23

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13(8) of the SARFAESI Act ties the hands of the mortga gee

(secured creditor) from exercising any of the powers conferred

under the Act; that redemption comes later; extinction of the

right of redemption comes much later than the sale notice; and

the right of redemption is not lost immediately upon the highest

bid made by a purchaser in an auction being accepted. We also

hold that such a right would continue till the execution of a

conveyance i.e. issuance of sale certificate in favour of the

mortgagee. A similar view has been taken by this Bench in

M/s.Hoshiarpur Roller Flour Mill Private Limited and another vs.

Punjab National Bank. CWP No.14440 of 2021, decided on

10.12.2021 (AIR Online 2021 P & H 1985).

16. Keeping in view the law laid down in judgments referred

to above, we shall now proceed to deal with the case on hand.

As seen from the narration of events, in the instant case,

undoubtedly, there is some delay i.e. a delay of three or four

days in paying the amount by the petitioners. The reason

given by the petitioners is that though the order was passed

by the High Court on 21.04.2022, giving four (4) weeks time

to deposit Rs. One Crore, the bank did not act on their

representation and insisted for a certified copy of the order,

which, the petitioner could secure only on 23.05.2022.

Within two days thereafter, they offered to pay the entire

amount and in fact the petitioners deposited the entire

amount on 31.05.2022. The petitioners not only deposited

the entire loan amount but also interest and other charges

that got accrued till then. In fact, the claim of the petitioners

appears to be that they paid more than the required amount.

The delay of three days which occurred cannot be attributed

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to the petitioners, for the reason that the certified copy of the

order was given at a little belated stage. Apart from that, the

petitioners paid the entire loan amount on 31.05.2022 itself.

Having accepted the amount on 31.05.2022, strangely, the

bank deposited the amount in the current account of the

petitioners, without adjusting it to the loan account, though

the petitioners paid the amount for clearing the two loan

accounts. After depositing the amount in the current

account of the petitioners on 31.05.2022, the respondent

bank accepted 25% of the bid amount from the auction

purchaser on 01.06.2022 and issued the sale certificate on

02.06.2022, which is after accepting the amount from the

petitioners.

17. The payment of the amounts mentioned in Section

13(8) ties the hands of the mortgagee (secured creditor) from

exercising any of the powers conferred und er the

Securitisation Act, 2002. Redemption comes later. Extinction

of the right of redemption comes much later than the sale

notice and the right of redemption is not lost immediately

upon the highest bid made by a purchaser in an auction

being accepted.

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18. It would be appropriate to refer to Section 13(8) of

SARFAESI Act, which reads as under:-

“Sec.13 …

(8) Where the amount of dues of the secured creditor together

with all costs, charges and expenses incurred by him is tendered

to the secured creditor at any time before the date of publication

of notice for public auction or inviting quotations or tender from

public or private treaty for transfer by way of lease, assignment

or sale of the secured assets,— (i) the secured assets shall not be

transferred by way of lease assignment or sale by the secured

creditor; and

(ii) in case, any step has been taken by the secured creditor

for transfer by way of lease or assignment or sale of the assets

before tendering of such amount under this sub -section, no

further step shall be taken by such secured creditor for transfer

by way of lease or assignment or sale of such secured assets.”

19. Having regard to the above, the right to redeem the

property mortgaged to the bank survives and accordingly the

Sale Certificate and Sale Confirmation Letter issued by the

respondent/bank in favour of the auction purchaser shall

stand cancelled. Further, the amount paid by the petitioners

shall be adjusted to the two loan accounts and the amount

paid by the auction purchaser sh all be returned to the

auction purchaser in accordance with law. Accordingly, the

three writ petitions are allowed. There shall be no order as

to costs.

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Miscellaneous petitions pending, if any, shall stand

closed.

_______________________________

JUSTICE C.PRAVEEN KUMAR

_________________________________________

JUSTICE TARLADA RAJASEKHAR RAO

Date: 26.08.2022

Note: LR copy to be marked.

B/o.MS

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THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR

AND

THE HON’BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

Writ Petition Nos.15580, 15632 & 23932 of 2022

(per the Hon’ble Sri Justice C. Praveen Kumar)

Date: 26.08.2022

MS