Supreme Court Reaffirms: Right of Redemption Ends Once Auction Notice Is Published under SARFAESI Act

In a recent ruling, the Hon’ble Supreme Court of India in the case of M. Rajendran & Ors. v. M/s KPK Oils and Proteins India Pvt. Ltd. & Ors., (2025 INSC 1137), dated September 22, 2025, reiterated the legal position on the right of redemption under Section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the Supreme Court held that such right stands extinguished upon the valid publication of the notice of sale, and not merely on execution of sale or conveyance.

The factual matrix arose from a loan transaction wherein the borrower, M/s KPK Oils and Proteins India Pvt. Ltd. & Ors. availed credit facilities through an equitable mortgage from a bank in January 2016. Due to default in repayment, the loan account was classified as a Non-Performing Asset (NPA) on December 31, 2019. The bank thereafter issued a demand notice under Section 13(2) of the SARFAESI Act and, following no representation from the borrowers, issued a possession notice under Section 13(4) on October 28, 2020. 

This was followed by the publication of the auction sale notice in newspapers on October 31, 2020. An auction was conducted wherein the appellants successfully bid and deposited the entire sale consideration, leading to the issuance of a sale certificate. Notably, the borrowers subsequently deposited a large portion of the dues post-sale confirmation. Litigation ensued before the Debts Recovery Tribunal (DRT), which was followed by a writ petition filed before the Hon’ble High Court of Madras, wherein the borrowers sought to redeem the mortgage.

Upon appeal, the Supreme Court observed that there is an inconsistency between the SARFAESI Act and Security Interest (Enforcement) Rules, 2002 [“Rule(s)”] on whether the various procedural steps under Rules 8 and 9 of the Rules, such as serving the notice to the borrower, publishing it in newspapers, affixing it on the property, and uploading it online, constitute separate notices requiring separate timelines, or whether they form a single, composite ‘notice of sale’ that triggers the extinguishment of the borrower’s right of redemption under Section 13(8).

The Court emphasised that the expression ‘notice of sale’ must be construed as a composite concept, encompassing service to the borrower, publication in a newspaper, affixation, and uploading, as mandated under Rule 8(6), its Proviso, Rule 8(7), and Rule 9(1). It was held that these are not separate or distinct notices but parts of a single composite process required for a valid sale under Rule 8(5). Thus, the date of valid publication, reckoned as the latest of the actions taken in accordance with the Rules, marks the extinguishment of the borrower’s right of redemption under Section 13(8).

In doing so, the Court harmonised Rule 9(1), which mandates a 30-day gap from publication to sale, with Section 13(8) by clarifying that the thirty-day period begins from the latest date of publication, service, or affixation, depending on the applicable mode of sale. Importantly, the Bench rejected the notion that auction notice publication and borrower’s notice are distinct, noting that Appendix IV-A to the Rules evidences their being part of the same process. 

Further, the Court referred to its prior judgments in Mathew Varghese v. Amritha Kumar, (2014) 5 SCC 610, dated November 3, 2014, and Celir LLP v. Bafna Motors (2024) 2 SCC 1, dated December 13, 2024, reiterating that post-2016, the right of redemption is not open-ended and must align with the amended statutory text. The borrower cannot claim to redeem merely by tendering the auction amount post-confirmation of sale. Redemption must be complete before the date of valid publication of the notice of sale under the SARFAESI Act and Rules.

The Court, having acknowledged judicial inconsistency across High Courts and prior benches regarding the interpretation of Section 13(8) and Rules 8/9, terming it an ‘interpretative deadlock,’ urged the Ministry of Finance to consider appropriate legislative clarification to avoid further procedural and interpretive anomalies.

The judgment reaffirms that the borrower’s right of redemption under Section 13(8) ceases upon the valid publication of a composite notice of sale as per the SARFAESI Act and Rules.