Introduction:

The case of M. Rajendran & Ors. versus M/s KPK Oils and Proteins India Pvt. Ltd. & Ors. [2025 LiveLaw (SC) 931] came before the Supreme Court, where a bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan was tasked with interpreting the scope and meaning of “publication of notice” under Section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The central issue revolved around when exactly a borrower’s right of redemption of the mortgaged property stands extinguished. The borrowers argued that their right to redeem continued until the actual sale or transfer of the secured asset, while the creditors contended that the right ended with the “publication of notice of sale.” The ambiguity in the statute and the SARFAESI Rules led to divergent interpretations before lower courts, ultimately requiring the Supreme Court to step in for authoritative clarification.

Arguments by the Borrowers:

The borrowers, represented by their counsel, advanced a detailed argument emphasizing that the right to redeem a mortgage is an essential and substantive right flowing from the Transfer of Property Act, 1882, specifically Section 60, and is preserved even under the SARFAESI framework. They argued that the SARFAESI Act, being a piece of legislation meant to expedite recovery for banks and financial institutions, could not be interpreted so strictly as to completely extinguish a borrower’s right before an actual transfer of property occurs. According to them, Section 13(8) of the SARFAESI Act must be read harmoniously with the principles of equity, allowing redemption up until the very moment of sale or lease.

The borrowers contended that the expression “before the date of publication of notice” was vague and could not be read to mean that their rights ceased simply upon a newspaper advertisement or other form of notice. They highlighted that the rules prescribed multiple forms of notice—service of notice to the borrower, affixation of the notice on the property, uploading on official portals, and, in cases of public auction, publication in newspapers. These were procedural steps, they argued, not substantive acts extinguishing rights. The borrowers further pointed out that depriving them of redemption merely because of procedural publication would be disproportionate and violative of the right to property under Article 300A of the Constitution.

They also argued that in cases where private treaties or quotations were the chosen mode of sale, no newspaper publication was even mandated. Thus, tying the extinction of their rights solely to newspaper publication was irrational and discriminatory, leading to inconsistent treatment of borrowers depending on the mode of sale chosen by the creditor. The borrowers urged the Court to read the law in favor of preserving the valuable right of redemption until the actual execution of sale deeds or transfer instruments, thereby aligning it with the overarching principles of fairness, justice, and equity.

Arguments by the Creditors:

The secured creditors, represented by their counsel, adopted a contrasting position. They submitted that the SARFAESI Act was enacted with the specific purpose of enabling banks and financial institutions to recover non-performing assets efficiently and without unnecessary judicial intervention. According to them, Section 13(8), especially after its amendment in 2016, clearly stipulated that a borrower’s right of redemption ceased upon the publication of the notice of sale. They emphasized that the expression “before the date of publication of notice” could not be diluted, as it would undermine the certainty and sanctity of recovery proceedings.

The creditors argued that interpreting the right of redemption as subsisting until the actual sale would open the floodgates of litigation, allowing defaulting borrowers to file last-minute petitions and obstruct recovery actions indefinitely. They contended that such an interpretation would defeat the object of the SARFAESI Act, which was to empower financial institutions to act swiftly and recover dues without protracted delays. They further highlighted that the SARFAESI Rules provided a detailed scheme for notices depending on the chosen mode of sale—public auction, tender, quotations, or private treaty. For each mode, the issuance of the “notice of sale” was a composite act involving different procedural requirements.

The creditors maintained that once the composite notice was given in accordance with the SARFAESI Rules, the borrower’s right of redemption automatically stood extinguished. They argued that any contrary interpretation would not only render the 2016 amendment meaningless but also create inconsistency in recovery proceedings, leading to uncertainty for creditors and buyers of secured assets. The creditors urged the Court to adopt a strict and literal interpretation of Section 13(8), holding that the borrower’s right of redemption ends with the valid “publication” of the notice of sale in whatever form required under the applicable rules.

Supreme Court’s Judgment:

The Supreme Court, after carefully analyzing the statutory provisions, the rules, and the competing arguments, delivered a detailed judgment clarifying the scope of Section 13(8) of the SARFAESI Act. The bench began by acknowledging that the right of redemption is a substantive right but noted that the legislature, through the 2016 amendment, had consciously curtailed this right by linking its extinction to the “publication of notice of sale.” The Court observed that the term “publication” could not be read narrowly to mean only newspaper publication. Instead, it must be understood as an umbrella expression covering all forms of notice contemplated under the SARFAESI Rules.

The bench clarified that “notice of sale” is not a collection of separate or distinct notices but a composite concept that includes service to the borrower (Rule 8(6)), affixation on the property (Rule 8(7)), uploading on official portals, and, where required, publication in newspapers (Proviso to Rule 8(6)). These different forms of notice are all parts of the same integrated act of giving notice. Thus, until the secured creditor completes all the steps mandated under the relevant rules for the chosen mode of sale, the notice of sale remains incomplete. It is only after full compliance and the expiry of thirty days from the latest of such acts—service, affixation, or publication—that the notice becomes valid in the eyes of law.

Interpreting the expression “before the date of publication,” the Court held that the borrower retains the right to redeem the mortgage up to the date when the valid composite notice of sale is published in all required forms. For example, in a public auction, the right would continue until the date of newspaper publication. In cases of private treaty or quotations, where no newspaper publication is required, the right would continue until the notice is served or affixed, as mandated. Thus, the extinguishment of redemption rights depends on the mode of sale chosen by the creditor, and the notice must be considered valid only after all procedural requirements are satisfied.

The Court made five critical clarifications:

• Rules 8(6), its proviso, 8(7), and 9(1) do not envisage separate notices but together form one single composite notice of sale.
• The different modes of service—whether through newspaper, affixation, or direct service—are not distinct notices but part of one composite notice.
• The thirty-day requirement under Rule 9(1) applies from the latest date when the notice is served, affixed, or published, ensuring a uniform gap before the actual sale.
• The embargo on sale within thirty days ensures fairness, giving borrowers sufficient opportunity to redeem if they wish to do so before the cut-off date.
• Under the composite scheme, borrowers cannot claim redemption rights beyond the valid publication date, as that would nullify the legislative intent behind the 2016 amendment.

Justice Pardiwala, writing for the bench, emphasized that while the right of redemption is valuable, it cannot be allowed to paralyze the recovery process envisaged by the SARFAESI Act. The judgment harmonized the rights of borrowers with the legitimate interests of creditors, ensuring clarity and uniformity across all modes of sale.

The Court also highlighted inconsistencies between Section 13(8) and the SARFAESI Rules regarding redemption rights and urged the government to consider amending the law to bring greater precision. Importantly, it held that the 2016 amendment to Section 13(8) applies even to pre-amendment loans if the default occurred after the amendment, thereby expanding its scope.

In sum, the judgment provided a definitive interpretation of “publication of notice” under Section 13(8), holding that a borrower’s right of redemption stands extinguished not upon mere service of notice or newspaper publication alone but upon the completion of all procedural requirements of a valid notice of sale, depending on the chosen mode of sale. This ruling balances the scales between borrower protection and creditor rights, giving both clarity and certainty in the enforcement process under the SARFAESI framework.