Supreme Court Clarifies SARFAESI Act Auction Procedures
The Supreme Court ruled that borrowers cannot redeem property after an auction notice is published, as the SARFAESI Act grants purchasers indefeasible rights post-sale certificate issuance. It emphasized the need for legislative clarity to avoid prolonged litigations and procedural ambiguities, urging corrections to protect interests.
- Country:
- India
The Supreme Court has ruled that under the SARFAESI Act, borrowers lose their right to redeem property once an auction notice is published. This decision comes as the court recognized the ambiguities causing prolonged litigation and urged legislative clarity.
A bench including Justices J B Pardiwala and R Mahadevan stressed that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act was intended to protect financial institutions and banks, but procedural issues in Section 13(8) have led to significant challenges.
The court has asked for amendments to harmonize the SARFAESI Act and its Rules, as inconsistencies have impaired the objectives of reducing non-performing assets. The directive extends to all high courts and relevant ministries for immediate consideration.
(With inputs from agencies.)
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