M. Rajendran vs KPK Oils and Proteins India Pvt. Ltd. 2025 INSC 1144 - SARFAESI Act - Security Interest (Enforcement) Rules - Interpretation of Statutes

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Security Interest (Enforcement) Rules, 2002- Whether Rule 8(6) read with Rule 9(1) of the SARFAESI Rules contemplate issuance of two distinct and separate notices of sale ?- Whether there is a requirement to maintain a gap of thirty-days each, between the service of notice or notice(s) of sale to the borrower, and the publication of such notice or notice(s) in the newspaper in terms of Rule(s) 8(6) and 9(1), respectively ? - SC held: The Scheme under the SARFAESI Rules envisages one single composite Notice of Sale of Immovable Secured Asset- (i) Rule(s) 8(6), the Proviso thereto, Rule 8(7) and Rule 9(1) of the SARFAESI Rules do not speak of any separate or distinct notice of sale that is required to be issued by the secured creditor for the transfer of the secured asset by way of lease, assignment or sale in accordance with any of the methods enumerated in Rule 8(5). (ii) The different manner in which the notice of sale has to be served, caused, published, affixed, uploaded as stipulated in Rule(s) 8(6) and 8(7) of the SARFAESI Rules, do not constitute separate notices of sale by themselves, they are part and parcel of one single composite intended “notice of sale” of the secured asset by the secured creditor, by any of the mode of sale listed in Rule 8(5). All of the aforesaid rules are concerned with a single composite “notice of sale”, and the only distinction between the said rules, is the manner in which the said “notice of sale” has to be given, on the basis of which relevant rule or rules are applicable, as the case may be. (iii) Similarly, the stipulation under Rule 9(1) of a thirty-days gap between the date of publication of notice of sale and the date of actual sale does not impute a distinct characteristic to the public notice in the newspaper in contrast to the notice of sale that is served to the borrower. As is evident from Appendix IV-A to the SARFAESI Rules, the public notice of sale in newspaper as-well the notice of sale served to the borrower are one and the same, for the purpose of Rule 9(1). (iv) The embargo enshrined under Rule 9(1), that no sale, in the first instance shall take place before the expiry of thirty-days, would be reckoned from the date of issuance of the “notice of sale”, which would include both the public notice of sale in the newspaper and the service thereof to the borrower, whichever is later. (v) Under Rule 8(6) read with Rule 9(1) both the notice of sale can be served as-well as published in the newspaper, simultaneously on the same date. All that is required under Rule 9(1) is that thirty-day gap is maintained between when the notice of sale is served, affixed and published, whichever is later, as the case may be, till the date of actual sale. (Para 169)

SARFAESI Act - Section 13(8) -Whether, the Amended Section 13(8) of the SARFAESI Act is retrospective in nature? SC held: If the claim is alive on 01.09.16 when the Section 13(8) is amended and the notice for auction is issued after 01.09.16, then the amended section should apply. (Para 185)

SARFAESI Act - Section 13(8) - The expression “before the date of publication” used therein, has to be construed to refer and mean the publication of a valid “notice of sale” for the secured asset, although such publication may vary depending upon the mode of sale chosen by the secured creditor. The word “publication” used in Section 13(8) of the SARFAESI Act, has to be understood to mean and include the service, publication in newspaper, and the affixation and uploading of the “notice of sale”, as may be required under the SARFAESI Rules. Wherever, the chosen mode of sale requires the secured creditor to effectuate the “notice of sale” in any or all of the aforesaid manner, as the case may be, the expiry of thirty-days as required under Rule 9(1) from the day when the secured creditor complies with the requirement of giving the notice of sale, as per the applicable rules, would be the date on which the secured creditor is said to have validly published the “notice of sale” and it would be this date on which the right of redemption of the borrower would stand extinguished. (Para 177-178)

Interpretation of Statutes - Principles on retrospective application of legislations - (i) Presumption against retrospectivity is not applicable to enactments which merely affect procedure or change forum or are declaratory; (ii) Retroactive/retrospective operation can be implicit in a provision construed in the context where it occurs ; (iii) Given the context, a provision can be held to apply to cause of action after such provision comes into force, even though the claim on which the action may be based may be of an anterior date ; and (iv) A remedial statute applies to pending proceedings and such application may not be taken to be retrospective if application is to be in future with reference to a pending cause of action. (Para 188)

SARFAESI Act - Section 13(8) - SARFAESI Rules - Ill-wording of Section 13(8) of the SARFAESI Act has resulted in a glaring inconsistency between the aforesaid provision and the SARFAESI Rules framed in lieu thereof - Ministry of Finance urged "to take a serious look at these provisions and bring about necessary changes, before it is too late in the day." (Para 201)

SARFAESI Act - Transfer of Property Act - Right of redemption is not a contractual right, and rather a statutory right. Such right of redemption is generally governed by the TP Act, and subject to material modification or alteration by any overriding special law in this regard. Even under the SARFAESI Act, the right of redemption has been statutorily recognized and given effect to in Section 13(8) of the SARFAESI Act, albeit subject to conditions stipulated thereunder insofar as its exercise is concerned.  (Para 191)

Suggested Readings:

SARFAESI Rules Do Not Speak Of Any Separate Or Distinct Notice Of Sale Required To Be Issued By Secured Creditor: Supreme Court

The Supreme Court observed that the Rules are concerned with a single composite “notice of sale”, and the only distinction between the said Rules, is the manner in which the said “notice of sale” has…

VerdictumSwasti Chaturvedi