Extinguishment of Borrower’s Right of Redemption on Publication of Auction Notice under Section 13(8) SARFAESI:
Case Commentary on M/s Gogi Motor Store v. Citizen’s Co-operative Bank Ltd. & Anr.

1. Introduction

The judgment of the High Court of Jammu & Kashmir and Ladakh in M/s Gogi Motor Store th. Manoj Kumar Jilka v. Citizen Co-operative Bank Ltd. & Anr., WP(C) No. 2274/2025 (decided on 09.12.2025), is a significant application of the amended Section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”).

The decision addresses a recurring and practically important question: up to what point in time does a borrower retain the statutory right to redeem a secured asset once SARFAESI proceedings have culminated in a public auction?

Relying heavily on the Supreme Court’s recent decision in M. Rajendran & Ors. v. KPK Oils and Proteins India Pvt. Ltd. & Ors., 2025 SCC OnLine SC 2036, the High Court holds that:

The borrower’s right to redeem the secured asset under Section 13(8) of SARFAESI is extinguished on the date of publication of the auction notice.
Any payments made, or offers to pay, after the date of publication of the auction notice do not revive the right of redemption, nor do they legally bind the secured creditor to halt the sale.

The case thus cements, for the jurisdiction of Jammu & Kashmir and Ladakh, the post-amendment interpretation of Section 13(8) and clarifies the limited scope for borrowers to use writ proceedings to stall auctions once the statutory cut-off has passed.

2. Factual Background

2.1 Sanction of Cash Credit and Mortgage

The petitioner, M/s Gogi Motor Store, availed a Cash Credit Limit (CCL) of Rs. 49 lakhs from the respondent, Citizen’s Co-operative Bank Ltd., pursuant to sanction letter No. Adm/Loans/4207-08 dated 23.07.2019.

As primary security, the petitioner created a mortgage over:

Residential house on Plot No. 18, measuring 40' × 60' (2400 sq. ft.),
Situated at South X Housing Colony, Channi Kamala, Deeli Extension, Trikuta Nagar, Jammu,
Comprising land under Khasra Nos. 786 min, 788 min, 790 min, and 130 min.

2.2 Irregularity and Classification as NPA

The petitioner initially maintained the loan account till around September 2022. Thereafter, the account became irregular, and on 03.05.2023 it was classified as a Non-Performing Asset (NPA).

The Bank issued a notice dated 06.05.2023 asking the petitioner to regularize the account, failing which SARFAESI proceedings would follow. There was no satisfactory response.

2.3 Initiation and Progress of SARFAESI Proceedings

Following the NPA classification, the Bank invoked SARFAESI:

Demand Notice under Section 13(2): On 20.07.2023, the Bank issued a notice under Section 13(2) demanding Rs. 53,43,639/- along with further interest and charges, to be paid within 60 days.
Symbolic possession & publication: After non-compliance, the Bank took symbolic possession under Section 13(4), and published a possession notice on 04.01.2024 granting 30 days to clear dues.
Section 14 order for taking possession: The District Magistrate, Jammu, by order dated 16.02.2024, directed the Tehsildar, Jammu South, to take possession of the mortgaged property. The petitioner was informed via communication dated 23.02.2024.
Notice for taking physical possession: When the petitioner did not respond, another notice dated 28.03.2024 was served and published to effect physical possession of the secured asset.
First and second auction attempts:
- Tender-cum-auction notice dated 16.12.2024 was issued and published in two newspapers; no bids were received.
- A second tender notice dated 03.04.2025 was issued; again no response.

2.4 Borrower’s Payments and Request for Restructuring

During the pendency of these steps, the petitioner claims to have:

Paid approximately Rs. 2 crores in total towards interest and principal over time,
Reduced the alleged outstanding to around Rs. 19–20 lakhs,
Deposited approximately Rs. 34 lakhs after the Section 13(2) notice, and further smaller sums (Rs. 2,00,000/- on 25.06.2025, Rs. 1,00,000/- on 21.07.2025, Rs. 1,36,000/- on 23.07.2025) which the Bank accepted.

The petitioner asserted that bank officials verbally assured him that the CCL account would be restructured to Rs. 19 lakhs and that SARFAESI proceedings would not be pursued further. The Bank, however, states that:

The petitioner was asked to submit documents and pay overdue amounts (Rs. 4,48,908/- as of 03.06.2025) for renewal of the facility;
As he failed to comply, the Bank proceeded with the sale process.

2.5 The Third Auction and Successful Bidder

On 17.06.2025, the Bank issued the impugned Tender-cum-Auction Notice and published it on 18.06.2025 in two local dailies, in compliance with Rule 8(6) of the Security Interest (Enforcement) Rules, 2002.

In this auction:

Respondent No. 3, Mayank Gupta, emerged as the successful bidder.
He deposited the entire bid consideration of Rs. 71,02,000/- with the Bank.

The borrower then filed the present writ petition challenging the auction notice and consequential SARFAESI actions. Initially, the successful bidder was not impleaded as a party and later had to be added as Respondent No. 3.

2.6 Reliefs Sought in the Writ Petition

The petitioner sought:

Quashing of the Tender-cum-Auction Notice dated 17.06.2025;
Quashing of all consequential actions, including measures under Section 13(4) SARFAESI;
A direction restraining the Bank from proceeding against the mortgaged residential property described above.

Key grounds included:

Substantial repayment of dues and alleged small outstanding balance;
Bank’s acceptance of further amounts even after auction initiation;
Alleged verbal assurance of restructuring;
Complaint that a house allegedly worth around Rs. 2 crores was being sold to recover only about Rs. 19–20 lakhs;
Allegations of non-service of notices and improper valuation;
Assertion that once the Bank accepted further payments, it could not lawfully continue SARFAESI action.

3. Issues Before the Court

Though the judgment does not formally frame issues, the following legal questions are implicit:

Whether the borrower’s right of redemption of the mortgaged property survived after the publication of the Tender-cum-Auction Notice dated 17.06.2025 under Section 13(8) of SARFAESI.
Whether the Bank’s acceptance of subsequent payments and alleged assurances could legally prevent or invalidate continuation of SARFAESI measures and public auction.
Whether the auction was vitiated by improper valuation or non-compliance with procedural requirements under SARFAESI and the 2002 Rules.
Whether the writ petition, filed after publication of the auction notice and after a successful bidder had deposited the entire bid amount, could be entertained to derail the sale.

4. Summary of the Judgment

The Division Bench (Hon’ble Mrs. Justice Sindhu Sharma and Hon’ble Mr. Justice Shahzad Azeem) dismissed the writ petition, holding:

The Bank had followed the statutory steps under Sections 13(2), 13(4), 14 of SARFAESI and Rule 8 of the 2002 Rules.
The auction notice dated 17.06.2025 was properly published as per Rule 8(6).
On the authority of the Supreme Court’s decision in M. Rajendran, the borrower’s right to redeem the secured asset stood extinguished on the date of publication of the auction notice (17.06.2025).
Any payments made or willingness expressed by the borrower after that date could not compel the Bank to halt the auction or revive his right of redemption.
The challenge to valuation was a “mere wholesale assertion” without any substantive material to dislodge the report of the Bank’s empanelled valuer.
The petitioner’s attempt was characterized as an “abortive attempt just to delay the process” after consistently failing to utilise opportunities given earlier in SARFAESI proceedings.
Given that Respondent No. 3 had already deposited the entire auction consideration, and the borrower’s right of redemption was extinguished, there was no legal basis to interfere.

Consequently, the Court:

Dismissed the writ petition as being devoid of merit,
Vacated any interim orders,
Declined to consider other grounds in detail, in view of the extinguished right of redemption.

5. Detailed Legal Analysis

5.1 Statutory Framework: SARFAESI and the 2002 Rules

5.1.1 Section 13(2): Demand Notice

Section 13(2) empowers a secured creditor to issue a 60-day demand notice requiring the borrower to discharge in full his liabilities, failing which the Bank may take measures enumerated in Section 13(4). The notice dated 20.07.2023 for Rs. 53,43,639/- was issued under this provision.

5.1.2 Section 13(4): Measures for Enforcement

Upon non-compliance with the Section 13(2) notice, Section 13(4) allows the creditor to:

Take possession of the secured asset,
Take over management of the borrowing concern,
Appoint a manager, and/or
Other realisation measures.

In this case, the Bank:

First took symbolic possession,
Then proceeded towards physical possession by invoking Section 14.

5.1.3 Section 14: Assistance of Magistrate

Section 14 allows the secured creditor to seek assistance from the District Magistrate or Chief Metropolitan Magistrate to take possession of the secured asset. Here, the DM, Jammu, directed the Tehsildar (Jammu South) to take possession of the mortgaged property (order dated 16.02.2024).

5.1.4 Section 13(8): Right of Borrower to Redeem Secured Asset

Section 13(8) is the crux of this case. After its amendment in 2016, it essentially provides:

The borrower may tender the dues (principal, interest, costs, charges, expenses) to the secured creditor at any time before the date of publication of notice for:

Public auction, or
Inviting quotations or tenders from public, or
Private treaty, as the case may be.

If such tender is made before publication, the secured asset shall not be sold or transferred.

The critical interpretative question is what happens if the borrower seeks to pay after publication of the auction notice. That is exactly what the Supreme Court addressed in M. Rajendran and what the High Court applies here.

5.1.5 Rule 8 of the 2002 Rules: Sale of Immovable Secured Assets

Rule 8 governs the procedure for sale of immovable secured assets, including:

Taking possession,
Serving and affixing possession notices,
Obtaining a valuation from an approved valuer,
Fixing reserve price,
Publication of sale/auction notice in newspapers (Rule 8(6)).

In this case, the Tender-cum-Auction Notice dated 17.06.2025 was published on 18.06.2025 in two local dailies, which the Court finds in consonance with Rule 8(6).

5.2 Precedent: M. Rajendran & Ors. v. KPK Oils and Proteins India Pvt. Ltd. & Ors.

The High Court treats M. Rajendran as a locus classicus on Section 13(8). Key extracts cited by the Court clarify:

“To put it simply, as per sub-section (8) of Section 13 of the SARFAESI Act, a borrower can tender the amount of due to the secured creditor along with all costs, charges and expenses, at any time, before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty, as the case may be.”

“A borrower has no unfettered right to tender such amount of dues, as stipulated in Section 13(8), after the date of publication of notice for public auction or inviting quotations or tender from public or private treaty, as the case may be… Where the borrower tenders such dues after the publication of the notice stipulated in Section 13(8), the secured creditor is not bound to accept it, and can continue to proceed with the transfer of the secured asset…”

Further, the Supreme Court explained that:

Post-amendment Section 13(8) extinguishes the borrower’s right of redemption if dues are not paid before publication of the auction/tender notice.
Thus, the key cut-off is the date of publication of the sale notice, not the date of actual auction or confirmation.

In Rajendran, the auction notice was published on 22.01.2021 and the assets auctioned on 26.02.2021. The Supreme Court held that the borrowers’ right of redemption stood extinguished on 22.01.2021 because they did not pay dues before that date.

5.2.1 Departure from Earlier Equitable Approach

Historically, under Section 60 of the Transfer of Property Act, 1882 (TPA), the mortgagor’s equitable right of redemption was recognised until actual sale or at least till confirmation of sale, subject to special statutory provisions. Pre-amendment jurisprudence, including decisions like Mathew Varghese v. M. Amritha Kumar (2014) 5 SCC 610, indicated a broader window to redeem, often up to the stage when the sale was completed in accordance with law and equity.

By contrast, Rajendran – interpreting the amended Section 13(8) – draws a sharper, statutory cut-off at the date of publication of auction notice. The legislature has essentially:

Narrowed the duration of the statutory right of redemption under SARFAESI, and
Given primacy to the certainty and finality of enforcement for secured creditors and buyers.

The High Court in Gogi Motor Store faithfully applies this new post-amendment position.

5.3 Application of Rajendran to the Present Case

The key dates in this case are:

Publication of the impugned Tender-cum-Auction Notice: 17–18.06.2025,
Filing of writ petition: after around two months of such publication,
Deposits by the petitioner: largely after or around the time of auction-related steps, not before the crucial date of publication.

The Court notes:

The petitioner failed to discharge dues before the publication of the Tender-cum-Auction Notice dated 17.06.2025.
The right to redeem thus stood extinguished on that date, applying Rajendran.
Even if the petitioner deposited some amounts after this stage, those payments are legally “immaterial” for reviving the extinguished right of redemption or stalling the auction process.
Respondent No. 3’s full deposit of the bid amount further entrenched the sale process, creating strong third-party rights.

Consequently, once the Court accepted the binding nature of Rajendran, the legal position became:

The borrower no longer had any statutory right to compel the Bank to halt the sale.
The Court was not inclined to interfere in writ jurisdiction to upset a legally conducted auction with a bona fide third-party purchaser.
Other grounds (valuation, alleged lack of notice, etc.) became legally marginal, and the Court explicitly declined to examine them in depth.

5.4 Treatment of Other Objections

5.4.1 Valuation Challenge

The petitioner vaguely alleged that the property was worth around Rs. 2 crores and that the Bank undervalued it before auctioning it for Rs. 71,02,000/-.

The Court, however, held:

The Bank had obtained valuation from its empanelled valuer,
The valuation report contained detailed heads and consideration of area and other aspects,
The petitioner offered only a bare allegation without any counter-valuation or expert report.

The Court thus treated this as a “mere wholesale assertion” insufficient to displace a professional valuation, especially when the primary legal challenge (redemption) had already failed.

5.4.2 Service of Notices and Procedural Compliance

The petitioner suggested that statutory notices were not duly served. The Court, upon perusal of the record, found:

Demand notice under Section 13(2) had been issued and received.
Possession notices were issued and published in newspapers.
Order under Section 14 by DM and subsequent communication to the borrower were made.

Given this, and in the absence of convincing evidence to the contrary, the Court did not accept the plea of defective service.

5.4.3 Acceptance of Part Payments after NPA and after Auction Initiation

The petitioner argued that:

He had deposited significant amounts even after SARFAESI proceedings commenced,
The Bank’s acceptance of these amounts barred it from continuing with SARFAESI measures,
Bank officials had verbally promised restructuring and discontinuation of enforcement.

The Court found these contentions unpersuasive in law:

Section 13(8), as interpreted in Rajendran, limits the borrower’s enforceable right to tender dues to a point before publication of auction notice.
Once that stage has passed, the Bank is not legally bound to accept further tender or to halt enforcement.
Even if the Bank does accept part payments, that by itself does not erase the earlier default or undo the SARFAESI actions, unless a formal restructuring/settlement is concluded and properly recorded.

Therefore, the Bank’s acceptance of amounts and alleged verbal assurances could not override the statutory scheme and extinguished rights under Section 13(8).

5.4.4 Suppression of Facts and Non-impleadment of Successful Bidder

Respondent No. 3 pointed out that:

He was the successful bidder,
He had deposited the entire bid amount,
The petitioner initially filed the writ petition without impleading him, and obtained interim relief, causing serious prejudice to his rights.

While the High Court does not dwell at length on this suppression, it implicitly recognizes the creation of third-party rights and the prejudice that would result if the auction were set aside at this stage. This context further strengthens the policy rationale behind limiting the borrower’s right of redemption to a defined statutory window.

5.5 Writ Jurisdiction and Alternative Remedies

Although the judgment does not explicitly discuss the bar of alternative remedies (e.g., appeal under Section 17 SARFAESI to the Debts Recovery Tribunal), it is notable that:

The Court did entertain the writ but focused its analysis on the substantive statutory right of redemption under Section 13(8).
Once it concluded that the right stood extinguished and that the Bank had complied with SARFAESI procedures, the Court found no basis for interference in writ jurisdiction.

This suggests a judicial reluctance to interfere with completed or substantially completed SARFAESI auctions, especially when:

Statutory steps are followed,
The borrower had sufficient earlier opportunities, and
Third-party rights have crystallized.

6. Simplifying Key Legal Concepts

6.1 SARFAESI Act in Simple Terms

The SARFAESI Act allows banks and financial institutions to recover loans secured by mortgages or charges without going to court. If a borrower defaults and the loan becomes an NPA, the bank can:

Issue a demand notice;
Take possession of the secured assets;
Sell the assets through public auction or private treaty;
Use sale proceeds to adjust the outstanding loan.

6.2 What is an NPA (Non-Performing Asset)?

An NPA is a loan where the borrower has not made principal or interest payments for a specified period (usually 90 days or more). Once an account becomes NPA, banks can trigger more stringent recovery measures under laws like SARFAESI.

6.3 Right of Redemption

In mortgage law, the right of redemption is the borrower’s right to reclaim the mortgaged property by repaying the loan with interest and costs. Under:

Transfer of Property Act, Section 60: The mortgagor’s right of redemption traditionally continued until the property was actually sold (or sometimes until confirmation of sale).
SARFAESI, Section 13(8) (post-amendment): This right is statutorily curtailed. The borrower must pay dues before publication of the auction notice to stop the sale. After that, the law does not require the bank to accept payment or stop the auction.

Gogi Motor Store applies this narrower, more definite statutory right of redemption.

6.4 Symbolic vs. Physical Possession and Role of District Magistrate

Symbolic possession: The bank issues a possession notice and publicly declares that it has taken possession (often while the borrower may still physically occupy the property).
Physical possession: Actual control of the property is taken, often with the assistance of the District Magistrate under Section 14, who can direct local authorities (like the Tehsildar) to help the bank.

In this case, the Bank initially took symbolic possession and later invoked Section 14 to secure physical possession.

6.5 Tender-cum-Auction Notice and Valuation Report

A Tender-cum-Auction Notice is a public notice inviting bids for the purchase of the secured asset. It typically specifies:

Details of the property;
Reserve price (based on valuation);
Earnest money deposit, bid submission deadlines;
Date, time, and mode of auction.

A valuation report is prepared by an approved/empanelled valuer of the Bank. Courts often give substantial weight to such professional valuations, and mere assertions by borrowers of higher “market value” rarely suffice to invalidate an auction unless supported by credible contrary evidence.

7. Implications and Impact of the Judgment

7.1 For Borrowers

Hard cut-off for redemption: Borrowers must now treat the date of publication of the auction notice as the final, non-negotiable deadline to fully clear dues if they wish to prevent sale under SARFAESI.
Limited efficacy of post-auction payments: Payments made after auction notice publication will generally not revive the right to redeem or compel the bank to abandon the auction.
Need for proactive litigation: Any legal challenge to SARFAESI measures (e.g., to valuation, classification as NPA, service of notices) must be raised before the auction notice is published, preferably through DRT under Section 17, rather than belated writ petitions.

7.2 For Banks and Financial Institutions

Enhanced certainty and enforceability: Banks gain legal assurance that once they cross the milestone of auction notice publication (after complying with prior requirements), the borrower’s statutory right of redemption ends.
Protection of auction process: Acceptance of part payments after auction initiation does not, by itself, prevent continuation of sale, provided no formal restructuring/settlement is recorded.
Importance of compliance: The judgment also implicitly underscores the necessity of scrupulous compliance with procedural steps (Section 13(2), 13(4), Rule 8, Section 14) to earn such judicial deference.

7.3 For Auction Purchasers

Strengthened third-party rights: Once a purchaser bids successfully and deposits the entire bid amount pursuant to a duly published auction notice, courts are increasingly reluctant to disturb their rights based on belated challenges by borrowers.
Reduced litigation risk: With Rajendran and cases like Gogi Motor Store, bona fide buyers have greater confidence that sales will not be lightly set aside in writ jurisdiction after the key statutory stages.

7.4 For Litigation Strategy and Legal Doctrine

Shift from equity to strict statutory interpretation: The judgment illustrates the movement from earlier, more equitable doctrines of redemption (TPA Section 60, older SARFAESI cases) to a stricter, statute-centric approach under the amended Section 13(8).
Constrained writ review in SARFAESI auctions: While constitutional remedies remain available, High Courts are likely to confine interference to clear statutory or constitutional violations, especially once auction notices are published and third-party rights accrue.

8. Conclusion and Key Takeaways

The decision in M/s Gogi Motor Store v. Citizen’s Co-operative Bank Ltd. is a clear and firm application of the Supreme Court’s interpretation of amended Section 13(8) in M. Rajendran. It establishes, for the jurisdiction of Jammu & Kashmir and Ladakh, that:

Borrower’s right of redemption under Section 13(8) SARFAESI stands extinguished on the date of publication of the auction notice if dues are not fully paid before that date.
Post-notice payments or offers, even if accepted by the bank, do not legally compel the creditor to halt the auction or restore the borrower’s right of redemption.
Courts will generally respect completed or substantially completed auction processes, especially where:
- Statutory procedures have been followed,
- Borrowers had multiple prior opportunities to regularize the account, and
- Third-party rights of successful bidders have crystallized.
Bare allegations of improper valuation or lack of notice, without credible supporting material, are unlikely to succeed against an auction conducted in accordance with Rule 8 and other SARFAESI provisions.

In a broader sense, the judgment reinforces a more creditor-friendly and certainty-oriented regime under SARFAESI, where:

Borrowers must act promptly and proactively if they wish to protect their properties, and
Banks and auction purchasers can rely on a clear statutory timeline beyond which the borrower’s right of redemption no longer obstructs the sale.

For legal practitioners, the case is an important reminder that in SARFAESI matters, the timing of the challenge – specifically, whether it is mounted before or after publication of the auction notice – can be determinative of the outcome.

Extinguishment of Borrower’s Right of Redemption on Publication of Auction Notice under Section 13(8) SARFAESI: Case Commentary on M/s Gogi Motor Store v. Citizen’s Co-operative Bank Ltd. & Anr.