In a significant verdict, the Supreme Court clarified the legal standing of borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) in a case involving Orris Infrastructure.
The Court, headed by CJI Dr. Dhananjaya Y. Chandrachud and Justice J.B. Pardiwala, ruled that once the auction notice is published, the borrower’s right of redemption of mortgage is extinguished as per the amended Section 13(8) of the SARFAESI Act. The case revolved around a private arrangement between the bank and the borrowers, leaving an auction purchaser stranded.
The Supreme Court directed the bank to return the entire amount paid by the borrowers and issue a sale certificate in Favor of the auction purchaser, emphasizing the sanctity of public auctions conducted under the SARFAESI Act.
The ruling has far-reaching implications, underscoring the importance of borrowers adhering to legal provisions, particularly concerning auction notices. It clarifies the legal rights and obligations of both borrowers and financial institutions, ensuring transparency and fairness within the real estate sector.