Safiya Malik

The High Court of Jammu & Kashmir and Ladakh Division Bench of Justice Sindhu Sharma and Justice Shahzad Azeem dismissed a borrower’s writ petition and vacated the interim protection against a co-operative bank’s tender-cum-auction notice for sale of the borrower’s mortgaged residential house at Jammu to recover outstanding credit-facility dues. The Court allowed the secured creditor to continue with the auction process, noting that a third-party bidder had deposited the entire bid amount. Reaffirming the amended Section 13(8) of the SARFAESI Act, the Bench said the right to redeem a secured asset stands extinguished on publication of the public auction notice, and the borrower cannot insist on tendering dues after that date to halt the transfer.

M/s Gogi Motor Store filed the petition seeking quashment of the Tender-cum-Auction Notice dated 17.06.2025 issued by Citizen’s Co-operative Bank Ltd., along with any consequential action taken under Section 13(4) of the SARFAESI Act. The petitioner had availed a Cash Credit Limit of Rs. 49,00,000, secured by mortgaging a residential property at South X Housing Colony, Channi Kamala, Jammu. The account became irregular and was classified as NPA on 03.05.2023, following which proceedings under the SARFAESI Act were initiated.

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The Bank issued a demand notice under Section 13(2) claiming Rs. 53,43,639 and later took symbolic possession, followed by steps under Section 14. Multiple auction notices, including notices dated 16.12.2024 and 03.04.2025, received no bids. The final Tender-cum-Auction Notice dated 17.06.2025 resulted in respondent No. 3 being declared the successful bidder after depositing Rs. 71,02,000. The petitioner asserted that substantial repayments had been made, that deposits were accepted even after issuance of the auction notice, that valuation was improper, and that assurances of restructuring were given verbally. The Bank denied these allegations, stating that statutory requirements were fulfilled. Respondent No. 3 contended that the petitioner suppressed material facts and that the borrower’s right to redeem extinguished upon publication of the auction notice.

The Court recorded that the petitioner’s account became irregular and was classified as NPA despite repeated intimation to regularize the account. It stated that after issuance of the demand notice under Section 13(2) and the notice under Section 13(4) read with Rule 8, the petitioner failed to redeem the secured asset. The Court observed that “the petitioner did not comply, thereby compelling the respondent-Bank to resort to Section 14 of the SARFAESI Act” and that the Bank thereafter issued notices for taking over possession.

The Court recorded that several steps taken under the SARFAESI Act yielded no repayment, leaving the Bank with no option but “to go for the auction/sale of the secured assets”. It noted the issuance of multiple auction notices and the ultimate publication of the Tender-cum-Auction Notice dated 17.06.2025. It further recorded that respondent No. 3 “has been declared as successful bidder and by now, has deposited the entire bid amount of Rs. 71,02,000”.

Regarding valuation, the Court observed that “the respondent-Bank has got done the valuation of the secured assets from its empanelled valuer… therefore, mere wholesale assertion is not sufficient to dislodge the report”. It further noted that the petitioner filed the petition two months after publication of the auction notice while admitting liability.

The Court relied upon the Supreme Court decision in M. Rajendran v. KPK Oils and Proteins, quoting that “a borrower can tender the amount… at any time, before the date of publication of notice for public auction… A borrower has no unfettered right… after the date of publication”. It observed that the amended Section 13(8) “extinguishes the right of redemption… before publication of the Auction Notice”. Applying this to the case, the Court stated that “once the Auction Notice is published, the right of redemption… has extinguished on 17.06.2025 and any amount even if deposited is immaterial.”

The Court recorded that the petitioner made an “abortive attempt just to delay the process” after failing to respond to statutory notices, and thus no other grounds required examination once the right of redemption had extinguished.

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The Court recorded that “writ petition does not stand the scrutiny of law, therefore, being bereft of merit, accordingly, same is dismissed along with connected CM(s). Interim order, if any, shall stand vacated. Record is returned to Mr. Ajay Bakshi, Advocate appearing for the respondent-Bank.”

Advocates Representing the Parties

For the Petitioner: Mr. D.S. Chouhan, Advocate; Mr. Ashish Sharma, Advocate

For the Respondents: Mr. R.K. Jain, Sr. Advocate with Mr. Paramveer Singh, Advocate; Mr. Ajay Bakshi, Advocate.

Case Title: M/s Gogi Motor Store v. Citizen’s Co-operative Bank Ltd. & Anr.
Case Number: WP(C) No. 2274/2025
Bench: Justice Shahzad Azeem, Justice Sindhu Sharma