Safiya Malik

The High Court of Jammu and Kashmir and Ladakh Division Bench of Justice Sanjeev Kumar and Justice Sanjay Parihar dismissed a borrower’s writ challenge to a bank’s SARFAESI recovery action, including possession steps, an e-auction of the mortgaged property and the sale certificate issued to the auction purchaser. Taking note of the shift introduced by the 2016 amendment, the Bench held that the borrower’s right of redemption does not survive until completion of sale and stands extinguished on the date of valid publication of the sale notice. The Court held that once the secured creditor complies with the composite notice requirements under the Act and the 2002 enforcement framework, the borrower cannot derail recovery proceedings by raising belated procedural objections.

The case arose from recovery proceedings initiated by a bank against a borrower whose loan account had been declared a non-performing asset. The borrower had availed cash credit facilities, which were subsequently enhanced, against hypothecation of agricultural produce and mortgage of immovable properties. Due to failure to service the loan and clear outstanding dues despite repeated demands, the bank classified the account as NPA and issued a demand notice requiring repayment within the stipulated period.

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Subsequently, possession of the secured assets was taken and auction proceedings were initiated. After an initial auction attempt did not culminate in sale, a fresh e-auction notice was issued, followed by an addendum extending the auction timeline. The secured assets were eventually sold through e-auction, and a sale certificate was issued and registered in favour of the auction purchaser.

The borrower challenged the recovery proceedings, auction notices, and issuance of the sale certificate, alleging non-service of statutory notices and denial of the mandatory period to redeem the secured assets. The borrower also questioned the manner in which the auction was conducted, contending that statutory safeguards under the applicable recovery framework were not complied with.

The Court examined the challenge in the context of the amended statutory framework governing enforcement of security interests. It recorded that “the petitioner has no reasonable cause or justification to maintain this petition after having failed to clear its debt despite availing several opportunities from the Bank.”

Addressing the contention regarding denial of the statutory period for redemption, the Court referred to the legal position governing the right of redemption and noted that “the issue raised in this petition needs to be examined in the light of judgment passed by the Hon’ble Supreme Court… in which it has been reaffirmed that the right of redemption of the borrowers… is extinguished on the date of publication of auction notice.”

The Court reproduced and relied upon authoritative passages explaining that “the moment the notice for holding auction… is ‘published’, the borrower’s right of redemption would be extinguished.” It further recorded that “the word ‘publication’… has to be understood to mean and include the service, publication in newspaper, and the affixation and uploading of the ‘notice of sale’.”

On facts, the Court noted that although the initial auction notice granted a shorter period, it was not taken to its logical end. It observed that “the petitioner thus had a time with effect from 28th of July 2023 to 13th of September 2023 to clear his dues which he failed to do.”

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The Court further stated that “it cannot by any stretch of reasoning be said that the petitioner was deprived of an opportunity of 30 days to deposit the dues.” It recorded that the borrower had knowledge of the proposed auction well in advance and had substantially more time than the minimum prescribed period to redeem the secured assets.

The Court recorded that “we find no merit in this petition.” It further directed that “the same is accordingly dismissed.”

Advocates Representing the Parties

For the Petitioners: Mr. Tariq M. Shah, Advocate, with Mr. Zahid Ahmad, Advocate

For the Respondents: Ms. Insha Rashid, Advocate; Ms. Taniya, Advocate

Case Title: Nazir Ahmad Bhat v. Chairman/Managing Director, J&K Bank & Others
Neutral Citation: 2025: JKLHC-SGR:409-DB
Case Number: WP (C) No. 654/2024
Bench: Justice Sanjeev Kumar, Justice Sanjay Parihar