By S&S Co. Advocates & Solicitors · Published 15 October 2026 · Informational content, not legal advice: see our disclaimer
A borrower who has defaulted and received a Section 13(2) notice almost always believes there is time left to put things right, even after possession has been taken and an auction notice published. For years, that belief had some basis, because High Courts disagreed on exactly when the right to redeem a mortgaged asset under the SARFAESI Act actually closes. The Supreme Court resolved the conflict in Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd., and the answer is tighter than many borrowers, and some lenders, expect.
This matters just as much to a bidder who has won a SARFAESI auction and is waiting for the sale certificate, since the same ruling tells them exactly when they can stop worrying about a late redemption attempt derailing the purchase.
Where Redemption Sits in the SARFAESI Timeline
The process starts with a notice under Section 13(2), giving the borrower sixty days to clear the dues. If that period passes without payment, the secured creditor can take possession under Section 13(4) and proceed to sell the asset, usually by public auction, under the Security Interest (Enforcement) Rules, 2002. At several points along this sequence, a borrower can still come forward and offer to clear the outstanding amount in exchange for getting the property back. The question that split the High Courts was how late in that sequence the offer could still be made.
Section 13(8) of the Act is the specific provision dealing with this. Before 2016 it read, and was applied, in a way that let a borrower redeem the asset right up until the transfer to the auction purchaser was actually completed, which in practice meant until the sale certificate was registered and possession handed over. A 2016 amendment changed the wording, and lenders began arguing that the cut-off had moved much earlier, to the point the auction notice itself was published.
Why High Courts Took Different Views After the 2016 Amendment
Some High Courts read the amended Section 13(8) literally and held that once the secured creditor published the notice of sale under the Enforcement Rules, the borrower's statutory right to redeem the secured asset stood extinguished from that moment, regardless of whether the sale itself had been confirmed or completed. Other High Courts continued to apply the older logic, reasoning that a mortgagor's general right of redemption under the Transfer of Property Act survives until the transfer is actually finished, and that the 2016 change should not be read to cut that right off at an earlier, less final stage.
The practical difference between the two views is large. Under the stricter reading, a borrower who shows up with the full amount the week after the auction notice is published, but before the sale is confirmed, is simply too late. Under the more lenient reading, that same borrower would still have a live right to redeem. Lenders, auction purchasers and borrowers were all operating with real uncertainty about which rule actually governed their situation until the Supreme Court stepped in.
What the Supreme Court Held in Celir LLP v Bafna Motors
The dispute involved a lease rental discounting facility of roughly one hundred crore rupees extended by Union Bank of India, secured by a mortgage, on which the borrower defaulted. Celir LLP won the SARFAESI auction with a bid of about one hundred five and a half crore rupees. The borrower then tried to redeem the property, including through an offer of a higher amount, first before the Debts Recovery Tribunal and then before the Bombay High Court.
Deciding the matter on 21 September 2023, the Supreme Court held that the amended Section 13(8) means exactly what the stricter line of High Courts had said. A borrower's right to redeem the secured asset stands extinguished once the secured creditor publishes the notice for public auction, provided the dues have not been tendered before that point. The Court treated this as a deliberate legislative choice to bring certainty to SARFAESI sales, and held that the statutory cut-off under Section 13(8) prevails over the mortgagor's general redemption right under the Transfer of Property Act for assets being sold under this particular enforcement mechanism. The earlier line of reasoning, that redemption survived until registration of the sale certificate and delivery of possession, was not followed for sales governed by the amended provision.
What Counts as Tendering the Dues in Time
The ruling does not leave borrowers with nothing. If the full amount due, not merely the arrears mentioned in the Section 13(2) notice, is tendered to the secured creditor before the auction notice is published, the right to redeem remains intact and the creditor cannot proceed to sell. The relevant moment is publication of the notice, not the thirty day period typically given between that notice and the actual auction date, and not any later stage of confirmation or registration.
This means a borrower who is negotiating a settlement, or waiting on funds from a sale of other assets or a fresh loan elsewhere, needs to track the publication date closely rather than assuming there will be a window right up to the auction itself. Once that notice goes out, the clock on redemption has effectively stopped, whatever stage the physical sale process later reaches.
Practical Steps for a Borrower Who Wants the Property Back
The first and most useful thing a defaulting borrower can do, well before any auction notice is even drafted, is open a dialogue with the lender during the sixty day period following the Section 13(2) notice, since a one time settlement or restructuring at that stage avoids the redemption question altogether. Once possession has been taken under Section 13(4), a borrower who genuinely intends to redeem should be ready to tender the full amount the moment there is any sign an auction notice is imminent, rather than waiting for a formal copy to arrive in hand.
The Supreme Court reaffirmed this position in M. Rajendran and Ors. v. KPK Oils and Proteins India Pvt. Ltd. (decided 22 September 2025), holding again that the redemption right is lost on valid publication of the auction notice and does not survive until confirmation or registration of the sale, and clarifying that 'publication' refers to the composite notice process (service, newspaper publication, affixation and website upload), not a newspaper advertisement alone. Where an auction notice has already been published and the borrower missed that window, this line of authority leaves very little room to argue the point before the DRT or a civil court based on the SARFAESI provision itself. Any remaining argument would have to rest on a procedural defect in the notice or the auction process, not on a claim to a continuing right of redemption, and that is a narrower and harder case to make.
What an Auction Buyer Should Check Before Bidding
For a bidder, the comfort from this ruling is real but not unconditional. It confirms that a completed auction, properly notified, should not be unwound simply because the borrower later shows up with the money or a higher counter-offer, since the borrower's right closed at publication of the notice. What a careful bidder should still verify before paying the balance sale consideration is that the Section 13(2) and 13(4) steps, and the auction notice itself, were carried out correctly and within the Enforcement Rules' own timelines, since a defect in those earlier steps remains a separate route by which a sale can still be challenged.
It is worth asking the bank directly, before the balance payment falls due, whether any redemption offer was received before the auction notice went out, and if so how it was dealt with. A bidder who skips this check and later discovers a disputed pre-notice tender exists is likely to end up defending the sale in court rather than enjoying it, even where the underlying Celir LLP position would probably favour the purchaser once the facts are properly argued out.
Frequently Asked Questions
We received a Section 13(2) notice last month. Can we still redeem the property if we pay later, even after possession is taken?
Yes, redemption remains possible after possession under Section 13(4), but only until the bank publishes the auction notice. Once that notice is published without full payment having been tendered, the statutory right to redeem the secured asset is treated as extinguished.
Does registering the sale certificate or handing over possession to the buyer give us one last chance to redeem?
No. The Supreme Court in Celir LLP v. Bafna Motors held the cut-off is publication of the auction notice, not registration of the sale certificate or delivery of possession. Those later steps do not reopen the redemption window.
We offered a higher price than the winning bidder after the auction. Does that revive our right to redeem?
Not under Section 13(8) as interpreted in Celir LLP. An offer made after the auction notice has been published, however much higher it is than the winning bid, does not restore a redemption right that has already stood extinguished.
I won a SARFAESI auction and paid the full price. Can the borrower still get the sale set aside by offering to pay the bank?
Not on redemption grounds alone, once the notice was properly published before any tender of dues. A borrower would need to show a genuine procedural defect in the Section 13(2) notice, the possession, or the auction process itself to challenge a completed sale.
Does this ruling apply to every secured asset sold under SARFAESI, or only to certain kinds of loans?
The ruling applies to the enforcement mechanism under the SARFAESI Act generally. It does not disturb a borrower's separate contractual settlement options with the lender before an auction notice is published, which remain the most reliable way to avoid the cut-off entirely.
References & Further Reading
The provisions and rulings below were relied on for this guide. The position can change with amendments and later decisions, so check the current text and the latest case law before acting on any of it.
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Sections 13(2), 13(4), 13(8)
- Security Interest (Enforcement) Rules, 2002
- Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. and Ors., Supreme Court of India, decided 21 September 2023, [2023] 13 S.C.R. 55
- Mathew Varghese v. M. Amritha Kumar, Supreme Court of India (pre-amendment position on redemption timing)