*S. Karthik & Ors Vs N Subhash Chand Jain & Ors*
*Forum-Supreme Court of India*
*Date-23rd September,2021*

*Sub-How an ingenious litigant, by taking recourse to a series of proceedings one after the other, has been successful in blocking the enforcement of a security interest, created in favour of a secured creditor, thereby defeating the very purpose for which the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’) was enacted. *

The Apex Court in this case was dealing with the auction sale of mortgaged property which was continuously blocked by the guarantors on some pretext or other and ultimately Indian Overseas Bank disposed off the property through auction sale by way of a 2nd notice under SARFESI Act by giving notice of 10 days and the question before the Hon’ble Court was whether in a subsequent sale , the mandatory 30 days notice has to be given or not. The court distinguished the judgement of Mathew Varghese relied on by the appellants by holding that the initial sale could not take place because of the reasons attributable to the guarantors due to multiple and protracted litigations. The court also interpreted Section 60 of the Transfer of Property Act as per which the right of redemption of the mortgagor is extinguished on execution of conveyance and registration of the mortgagor’s interest by registered instrument. Finally in Para 76, the court noted the rationale and purpose for which the SARFESI Act was enacted.
Finally the appeal was dismissed and the court in exercise of powers under Article 142 of-the Constitution of India, directed the possession of the property to be given to the auction purchaser within 8 weeks and also the rent collected during this period to be made over to the auction purchaser.

This judgement reiterates the dictum that Litigation doesn’t always pay and truth always prevails.

Ramesh Patodia
24-09-2021