The High Court of Jammu & Kashmir and Ladakh has ruled that under the amended provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), a borrower’s right to redeem a secured asset stands extinguished the moment the auction notice is published, and any attempt to redeem the asset thereafter—even by tendering full dues—is legally ineffective. The decision came in a writ petition filed by a borrower, M/s Gogi Motor Store, challenging a tender-cum-auction notice issued by a bank for auctioning the petitioner’s mortgaged residential property.
The background of the case is that the petitioner had obtained a cash credit facility of ₹49 lakh by mortgaging his residential property, and the account had become irregular and subsequently classified as a non-performing asset. The bank issued statutory notices under the SARFAESI Act for recovery and, after failure on the borrower's part to clear dues, initiated possession and auction proceedings. After all procedural steps, the bank issued a fresh Tender-cum-Auction Notice, which was duly published. The successful bidder deposited the bid amount following the auction process.
The petitioner contended that he had substantially repaid the loan dues, reducing outstanding amounts drastically, and claimed that the bank had verbally promised a restructuring of the account. He also alleged improper valuation of his property, failure to serve statutory notices correctly, and that auctioning a residential house worth over ₹2 crore for dues allegedly under ₹20 lakh was disproportionate.
Rejecting these arguments, the High Court construed the amended Section 13(8) of the SARFAESI Act in light of recent jurisprudence, particularly relying on the interpretation by the Supreme Court of India (SC) in a 2025 ruling. The Court observed that the 2016 amendment to Section 13(8) significantly curtailed the borrower’s redemption rights — providing that such rights stand terminated upon publication of the notice for public auction or invitation of tender/quotation for transfer of the secured asset. After that date, no amount, whether full dues or partial repayment, will suffice to revive the redemption right.
Given this statutory position, the Court held that the tender-cum-auction notice publication lawfully extinguished the borrower’s right to redeem the mortgaged property. The property having already been bid upon and sold, the Court found no merit in reopening the process merely because the borrower tendered payment after notice publication. Further, the Court refused to fault the valuation carried out by the approved valuer, noting that mere assertions of under-valuation were insufficient to dislodge the valuation report.
Given that the statutory sequence of notices, possession, and auction was followed, the auction purchaser had a vested right over the property, and the sale process stood concluded, the Court dismissed the writ petition. It characterized the petitioner’s challenge as a belated attempt to derail the statutory recovery process after prolonged inaction. The interim order in his favour was vacated, and the auction proceedings were allowed to stand unimpeded.
The judgment thus reinforces the legal clarity that under the revised SARFAESI regime, borrowers must act early: once a valid auction notice is published, their chance to redeem ends. Any payments tendered after that point cannot legally revive their right. The decision underscores the finality of auction notices and safeguards the sanctity of auctions conducted by secured creditors under the SARFAESI Act.
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