CELIR LLP versus BAFNA MOTORS (MUMBAI) PVT. LTD. & ORS.

CELIR LLP versus BAFNA MOTORS (MUMBAI) PVT. LTD. & ORS.

The Supreme Court held that (1) the Bombay High Court erred in exercising writ jurisdiction under Article 226 when an alternative statutory remedy under Section 17 SARFAESI Act had been availed; (2) confirmation of sale under Rule 9(2) confers on the successful auction purchaser a vested right to obtain a sale certificate under Rule 9(6); (3) the 2016 amendment to Section 13(8) SARFAESI Act restricts the borrower’s right of redemption to payment of all dues before the date of publication of the public auction notice (and not until registration of sale), and the SARFAESI Act as special law overrides inconsistent general provisions such as Section 60 of the Transfer of Property Act; and (4)...

Parties
Appellant (auction Purchaser): CELIR LLP; Respondent No.1 (borrower): Bafna Motors (Mumbai) Pvt. Ltd.; Guarantor: Respondent No.2 (Guarantor); Respondent No.3 (bank / Secured Creditor): Union Bank of India
Jurisdiction
India
Judgment Date
21 September 2023
Procedural Posture
Civil Appeal (civil Appeal Nos. 5542 5543 of 2023) / Appeal Against Judgment and Order Dated 17.08.2023 of the Bombay High Court (writ Petition Disposal)
Outcome
Appeals allowed

Case Brief

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Parties

CELIR LLP

Appellant (auction Purchaser)

Bafna Motors (Mumbai) Pvt. Ltd.

Respondent No.1 (borrower)

Respondent No.2 (Guarantor)

Guarantor

Union Bank of India

Respondent No.3 (bank / Secured Creditor)

Procedural Posture

Civil Appeal (civil Appeal Nos. 5542 5543 of 2023) / Appeal Against Judgment and Order Dated 17.08.2023 of the Bombay High Court (writ Petition Disposal)

Legal Issues

  1. 1 Whether the High Court was justified in exercising writ jurisdiction under Article 226 when an alternative remedy under s.17 of the SARFAESI Act had been availed of by the borrowers
  2. 2 Whether confirmation of sale by the secured creditor under Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 vests the successful auction purchaser with a vested right to obtain a sale certificate under Rule 9(6)
  3. 3 What is the impact of the amended Section 13(8) of the SARFAESI Act on the borrower’s right of redemption, and its interaction with Section 60 of the Transfer of Property Act, 1882

Ratio Decidendi

The Supreme Court held that (1) the Bombay High Court erred in exercising writ jurisdiction under Article 226 when an alternative statutory remedy under Section 17 SARFAESI Act had been availed; (2) confirmation of sale under Rule 9(2) confers on the successful auction purchaser a vested right to obtain a sale certificate under Rule 9(6); (3) the 2016 amendment to Section 13(8) SARFAESI Act restricts the borrower’s right of redemption to payment of all dues before the date of publication of the public auction notice (and not until registration of sale), and the SARFAESI Act as special law overrides inconsistent general provisions such as Section 60 of the Transfer of Property Act; and (4)...

Court Disposition

Appeals allowed

Orders

  • Impugned judgment and order dated 17.08.2023 of the Bombay High Court is set aside
  • Respondent Bank shall refund the entire amount deposited by the borrowers (Rs.129 crore)