[Cites 12, Cited by 0]
Madhya Pradesh High Court
Smt. Sunita Singh vs Bank Of India on 12 February, 2026
Author: Vivek Rusia
Bench: Vivek Rusia
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
1 WP-5555-2017
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE PRADEEP MITTAL
ON THE 12th OF FEBRUARY, 2026
WRIT PETITION No. 19856 of 2015
SMT. KAMLA DEVI AND OTHERS
Versus
BANK OF INDIA AND OTHERS
Appearance:
Shri Ramesh Kumar Verma, Senior Advocate with Shri Ram Murti
Tiwari and
Shri Munish Saini, Advocate for petitioners.
Shri Rajesh Maindiretta, Advocate for respondent No. 1.
Shri Avinash Gupta, Advocate for respondent No. 2.
WITH
WRIT PETITION No. 5555 of 2017
SMT. SUNITA SINGH AND OTHERS
Versus
BANK OF INDIA AND OTHERS
Appearance:
Shri Avinash Gupta, Advocate for petitioners.
Shri Rajesh Maindiretta, Advocate for respondent/Bank.
Shri Ramesh Kumar Verma, Senior Advocate with Shri Ram Murti
Tiwari & Shri Munish Saini, Advocate for respondent Nos. 2 and
3.
ORDER
Per: Justice Pradeep Mittal
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
2 WP-5555-2017
Since both these writ petition involve a common issue, they
are heard and decided together by this common order. References to
the annexures and documents are taken from W.P. No. 19856 of 2015
for the sake of convenience.
2. The case, in brief, in W.P. No. 5555 of 2017 is that Late V.P.
Singh, the husband of Petitioner No. 1 and father of Petitioner Nos. 2
to 4, is deceased. He, along with Petitioner No. 1, had constituted a
partnership firm in the name and style of M/s R&R Oil Mills. The
firm was the borrower. The firm availed an overdraft facility from the
respondent Bank and mortgaged the following properties: (i) land
measuring 7,200 sq. ft. situated at Khasra No. 77/1, Gwarighat,
Narmada Road, Jabalpur (M.P.); and (ii) two plots, each measuring
2,400 sq. ft., situated at Khasra No. 77/17, Gwarighat Ward, Jabalpur
(M.P.) (hereinafter referred to as the "mortgaged properties"). M/s
R&R Oil Mills failed to repay the outstanding dues. Consequently,
the respondent Bank initiated recovery proceedings under Section
13(4) of the SARFAESI Act, 2002. A sale notice was published in
the newspaper dated 23.01.2010 by the Bank, and the auction was
scheduled for 10.02.2010. However, the Bank failed to auction the
mortgaged properties on the said date. Thereafter, it is alleged that the
Bank entered into a private treaty with a third party under the guise of
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
3 WP-5555-2017
an auction, without informing the petitioners or obtaining their
written consent. Subsequent to the scheduled auction date, the
petitioners secured the release of one of the mortgaged properties
measuring 6,000 sq. ft. by paying Rs. 24 lakhs towards the
outstanding dues of M/s R&R Oil Mills. The petitioners claim that
they became aware of the alleged private treaty only when
Respondent No. 2, Sunita Singh, filed Civil Suit No. 119-A/2013
against the respondent Bank seeking execution of a sale deed in
respect of the mortgaged properties. She claimed that the properties
had been purchased by her late husband, Shri V.P. Singh, who died
on 06.07.2011, and that the Bank had failed to execute the sale deed
in her favour. The petitioners remain in possession of the mortgaged
properties and are regularly paying property taxes and other dues.
One of the mortgaged properties was let out to M/s Hathway Cable &
Datacom Ltd. up to 30.09.2015. The Petitioners submitted a
representation dated 02.11.2015 to the respondent Bank protesting
the alleged private treaty conducted without their consent and
requesting release of the mortgaged properties. Respondent Bank
failed to respond to the said representation and did not release the
mortgaged properties. Petitioner No. 1 also issued Cheque No.
680685 in favour of the Bank for Rs. 28 lakhs and requested the
Bank not to create any third-party interest in the mortgaged
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
4 WP-5555-2017
properties.
3. It is submitted that the petitioners have filed this petition raising
the following grounds. The Bank acted in an arbitrary and illegal
manner, contrary to the provisions of the SARFAESI Act, 2002 and
the Security Interest (Enforcement) Rules, 2002. The Bank's letter
dated 28.09.2012 addressed to Respondent No. 2 clearly indicates
that no auction was held on 10.02.2010, nor was any fresh publication
issued or notice of extension of the auction date served upon the
petitioners. Therefore, the alleged private treaty and related
proceedings are illegal, null and void, and not binding upon the
petitioners. Entire action of the respondent Bank is contrary to the
provisions of the SARFAESI Act, 2002, the Security Interest
(Enforcement) Rules, 2002, Section 60 of the Transfer of Property
Act, 1882, and Article 300A of the Constitution of India.
4. It is submitted that the private treaty entered into by the
respondent Bank is illegal, arbitrary, and not binding upon the
petitioners. No notice was served upon the petitioners as mandatorily
required under Rule 8(1) of the Security Interest (Enforcement)
Rules, 2002 framed under the SARFAESI Act, 2002. That the
respondent Bank could not have entered into any private treaty
without obtaining the prior written consent of the petitioners. Further,
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
5 WP-5555-2017
under Rule 9(4) of the Security Interest (Enforcement) Rules, 2002,
the Bank has no authority to extend the time for deposit of the
balance sale consideration without the written consent of the
borrower. No such consent was ever given by Petitioner No. 1 (Smt.
Kamla Devi) or by any partner of M/s R & R Oil Mills. That no
auction was conducted on 10.02.2010. The respondent Bank, by
attempting to dispose of the property without following the statutory
procedure, is acting beyond its authority and seeks to deprive the
petitioners of their constitutional right to property under Article 300A
of the Constitution of India. under the SARFAESI Act, 2002 and the
Rules of 2002, issuance of a fresh notice giving 30 clear days is
mandatory before effecting any sale. No such notice was issued to the
petitioners. Therefore, any transaction undertaken behind their back is
illegal, null and void.
5. It is submitted that neither any sale certificate has been issued
nor any sale deed has been registered by the respondent Bank in
favour of Respondent No. 2. Consequently, the petitioners' statutory
right of redemption under Section 60 of the Transfer of Property Act,
1882 continues to subsist. It is submitted that the law laid down by
the Hon'ble Supreme Court in Narandas Karsondas v. S.A. Kamtam
(1977) 3 SCC 247 and in Mathew Varghese v. M. Amritha Kumar
&Ors. (2014) 5 SCC 610 clearly holds that the mortgagor's right of
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
6 WP-5555-2017
redemption survives until the sale is completed by execution of a
registered sale deed. In the present case, no such registered deed has
been executed. In W.P. No. 2317/2013, by order dated 25.02.2013,
this Court restrained the Bank from proceeding further with the sale
of the property, holding that the procedure adopted was contrary to
Rule 8 of the Security Interest (Enforcement) Rules, 2002. In view of
the judgment in J. Rajiv Subramanian & Anr. v. M/s Pandiyas &
Ors., 2012 (1) BJ 832, a nationalised bank exceeds its authority if it
enters into a private treaty without the written consent/willingness of
the borrower as required under Rule 8 of the Security Interest
(Enforcement) Rules, 2002. It is submitted that in these
circumstances, this Court has ample jurisdiction to exercise its
powers under Article 226 of the Constitution of India and grant
appropriate relief to the petitioners.
6. The petitioners in W.P. No.5555 of 2017 are aggrieved by a
communication dated 28.9.2012 whereby the Bank has demanded
production of legal heir certificate for processing the issuance of the
sale certification in favour of the petitioners along with release of the
property upon payment of dues and return of original title deeds.
7. Learned counsel for the respondent submits that the allegations
are incorrect and contrary to the record. Petitioner No. 2, as
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
7 WP-5555-2017
proprietor of M/s R.R. Oil Mills, had availed financial assistance
from the respondent Bank but failed to repay the dues. Accordingly,
the Bank initiated proceedings under the SARFAESI Act, 2002 by
issuing a demand notice under Section 13(2) dated 04.03.2009,
followed by a possession notice under Section 13(4). Both notices
were duly published in newspapers. Thereafter, the Bank issued an
auction sale notice. In the auction conducted on 24.02.2010, the
husband of Respondent No. 2 submitted the highest bid of Rs.
28,00,000/-. Despite repeated communications from the Bank, he did
not complete the formalities for registration of the sale certificate.
After his demise, the Bank informed Respondent No. 2 to submit a
legal heir certificate for completion of registration. The said
communication is under challenge in separate proceedings. The
petitioners were fully aware of the auction proceedings and the sale
of the property. Subsequently, Petitioner No. 1 approached the Bank
and deposited Rs. 24,00,000/- towards full and final settlement of the
remaining dues, upon which the unsold properties were released and
the original title deeds were returned. The petitioners acknowledged
receipt of the same. The multiple civil proceedings were initiated by
the parties concerning the mortgaged property, including suits and
appeals filed by both the petitioners and Respondent No. 2. These
proceedings clearly demonstrate that the petitioners were aware that
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
8 WP-5555-2017
the property had been sold in auction to the husband of Respondent
No. 2. The allegation that the property was sold through a private
treaty is false and misleading. The sale was conducted pursuant to
auction proceedings under the SARFAESI Act, 2002. The
contentions raised in the writ petition are baseless, contrary to the
record, and devoid of merit. The respondents pray for dismissal of the
writ petition.
8. The petitioners have filed a rejoinder to the reply stating therein
that the respondent Bank, in its reply, has wrongly asserted that the
petitioners have misstated the facts and that all mandatory procedures
under the SARFAESI Act, 2002 and the Security Interest
(Enforcement) Rules, 2002 were duly followed. The said assertion is
incorrect. The petitioner further submits that present rejoinder is filed
to highlight the serious procedural lapses committed by the Bank,
which go to the root of the matter and render the alleged sale in
favour of Late Shri V.P. Singh invalid. The Bank failed to comply
with the mandatory requirements prescribed under Sections 13(2) and
13(4) of the SARFAESI Act read with the Rules of 2002. No clear 30
days' sale notice, as required under Rule 8(6), was ever served upon
the petitioners. The auction publication relied upon by the Bank does
not satisfy the statutory requirement of proper publication in
accordance with the Rules. The so-called auction process was, in
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
9 WP-5555-2017
substance, a private treaty conducted under the guise of a public
auction, without prior written consent of the petitioners. The Act and
the Rules do not permit such a procedure without strict compliance
with mandatory safeguards. The valuation of the property was not
obtained from an approved valuer, the reserve price was not properly
fixed in accordance with law, and due publication requirements were
not fulfilled. The petitioners were not supplied relevant documents
despite repeated requests. The sale proceedings were conducted
without proper notice, without compliance with statutory
requirements, and without affording the petitioners a fair opportunity
to redeem the property. Since the mandatory provisions relating to
demand notice, possession, valuation, sale notice, and publication
have not been complied with, the alleged sale is illegal, arbitrary, and
violative of the SARFAESI Act, 2002, the Transfer of Property Act,
1882, and Article 300A of the Constitution of India.
9. Heard the learned counsel for the parties.
10. It is evident from the record that the Bank auctioned the
property for Rs. 28,00,000/-, which had been mortgaged by the
petitioners with the respondent Bank. Thereafter, the petitioners
settled the account on 30.03.2012 and deposited the remaining
amount with the Bank, thereby redeeming the property. These facts
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
10 WP-5555-2017
clearly show that the auction of the disputed property was within the
knowledge of the petitioners from the very beginning, and they
accepted and honoured the amount of Rs. 28,00,000/- deposited by
the auction purchaser.
11. On 30 march 2012 bank issued a certificate that mortgage
property has been released from mortgage, which shown the property
sold in auction proceeding, that document produced by the petitioner
that document has shown, it was in the knowledge to prior that the
property had been sold in auction and petitioner never challenged it
before the DRT.
12. The respondent Bank issued a notice (Annexure R/1) under
Section 13 of the SARFAESI Act, 2002 to the petitioners through
registered post on 04.03.2009, and the notice was also published in
newspapers dated 27.05.2009 and 28.05.2009 (Annexure R-1/2). The
respondent Bank took possession of the secured asset on 25.09.2009.
Thereafter, the Bank conducted the auction on 24.02.2010 and issued
a notice to the auction purchaser for issuance of the sale certificate. It
is stated by the learned counsel for the Bank that the Bank vide
communications dated 9.4.2010 (Annexure R1/1),
13.4.2010(Annexure R1/2), 23.5.2010 (Annexure R1/3) and
2.07.2010 (Annexure R1/4) wrote to late Shri V.P. Singh to get the
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
11 WP-5555-2017
sale certificate registered. However, on acquiring the knowledge
about the demise of late Shri V.P. Singh the Bank wrote to the
petitioner No. 1 to get the sale certificate on production of the legal
heir certificate.
13. The petitioners submitted a letter to the Bank and settled the
loan amount of Rs. 24,00,000/- on 30.03.2012. On the same date, i.e.,
30.03.2012, a certificate was issued for redemption of the property.
These facts clearly demonstrate that the petitioners had knowledge of
the auction proceedings at least by 30.03.2012; however, they never
challenged the auction proceedings before the Debts Recovery
Tribunal (DRT).
14. The contention that one of the mortgaged properties had been
let out to M/s Hathway Cable & Datacom Ltd. up to 30.09.2015 is
not reliable, as the said document was prepared on 28.03.2013, nearly
three years after the auction proceedings had been completed.
15. The petitioners raised several issues regarding non-
compliance with the provisions of the SARFAESI Act, 2002;
however, the respondent denied the same. Therefore, such disputed
questions of fact cannot be adjudicated in the exercise of writ
jurisdiction.
16. The petitioners never challenged the auction proceedings before
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
12 WP-5555-2017
the Debts Recovery Tribunal (DRT) despite having notice thereof.
Consequently, the auction proceedings attained finality and cannot be
challenged after five years by way of a writ petition under Article 226
of the Constitution of India.
17. It is also disputed whether the property was sold through a
public auction or by way of private treaty. A private treaty is
permissible under Rule 8(5) of the Security Interest (Enforcement)
Rules, 2002, but ordinarily only after an attempt to sell the property
through public auction or tender has failed.
18. A sale by private treaty should ideally be conducted with the
written consent of the borrower. However, the conduct of the
petitioners indicates confirmation of the auction, suggesting that a
formal written agreement with the borrower may not be mandatory if
the Bank has acted in good faith.
19. Further, the fact that the borrower had knowledge of the sale
but failed to take any action within the prescribed period of 45 days
constitutes a significant impediment to the petitioner's challenge. A
sale certificate issued to an auction purchaser upon confirmation of a
sale is mere evidence of title and does not require compulsory
registration under Section 17(1) of the Registration Act, 1908.
In 2024 SCC OnLine SC 3372 State of Punjab and Another Versus
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
13 WP-5555-2017
Ferrous Alloy Forgings P Ltd. and Others the Hon'ble Apex court
has clarified that as long as the certificate remains in its original
form, it is exempt from registration, and filing a copy under Section
89(4) of the Registration Act is sufficient. It means that once the
Bank issues the sale certificate and informs the auction purchaser
about its issuance, the sale certificate is deemed to have been issued
by the Bank. Only the registration of the sale certificate remains
pending, if the auction purchaser desires to have it registered. If the
legal heirs of the auction purchaser seek to register the sale certificate
in their favour or request issuance of another sale certificate in place
of the auction purchaser, it does not amount to non-issuance of the
original sale certificate. Therefore, we hold that the sale certificate
has already been issued in favour of the auction purchaser, and
consequently, the right of redemption stands closed upon the issuance
of the sale certificate.
20. We are of the opinion that the petitioner had knowledge of the
auction of the mortgaged property but did not challenge it before the
Debts Recovery Tribunal (DRT). After the auction purchaser
deposited Rs. 28,00,000/-, the petitioner also deposited the remaining
amount of Rs. 24,00,000/- with the Bank and obtained release of the
remaining property from mortgage. On the same day, the Bank issued
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
14 WP-5555-2017
a notice releasing the property from mortgage.
21. The aforesaid facts are sufficient to hold that the auction
proceeding was conducted with the knowledge and implied consent
of the petitioners.
22. The substantive facts are disputed and can only be determined
after affording both parties an opportunity to lead evidence; therefore,
such issues cannot be adjudicated in writ jurisdiction. The petitioner
has wrongly contended that no alternative remedy was available,
despite the DRT being the competent authority to examine the
dispute. The petitioner ought to have approached the DRT within the
prescribed period of limitation. A time-barred remedy cannot be
revived or granted by way of a writ petition.
23. The relief of redemption cannot ordinarily be treated as time-
barred, as the fundamental principle of mortgage law is "once a
mortgage, always a mortgage," until the right of redemption is
lawfully extinguished.
24. The Hon'ble Supreme Court, in the case of M. Rajendran &
Ors. v. M/s KPK Oils and Proteins India Pvt. Ltd. & Ors., reported in
2025 LiveLaw (SC) 931, has clarified that the amended provision--
whereby the right of redemption stands extinguished upon
publication of the sale notice applies even to loans advanced prior to
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
15 WP-5555-2017
the amendment, provided the default (i.e., classification as NPA)
occurred after 1 September 2016.
25. Therefore, if the SARFAESI proceedings were initiated prior to
the 2016 amendment (i.e., the default and consequential action
occurred before 1 September 2016), the unamended provision would
apply, and the borrower would retain the right of redemption until the
sale certificate is issued.
26. It has been held by the Hon'ble Apex Court that the petitioner
has the right to redeem the property until the sale certificate is issued
under the unamended provision. In the present case, the Bank has
already issued the sale certificate; therefore, the borrower's right of
redemption would not subsist.
27. Considering the above facts and circumstances of the case, W.P.
No. 19856 of 2015 is dismissed and W.P. No. 5555 of 2017 is
disposed of with a direction to the Bank to hand over the sale
certificate to the legal heirs of the auction purchaser. If the legal heirs
of the auction purchaser desire to register the sale certificate, the
Bank shall take appropriate steps to have it registered in accordance
with law.
NEUTRAL CITATION NO. 2026:MPHC-JBP:12477
16 WP-5555-2017
(VIVEK RUSIA) (PRADEEP MITTAL)
JUDGE JUDGE
MSP
