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RIGHT OF REDEMPTION AMENDMENTS TO OTHER LAWS
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RIGHT OF REDEMPTION AMENDMENTS
TO OTHER LAWS
AUTHORED BY
- VASANTHARAO SATYA
VENKATARAO
& PHANIKUMAR ANUPINDI
Introduction:
A typical set of facts in connection
with the sale of assets due to default committed to Banks and Financial
Institutions are presented below.
A Lender advances a loan to a
borrower on the basis of mortgage immovable property as security along with
other securities like hypothecation, personal guarantees. The securities are
shared on Pari passu basis with the other lenders. The loan is disbursed after
the mortgage and other securities were created to the satisfaction of the
Lenders.
A default takes place and as per the
recovery laws governing the transaction between the Lenders and the Borrower, the
mortgaged assets are put to sale after complying with all the legal provisions
as applicable thereto.
In the auction the highest bidder is
declared the successful bidder and he deposits the sale consideration with the
lenders and obtains a sale certificate in his favour.
At this stage the original borrower
approaches the lender with a onetime settlement offer. The lender instead of
stating that the mortgaged has been sold agrees to consider the One-time
settlement offer and enters into a settlement. The borrower pays the settlement
amount and obtains the no due certificate.
If the above issue is to be decided
by the Courts on a singular issue as to whether a lender can enter into a one-time
settlement offered by the Borrower after the sale of property and issuance of
sale certificate, any one of the following scenarios can arise
1. The Courts
can hold that as the sale deed was not executed and the same is not yet registered, the
borrower can redeem the property at any time before the registration of the
sale deed.
2. The Courts
may hold that as the sale certificate is issued and has attained finality, the
right of the mortgagor to redeem the property is not available and hence the
entering into of the one-time settlement is not proper.
3. The Courts
may also find the receipt of money by the lenders from two different sources
namely the auction purchaser and the borrower as well is objectionable.
In India the above situations are not
rare and many banks and other lenders, auction purchasers find themselves in
the above vicious cycle.
Let us examine how the Courts in
India have dealt with this issue at different points of time and based on the
law that was prevailing at that point of time.
P.M.
Associates Vs IFCI Ltd, the Authorised officer and Sterling Holiday Resorts
India Ltd[1]:
The High Court of Madras in the light
of the facts set out above had examined the issue of confirmation of sale on
one side and the Cancellation of a confirmed sale and receipt of money from the
borrower after the sale had been completed. The Court extensively dealt with
the cases earlier decided on the right of redemption and held that since the auction conducted by the Lender was confirmed
in favour of the petitioner/auction purchaser and Sale Certificate was issued by the Authorised Officer, the
petitioner/auction purchaser is entitled to get the Sale Certificate registered
in their favour. It may be noted that this judgement was based on the legal
provisions existing in SRFA & ESI ACT & ESI Act at the relevant point
of time.
The final word is
yet to be said by the Supreme Court of India where a Special Leave is pending
before the Honourable Court for adjudication.
After appreciating
the above situation which at times is not only confusing but also derails the
business plans of the parties, the challenges and complexities that arise out
of the sale of immovable properties are presented below.
The mortgage of
immovable properties consists of a transaction between the owner and the lender
in which the owner secures the interest of the lender by mortgaging the
property. The debt advanced is called the Mortgage debt. There is an explicit
promise to pay the debt and in the event of default of repayment of the debt,
the owner is at the risk of his property being sold out by the Lender. The
Transfer of Property Act and other Statutes have detailed provisions in this
regard.
Default and its consequences via the
secured property: A
Default in repayment of a Loan advanced on the strength of the mortgage,
entails certain consequences for the mortgagor. The mortgagor is usually issued
a notice to rectify the default and prevent the legal consequences from setting
in consequent to the default. In case the default is not cleared, and it persists,
the lenders take recourse to sale of the mortgaged property.
Sale of Mortgaged Immovable property:
The sale of immovable properties
brought by way of enforcement of mortgage poses several challenges. These
challenges vary from case to case and can be very complex. The Mortgagor’s
inherent desire to save his property from sale, the approach of banks and
lenders in coming out of a dilemma as to whether they should proceed with sale
or accept one time settlements, the uncertainties faced by the auction
purchasers, litigations and counter litigations involved in the process of
sale, failure by the auction purchasers to abide by the terms of sale citing
the unexpected litigation , delays in
confirming the sale even after payment of the sale consideration, and not the
least delays in executing the conveyance deeds and handing over the possession
have all added and contributed to a very uncertain and perplexing situation
of auction sales in our country. A few
of the cases that have gone through one or more of the reasons cited above
would necessarily lead to the conclusion that the legal environment for the
enforcement of mortgages is not very conducive and warrants a change so as to
keep pace with the emerging trends in various spheres.
To add to the woes, there are
conflicting views and judgements as to which is the right and proper course of
action in such a situation. The decisions of the Courts are also based on
several factors like the Act and the provisions of law that are applicable,
principles of fairness and doing justice
to the parties.
It is also a fact that the law on the
subject has evolved with the applicability of different Acts governing the
above transaction.
Issue in The
Honourable Supreme Court of India in Civil Appeal No 5542 of 2023 in CELIR LLP Vs BAFNA MOTORS PVT LTD AND OTHERs:
The Supreme Court of India was
examining the issue of right of redemption of the mortgagor under the
provisions of the SRFA & ESI Act 2002.The Supreme Court has elucidated the
law on this particular aspect and has given the much-needed clarity and
certainty on the subject.
Prior to the pronouncement of the
judgement, it is no exaggeration to say that the law was shrouded in
controversy as the Mortgagor’s right to save his property till the last
available opportunity was paramount and the same was protected by the courts
till the execution and Registration of a conveyance deed.
The issues before the Supreme Court were
in the context of a few High Courts rendering conflicting judgements on this
issue. In the present case, the issue arose from the Orders of the Bombay High Court
in writ petition no 9523 of 2023 which allowed the Borrower’s appeal and
directed the bank to permit the borrower to redeem the mortgage of the secured
asset and refund the money to the successful auction purchaser who paid the
entire sale consideration.
This judgement will now bring clarity
to the following
a) Mortgagors
b) Lenders
c) Prospective
Applicants
d) Successful
Bidders
Statutory
Provisions on sale of Mortgaged properties under Different Laws
The procedure and the modalities for
the sale of property depend on the legal provisions in the governing statutes and
the contractual terms that are embedded into the loan and security agreements.
to A reference to the various statutory provisions and frameworks is made for
the sale of mortgage property by the mortgagee or at the instance of the
Mortgagee.
Civil Procedure code 1908: The Civil procedure code of 1908
contains provisions relating to execution of decrees which in the case of
mortgage suits entails the sale of property. Order XXI of the Code and Rules 1
to 106 provide for the manner in which the execution of a decree is to be made.
It is essential to note that this Particular Order of Civil Procedure Code
refers to both the Mortgagor’s Right of Redemption and Mortgagee’s right of
foreclosure.
As per the procedure specified under
the Code, an execution application is required to be moved by the decree holder
before the Execution Court and if after notice issued under the relevant Rule to
the Judgement debtor , the decree
remains unsatisfied, the steps for attachment, proclamation and sale of movable
and immovable properties are resorted to in line with the provisions of the Civil
Procedure Code. The Code also has timelines mentioned for conduct of sale,
deposit of sale consideration and other formalities like issuance of sale
confirmation and sale certificate.
Survival of
the Right of redemption under S.60 of the Transfer of Property Act read with
the provisions of the Civil procedure code.
The survival of the right of the
mortgagor to redeem his property is contained in the Provisions of Transfer of Property
Act read with the provisions of Civil procedure code. The Transfer of property
Act states that the right of redemption is available at any time before the
extinguishment of the right by the act of parties or by a decree of court.
Similarly, Provisions of Order XXXIV
of the civil procedure code also deal with the procedure for the enforcement of
such redemption right. There have been several cases where the above provisions
were dealt with by the High Courts and the Supreme Courts of the Country. A few
of the important judgements setting out the legal position by the courts is
given below.
The right of redemption survives only
till confirmation of sale and not thereafter. A suit instituted for redemption
after the issuance of sale certificate becomes irrelevant (Allokam peddabbayya
and another Vs Allahabad Bank and others[2]
The Decree for foreclosure in the original
suit and the subsequent auction sale followed by issuance of sale certificate,
extinguished the right to redemption by reason of the proviso to Section 60.
The Plaintiffs having interest in the mortgaged property through their
predecessor-in-interest and in the right to redeem the same were competent to
do so under Section 91 of the Act, but subject to the limitation under the
proviso to Section 60
Finally disposing of the Appeal, the
SC concluded that the right to sue for redemption of the mortgaged property is
lost, no sooner that mortgaged property was put to auction sale in a
foreclosure suit and a sale certificate was issued. There remains no property
mortgaged to be redeemed. The right to redemption cannot be claimed in the
Abstract.
L.K Trust Vs EDC Ltd[3]: The right of redemption under a
mortgage deed can come to an end only in a manner known to law. Such
Extinguishment of right can take place by contract between the parties, by a
merger or by statutory provisions which debars the mortgagor from redeeming the
mortgage. (Para 23 of the Judgement)
Rukmini Amma & others Vs
Rajeswary (dead) through LRs[4] : In this matter the SC was dealing
with a suit for redemption brought after 30 years of the sale of property under
the Revenue Recovery Act Therefore,
the only question to be examined is as to whether the suit prayer for
redemption as propounded by the Respondents is valid in law. In the above said background the factum of
the filing of the suit nearly after 30 years of the mortgage was very relevant.
If really the respondents were serious about the consequences which flowed from
the public auction sale or were really aggrieved of the sale effected, the
respondents should have been prompt in taking any steps for redressal of their
grievance in order to save the property mortgaged. Having failed to evince any
such keen interest in protecting their property, it is too late in the day for
the respondents to have approached the Court at their own sweet will (i.e.)
after nearly 30 long years of the mortgage and file a simple suit for
redemption without taking any steps to question a sale which was effected by
way of public auction and that too by invoking the provisions of the Revenue
Recovery Act which sale once effected would enure to the benefits of the
purchaser free from all encumbrance as provided in Section 44 of the Travancore
Revenue Recovery Act, 1951 which was the relevant statute applicable at that
point of time.
Mhadagonda Ramgonda Patil vs. Shripal Balwant Rainade,[5], It was held that unless and until a decree or
order debarring the mortgagor from redeeming the property is passed under
Sub-rule 3(a) of Rule 8 of Order XXXIV the right of redemption is available. It
was inter alia held as follows
“It is thus manifestly clear that the right
of redemption will be extinguished (1) by the act of the parties or (2) by the
decree of a court. We are not concerned with the question of extinguishment of
the right of redemption by the act of the parties. The question is whether by
the preliminary decree or final decree passed in the earlier extinguished. The
decree that is referred to in the proviso to Section 60 of the Transfer of
Property Act is a final decree in a suit for foreclosure, as provided in
sub-rule (2) of Rule 3 of Order 34 and a final decree in a redemption suit as
provided in Order 34, Rule 8(3)(a) of the Code of Civil Procedure. Sub-rule (2)
of Rule 3, inter alia, provides that where payment in accordance with sub-rule
(1) has not been made, the court shall, on an application made by the plaintiff
in this behalf, pass a final decree declaring that the defendant and all
persons claiming through or under him are debarred from all right to redeem the
mortgaged property and also, if necessary, ordering the defendant to put the
plaintiff in possession of the property. Thus, in a final decree in a suit for
foreclosure, on the failure of the defendant to pay all amounts due, the
extinguishment of the right of redemption has to be specifically declared. Again,
in a final decree in a suit for redemption of mortgage by conditional sale or
for redemption of an anomalous mortgage, the extinguishment of the right of
redemption has to be specifically declared, as provided in clause (a) of
sub-rule (3) of Rule 8 of Order 34 of the Code of Civil Procedure. These are
the two circumstances-(1) a final decree in a suit for foreclosure under Order
34, Rule 3(2) and (2) a final decree in a suit for redemption under Order 34,
Rule 8(3)(a) of the Code of Civil Procedure-when the right of redemption is
extinguished.
Philomina Jose
Vs. Federal Bank Ltd. & Ors.[6]. Right of redemption of a mortgage is a
substantive right of Mortgagor which has accrued to him to be exercised under
Order XXXIV, Rule 5 of the Code when the decree was passed which cannot be
taken away by the amendment of order XXXIV of the Code which was made only
after the decree in this case.
A reading of the
above judgements would clearly establish that the right conferred by the
Transfer of property Act under S.60 is available to the mortgagor any time
before such right is extinguished in the circumstances stated therein, the
mortgagor can exercise the right of redemption.
Recovery of Debts and the Bankruptcy
Act 1993: This is a
legislation enacted to mitigate the problems of Banks and Financial
Institutions in recovery of their bad debts. The situation that existed for
recovery of money through civil suits. prior to the passing of this enactment, was
largely time consuming and did not help in recycling of the loans through a
legal process. Hence in order to bring an efficient and quick recovery of the
nonperforming Assets this Act was brought in. The Act had envisaged a summary
procedure and barred the jurisdiction of the Civil Courts. The threshold of the
monetary Jurisdiction was initially placed at Rs 10 Lakhs.
Under the provisions of this Act, an
application filed by a bank or a financial institution under S.19 of the Act
will be adjudicated by the Presiding officer of the Debt Recovery Tribunal. A
recovery certificate is given under the signature of the Presiding to the
Recovery officer for execution and realisation of the amount mentioned in the
Recovery certificate. The Recovery officer is required to follow the Rules
mentioned in the second schedule of the Income Tax Act 1961. The procedure to
be followed is stated hereunder
On receipt of the recovery
certificate the recovery officer attached to the Debts recovery Tribunal,
proceeds with the issuance of the notice of under Rule 2 and thereafter
proceeds with the steps of attachment, proclamation and sale of property both
movable and immovable as specified under the Relevant Rules. The sale of
properties is usually by way of public auction and through a bidding process
the sale of assets is completed. The Rules also envisage the confirmation of
sale by the Recovery officer and issuance of sale.
The Rules also have provisions for setting
aside the sale on certain grounds. This right is also available to the
Mortgagor and the Mortgagor does come up with such applications Though these
applications are disposed of by the Recovery himself, yet the orders passed by
the Recovery officer go in appeal to the higher judicial forum. The important cases and relevant cases
decided in this context are discussed below.
Sadashiv Prasad Singh Vs Harendar
Singh & others[7]:In this case the Supreme Court of
India has set aside the Order of the High court which on principle of equity
has given an order in favour of the borrower mortgagor and set aside the
auction held. The Supreme Court considered the entire gamut of circumstances
and found the order of the High Court to be erroneous. The SC had taken into
cognizance that no irregularities in sale were alleged, the auction purchaser
has performed his part of the legal obligations, the sale certificate was
issued in favour of the auction purchaser, possession also was handed over to
the auction purchaser and hence the High court was not correct in setting aside
the auction.
It is pertinent to take note of Para
14 of the Supreme Court Judgement. The same is as under.
“It is nobody’s
case, that at the time of the auction-purchase, the value of the property
purchased by Sadashiv Prasad Sinha was in excess of his bid. In fact, the
factual position depicted under paragraph 8 of the impugned judgment reveals,
that the escalation of prices had taken place thereafter, and the value of the
property purchased by Sadashiv Prasad Sinha was presently much higher than the
bid amount. Since it was nobody’s case that Sadashiv Prasad Sinha, the highest
bidder at the auction conducted on 28.8.2008, had purchased the property in
question at a price lesser than the then prevailing market price, there was no
justification whatsoever to set aside the auction-purchase made by him on
account of escalation of prices thereafter. The High Court in ignoring the
vested right of the appellant in the property in question, after his auction
bid was accepted and confirmed, subjected him to grave injustice by depriving
him to property which he had genuinely and legitimately purchased at a public
auction. In our considered view, not only did the Division Bench of the High
Court in the matter by ignoring the sound, legal and clear principles laid down
by this Court in respect of a third-party auction purchaser, the High Court
also clearly overlooked the equitable rights vested in the auction-purchaser
during the pendency of a lis. The High Court also clearly overlooked the
equitable rights vested in the auction purchaser while disposing of the matter.
N. Prakash Vs the
Registrar[8] DRAT: The Madras
High Court had considered the Rights of the Mortgagor and the Auction purchaser
in this case. The property of the mortgagor was sold under the provisions of
the Recovery of Debts due to banks and Financial Institutions Act 1993( As it
was then known) .The Mortgagor ‘s contention of the right of redemption as
provided in the Second Schedule of Income Tax Rules was considered and it was
observed by the Chennai High that as he failed to comply with the provisions of
Rule 60 and Rulle 61 ,he cannot be given the opportunity to redeem the mortgage
and held that the Auction purchaser’s title has become absolute.
Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest Act
2002:
This Act empowers the lenders to sell the
mortgaged assets by following the procedure prescribed under this Act. The Legal
action is initiated with the issuance of notice under Section 13(2) of the Act
to the borrower after the account has been classified as Non performing asset.
The notice issued calls upon the borrower to repay and discharge the debt
within a period of 60 days failing which the Secured creditor can proceed with
the taking of measures stated in Section
13(4) of the Act. In case any representation is submitted by the borrower to
the notice issued under S.13(2), under Section 13(3) (A),the Secured Creditor
is required to dispose of the said representation before initiating any further
action. The Act envisages taking
possession of the mortgaged assets (referred to as security Interest under the
Act) and thereafter causing them to be sold both movable and immovable assets
under the Act. The possession referred to under this Act includes both symbolic
or constructive possession as well Physical/ actual possession. The support of
the magistrate can be taken by filing application under S.14 if the secured
creditor apprehends resistance to the taking of possession of assets. The Honourable Supreme Court has held that
the orders of the magistrate under S.14 are only ministerial in nature and it
does not involve any adjudicatory function
All these actions are performed
through an officer appointed by the Secured creditor known as Authorised
Officer. The Authorised officer is required to act strictly in consonance with
the provisions of the Act. The Authorised officer is required to act reasonably
in the matter of safeguarding the assets till they are sold, obtaining
valuation of assets from a registered valuer, fixing the reserve price in
consultation with the secured creditor and do all such acts and things as are
considered necessary for the sale of the secured. The Act also provides that in
case of joint financing of assets consent of more than 75% of the debt
outstanding are to signify their consent.
As regards the sale of assets, the
laws sale both through public auction, inviting quotations and also by private
treaty. Irrespective of the mode of sale the law envisages that a clear 30
days’ notice is to be issued to the borrower/ mortgagor before the assets are
brought to sale.
The law also states that the asset
cannot be sold below the reserve price fixed and in case it is to be sold below
reserve price it can be sold only with the consent of the borrower/ mortgagor.
In case of sale by public auction,
the highest bidder is required to pay 25% (Including the Earnest Money deposit)
on the day of auction and the balance sale consideration of 75% within 15 days
or within the extended period from the date of declaring the bidder as the
successful/highest bidder. Confirmation of sale and issuance of is made only
after the bidder deposits the entire sale consideration.
The Honourable Supreme court has
dealt with and adjudicated several issues arising from the implementation of
the Act. The Constitutionality of the Act, the primacy of the Act over other
enactments, questions relating to exercise of powers, questions relating to
possession, confirmation of sale, conditions relating to pre deposit before
filing statutory appeals under the Act priority in the matter of distribution
of sale proceeds and many such questions have been adjudicated by the Supreme
Court of India.
To make the position more lucid and
clearer, the amended provisions of SRFA & ESI Act 2002 can be referred to.
This provision was brought by way of an Amendment in 2016 The provision reads
as under.
“Where the amount of dues of the
secured creditor together with all costs, charges and expenses incurred by him
is tendered to the secured creditor at any time before the date of
publication of notice for public auction or inviting quotations or tender from
public or private treaty for transfer by way of lease, assignment, or sale
of the secured assets,
(i)
the secured assets shall not be transferred by way of
lease assignment or sale by the secured creditor; and
(ii)
in case, any step has been taken by the secured
creditor for transfer by way of lease or assignment or sale of the assets
before tendering of such amount under this sub-section, no further step shall
be taken by such secured creditor for transfer by way of lease or assignment or
sale of such secured assets.
A clear
line drawn between the Mortgagor’s rights and the interface of public with the
sale by the mortgagee will undoubtedly create a very conducive environment for
the sale of mortgaged assets.
TABULAR
DEPICTION OF LEGAL PROVISONS CONCERNING SALE OF IMMOVABLE PROPERTIES.
It can be seen from the above, that
the procedure that is prescribed for sale of movable and immovable properties
under the respective enactments is almost similar and proceeds on the basis of
the principles of natural justice, transparency and fetching the highest value
for the asset.
|
|
Civil Procedure Code
Relevant sections
Order XXI
|
Recovery of Debts and Bankruptcy
Act 1993.
Relevant sections
II Schedule to the Income Tax
Rules
|
Securitisation and reconstruction
of financial assets and Enforcement of Security Interest Act 2002
Relevant sections
|
|
Issuance of Notice
|
Rule 22
|
Rule 2 Notice of 15 days to pay
|
13(2) of the Act and Rule 3 of
the Security Interest (Enforcement) Rules
|
|
Attachment of Movable Property
|
Rule 41 Decree not satisfied for
a period of 30 days,
|
Rule 22
|
13(2)
|
|
Attachment of Immovable Property
|
Rule 43
|
|
13(2)
|
|
Attachment and proclamation of
immovable property
|
Rule 54
|
Rule 48
|
13(2)
|
|
Sale of movable and immovable
property
|
Rule 66
|
Rule 52 to Rule 56
|
Rule 6 and Rule 8 Of Security
Interest (Enforcement Rules)
|
|
Time for sale
|
Rule 68
Movable 7 days
Immovable 15 days
Calculated from the date of
proclamation
|
Rule 40 & 55
Movable 15 days
Immovable 30 days
Calculated from the date of
proclamation affixed in the Office of the Recovery officer
|
Rule 9 of the Security Interest
Enforcement Rules
30 days from the date of public
notice for sale of properties
|
|
Deposit of sale consideration
|
Rule 84 & 88
25% on the day of sale
75% within 15 days from the date
of sale
|
Rule 57
25% on the day of sale
75% within 15 days from the date
of sale
|
Rule 9 (3) and (4) of the
Security Interest Enforcement Rules
|
|
Application to set aside sale
|
Rule 90
|
Rule 60
Rule 61
|
|
|
Confirmation of sale and Issuance
of sale Certificate
|
|
Rule63 & Rule 65
|
Rule 9(6) of the Security
Interest Enforcement Rules
|
Suggestions
and conclusion for Amendments to other Legislations:
The Decision of the Honourable
supreme Court of India in Celir LLP Vs Bafna motors Pvt Limited has brought the
curtains down at least with regard to the right of redemption of the Mortgagor
under SRFA & ESI Act. The Supreme
Court while interpreting the amended provisions of the Act has cleared the air
with regard to the exercise of the right of redemption of the mortgagor by
stating that the right ceases on publication of the sale notice under Rule 9(1)
of the Security Interest Rules. This judgement will refreshingly bring in more
participation in auction sales than before and resultingly it will lead to
increased competition leading to a better value of the assets being sold. This
judgement will also ensure that the mortgagor too will have to make all his
efforts to save the property before the sale notice is published in the
newspapers under Rule (9)(1) of the Security Interest Enforcement Rules.
The net effect of this judgement is
that the Rule (8) (6) notice issued under the Securitisation Rules will also be
taken very seriously by the mortgagor as they now realise that if they do not
act swiftly within the period of 30 days given to them, they stand to lose the
property on the publication of the auction notice under Rule 9(1) of the
Security Interest Enforcement Rules. This awareness would spur the mortgagor to
act in the given time and avoid deploying dilatory methods.
Taking the above provision of law as
contained in the SRFA & ESI Act 2002, it would be very much pertinent to
bring similar provisions in the other legislations that provide for the sale of
immovable properties under different statutes.
Instead of having different points of
time available for exercise of right of redemption by the owners of the
immovable properties, amendments to other legislations governing the sale of
immovable properties would be appropriate to the interests of the relevant
stakeholders. Uniformity in laws on the timing of the exercise of the right of
redemption will also enable a uniform interpretation of the issues concerned
instead of different conclusions being reached by courts only because the laws
are different. Hence the following amendments are suggested
I Amendment to the Transfer of
Property Act: Section 60 of The Transfer of property Act presently allows
the mortgagor to redeem the mortgaged property at any time before the
extinguishment of this right. As can be seen this gives a lot of scope for the
mortgagor to bring suits for redemption. It would be worth considering amending
Section 60 by making it on par with the SRFA & ESI Act 2002 provisions and
with further Changes to the Civil procedure Code.
II: Amendment to the Civil
Procedure: Order XXI Rule 69 (3) provides for an adjournment or
stoppage of sale if before the lot is knocked down, the debt and costs (including
the costs of sale are tendered to the officer conducting the sale, or proof is
given to his satisfaction that the amount of such debt and costs has been paid
into the court which ordered the sale.
The provisions contained in order XXI
and the rules needs to be revisited in toto and similar changes can be
considered for bringing it on par with the provisions contained in the Security
Interest Enforcement Rules.
III: Amendment to the Recovery of
Debts and the Bankruptcy Act: Further the Rules under the Second Schedule
of the Income Tax Act may also need changes so as to bring it on par with the
other legislations mentioned above.
As can be seen from the table
presented above, the source of right of redemption is drawn to the provisions
of the Transfer of property Act, Civil Procedure code, the Recovery of Debts
and Bankruptcy Act, State Financial Corporations Act and the Specific statutes
which exist for statutory corporations.
On an analysis of the above it
becomes apparent that the right of redemption can be exercised at different
points of time based on the law by which the property is being sold. It is to
be remembered that while the legal provisions as they exist today could be
different, the objective of all such sales is the recovery of mortgage debt by
sale of properties.
As the enforcement of mortgage
involves the sale of mortgaged asset, the laws governing them also need to be
uniform, certain, clear, unambiguous, and more importantly understandable and
acceptable to the stakeholders. The uniformity of law is not meant as any kind
of inducement to any one stakeholder or put one in an advantageous situation
over the other but as a proper aid in the sale of mortgaged assets
It is therefore apt to consider
bringing in uniformity in all the laws stated above on the lines of the amended
provisions of the Securitisation and Reconstruction of Financial Assets and
enforcement of Security interest Act 2002. The amendment to other legislations
including statutory corporations who have their own statutes would strengthen
the mechanism of Auction sales in the
country and would be a critical factor in promoting the auction sales in our
country.
.
Article Information
RIGHT OF REDEMPTION AMENDMENTS TO OTHER LAWS
Authors: VASANTHARAO SATYA VENKATARAO, PHANIKUMAR ANUPINDI
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/03/09
- Issue 7
About Journal
International Journal for Legal Research and Analysis
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