Sale becomes absolute and title vests in auction purchaser on issuance of sale certificate : Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

As the borrowers have not complied with the notice of demand
issued under 13(2) of SARFAESI Act, the second respondent/bank directed the
borrowers to discharge the loan amounts with interest within 60 days. The
borrowers invoking S. 17 of the SARFAESI Act filed application before the Debts
Recovery Tribunal II, Chennai, challenging the said notices issued by the second
respondent/bank, but the same were dismissed.

In view of the default in discharging the loans by the
borrowers, the second respondent/bank, exercising its powers u/s.13(4) of the
SARFAESI Act issued notice informing the borrowers that constructive possession
of the secured assets were taken over by them and the same would be through for
sale after the expiry of 30 days from that date, by way of public auction. In
the absence of any headway by the borrowers in re-payment, the third respondent,
who is the authorised officer of the second respondent bank, brought the
property for public auction.

The SARFAESI Act is a Special Act which aims to accelerate
the growth of economy of our country, empowering the lenders, namely,
nationalised banks, private sector banks and other financial institutions to
realise their dues from the defaulted borrowers who are very lethargic in
repayment of the loans borrowed by them, by exercising their right of
expeditious attachment and foreclosure for the enforcement of security.

The High Court observed that Ss.(8) of S. 13 of the Act gives
an opportunity to the borrowers to redeem the property given in security to the
secured creditor by paying the dues on or before the date fixed for sale and if
the payment is made, the secured creditor shall not proceed with the sale or
transfer. But, in the case on hand, the borrowers did not come forward to settle
the dues on or before the date fixed for sale. The borrowers approached the
secured creditor, by way of three cheques after the sale was confirmed in favour
of the appellant, who was the highest bidder and therefore, the secured creditor
rightly returned those cheques stating that the sale was already over and sale
certificate alone was to be issued, which would be done shortly. Subsequently,
the sale certificate came to be issued by the third respondent authorised
officer as per sub-rule (7) of Rule 9 of the SARFAESI Rules.

The borrowers should have approached the secured creditor or
the authorised officer before the date fixed for sale and not after the sale as
provided U/ss.(8) of S. 13 of the SARFAESI Act. Only if the borrowers approach
the secured creditor or the authorised officer before the date fixed for sale or
transfer and tender or pay all the dues to the secured creditor, the Section
creates a bar on the secured creditor or authorised officer to proceed further
with the proposed sale or transfer. In this case, admittedly, the date fixed for
the sale was 19-12-2005. But, even according to the version of the borrowers,
they approached the secured creditor only on 2-1-2006. In such circumstances,
the contention of the borrowers is without any basis and contrary to the
provisions contained in Ss.(8) of S. 13 of the Act.

[ K. Chidambara Manickam v. Shakeena & Ors., AIR 2008 Madras 108]