Holding

The Supreme Court upheld the validity of the 9th auction and sale certificate, declared the assignment agreement void under lis pendens, and, while noting initial contemptuous conduct, refrained from finding the respondents guilty of contempt, instead issuing remedial directions.

Summary

The Supreme Court considered contempt petitions filed by the successful auction purchaser (Celir LLP) against the original borrower, a subsequent transferee, and the bank, alleging wilful disobedience of the Court’s 21 September 2023 judgment that confirmed the 9th auction of a secured asset and directed issuance of a sale certificate. The Court examined whether the borrower and transferee had violated the judgment by refusing to hand over possession, cancelling the release deed, and by executing an assignment agreement during the pendency of the appeal, raising issues of lis pendens, the Henderson principle, and the doctrine of election. It held that the auction and sale certificate were valid, the assignment agreement was void as it was made during lis pendens, and the respondents’ conduct, though initially contemptuous, was mitigated by their subsequent undertakings. Consequently, the Court declined to find them in contempt at this stage but issued comprehensive directions to cancel the release deed, withdraw pending applications, and restore possession to the bank, while confirming the petitioner’s title.

Issues considered

The respondents’ acts constitute civil contempt for wilful disobedience of the Supreme Court’s 21 September 2023 judgment.
Whether the 9th auction and the sale certificate issued to the petitioner confer a clear title, precluding further challenges in the SARFAESI securitisation application.
Whether the assignment agreement dated 28 August 2023 is hit by lis pendens under Section 52 of the Transfer of Property Act, despite the lack of a registered notice of pendency.

Legislation cited

Code of Civil Procedure, 1908s. Order VII Rule 11, s. Section 11
Constitution of Indias. Article 129, s. Article 142(2)
Contempt of Courts Act, 1971s. 2(b)
Registration Act, 1908s. Section 18
Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002s. 13(2), s. 13(4), s. 13(8), s. 17
Security Interest (Enforcement) Rules, 2002s. Rule 8(6), s. Rule 9(1), s. Rule 9(2), s. Rule 9(6)
Transfer of Property Act, 1882s. 52, s. 54, s. 60

Headnote

Issue for Consideration The present petitions sought to initiate contempt proceedings against the respondents/alleged contemnors for wilful disobedience of the final judgment and order dated 21.09.2023 passed by this Court in Civil Appeal Nos. 5542-5543 issuance of Sale Certificate of the Secured Asset (belonging to respondent no.1-Borrower) to the petitioner-auction purchaser; Respondent no.4 ‘Greenscape IT Park LLP’ and its director, i.e., respondent no.2 were the subsequent transferee/third party purchaser and respondent

Subjects

wilful disobediencecontempt of courtSARFAESI Actsale certificatesecured assetright of redemptionlis pendensHenderson principleconstructive res judicatadoctrine of electionpari delictotransfer of property actsection 13(8)section 52civil contemptabuse of processauction validityjudicial finality

Judgment

[2024] 12 S.C.R. 1618 : 2024 INSC 978

Celir LLP
v.
Mr. Sumati Prasad Bafna & Ors.
(Contempt Petition (C) No(s). 158-159 of 2024)
In
(Civil Appeal No(s). 5542-5543 of 2023)
13 December 2024
[J.B. Pardiwala* and Manoj Misra, JJ.]

Issue for Consideration
The present petitions sought to initiate contempt proceedings against
the respondents/alleged contemnors for wilful disobedience of the
final judgment and order dated 21.09.2023 passed by this Court
in Civil Appeal Nos. 5542-5543 of 2023 which directed issuance
of Sale Certificate of the Secured Asset (belonging to respondent
no.1-Borrower) to the petitioner-auction purchaser; Respondent
no.4 ‘Greenscape IT Park LLP’ and its director, i.e., respondent
no.2 were the subsequent transferee/third party purchaser and
respondent no.3, ‘Union Bank of India’ was the secured creditor/
bank. Accordingly, the following questions arose for consideration:-
1. Whether any act of contempt could be said to have been
committed by the respondent nos. 1 to 4 respectively of
the judgment and order dated 21.09.2023; whether the
respondents in light of the aforesaid decision of this Court were
duty bound to cancel the Release Deed dated 28.08.2023
(executed for discharge of mortgage over the Secured Asset)
and hand over physical possession along with original title
deeds of the Secured Asset to the petitioner.
2. Whether, proceedings arising out of Securitization Application
being S.A. No. 46 of 2022 preferred by the Borrower u/s.17 of
SARFAESI Act before DRT [assailing demand notice issued
by the Bank for repayment of principal amount and further
notice of the Bank classifying the Borrower’s account as
NPA and taking symbolic possession of the Secured Asset]
could have continued after this Court’s judgment and order
dated 21.09.2023; whether the petitioner by virtue of the
Sale Certificate dated 27.09.2023 (issued by the Bank for

*Author
[2024] 12 S.C.R. 1619

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

the Secured Asset) can be said to have acquired a clear title
to the said property; and
3. Whether the transfer of the Secured Asset in favour of the
Subsequent Transferee by way of Assignment Agreement
dated 28.08.2023 was hit by lis pendens; whether the absence
of any registration in accordance with Section 52 of the
Transfer of Property Act, 1882 as amended by the State of
Maharashtra rendered the lis pendens inapplicable.

Headnotes†
Contempt of Courts Act, 1971 – s.2(b) – Constitution of
India – Art. 129 – Mere conduct of parties aimed at frustrating
the court proceedings or circumventing its decisions, even
without an explicit prohibitory order, constitutes contempt –
However, power of contempt to be exercised sparingly and
with caution – On facts, respondents demonstrated effort
and willingness to purge themselves of their contemptuous
conduct in violation of Court’s judgment – One last opportunity
to them to abide by the judgment:
Held: 1. The contempt jurisdiction of this court cannot be construed
by any formulaic or rigid approach – Merely because there is no
prohibitory order or no specific direction issued the same would not
mean that the parties cannot be held guilty of contempt. [Para 199]
2. Mere conduct of parties aimed at frustrating the court proceedings
or circumventing its decisions, even without an explicit prohibitory
order, constitutes contempt – Such actions interfere with the
administration of justice, undermine the respect and authority of
the judiciary, and threaten the rule of law – However, at the same
time, the power of contempt ought to be exercised sparingly and
with caution and care – It operates with a string of caution and
unless otherwise satisfied beyond doubt, it would neither be fair nor
reasonable for the courts to resort to such powers – The standard
of proof required before a person is held guilty of committing
contempt of court must be beyond all reasonable doubt – The
courts while exercising its contempt jurisdiction must remain
circumspect, more particularly, where there exists a possibility
of the order being amenable to more than one interpretation.
[Paras 201, 202 and 203]
3.1. On facts, it is true that this Court in its decision rendered
in the Main Appeals had not issued any specific direction either
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to the Borrower or the Subsequent Transferee as regards the
handing over of physical possession and the original title deed to
the Secured Asset, or the proceedings pending before the DRT
in S.A. No. 46 of 2022 – However, the same would not mean
that the decision of this Court in the Main Appeal was bereft of
any direction as to the outcome of its findings – This Court in the
operative portion of the Main Appeals stated in unequivocal terms
that the confirmation of the sale by Bank under Rule 9(2) of the
SARFAESI Rules had vested the petitioner herein with a right to
obtain the certificate of sale of the Secured Asset – It further held
categorically that the Borrower herein could not have redeemed the
mortgage upon publication of the 9th auction notice – Furthermore,
this Court explicitly directed the Bank to not only issue the Sale
Certificate to the petitioner herein in accordance with Rule 9(6) of
the SARFAESI Rules but also directed the refund of the amount
of Rs. 129 crore paid by the Borrower – Moreover, the impugned
order of the High Court had been set-aside by this Court in toto.
[Para 204]
3.2. Where a decision is rendered and the impugned order is set-
aside, it behoves any logic that an express direction to act must
be given in respect of every aspect of the decision – The parties
are duty bound to act in accordance with common sense – If at all
the parties are in doubts over the judgment and order of a court,
the correct approach is to prefer a miscellaneous application for
seeking clarification rather than proceeding to presume a self-
serving interpretation of the decision. [Paras 205, 206]
3.3. On facts, both the Borrower and the Subsequent Transferee
made several attempts to prevent the effective implementation of
the judgement and order dated 21.09.2023 passed by this Court
and thereby thwart the attempts of the Bank to hand over the
physical possession and the original title deeds of the Secured
Asset to the petitioner – Both the Borrower and the Subsequent
Transferee committed contempt of this Court’s judgment and order
dated 21.09.2023 in the Main Appeals – The acts of the contemnors
are nothing more than a gamble on their part to circumvent and
undermine the findings and directions passed by this Court in the
Main Appeals – Similarly, the lame excuses offered by them for
explaining their conduct are also nothing more than a calculated
attempt in the hope that they would get away with legitimizing the
illegal Assignment Agreement even after the decision of this Court,
and is equally contemptuous – However, on an overall conspectus
[2024] 12 S.C.R. 1621

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

of the facts of the present case, while the initial acts of the Borrower
and the Subsequent Transferee are in violation of this Court’s
judgment and order dated 21.09.2023, yet the efforts on their part
to take steps and make amends by withdrawing the Special Civil
Suit No. 5 of 2024 along with their belated unconditional undertaking
to comply with any further order that this Court may deem fit and
proper to pass, demonstrates their effort and willingness to purge
themselves of their contemptuous conducts – Thus, this Court is
inclined to provide one last opportunity to the Borrower herein and
the Subsequent Transferee to abide by the judgment and order
dated 21.09.2023 passed by this Court and further comply with the
directions issued in the present contempt petition, and thus, deem
it fit not to hold them guilty of contempt for the present moment.
[Paras 207, 208, 209]

Contempt of Courts Act, 1971 – s.2(b) – ‘Wilful disobedience’
in the context of s.2(b) – Expression “wilful” – Meaning of:
Held: Wilfulness signifies deliberate action done with evil intent
and bad motive and purpose – The expression or word “wilful”
means act or omission which is done voluntarily or intentionally
and with the specific intent to do something which the law forbids
or with the specific intent to fail to do something the law requires
to be done, that is to say with bad purpose either to disobey or to
disregard the law – It signifies a deliberate action done with evil
intent or with a bad motive or purpose. [Paras 184, 185]

Contempt of Court – Principles governing the Rule of law must
be extended to the party against whom contempt proceedings
have been initiated. [Para 187]

Res judicata – Constructive Res Judicata – Abuse of Process
of Court – Collateral challenge to judgments that have attained
finality – Proposition of law laid down by English Court of
Chancery in Henderson v. Henderson, [1843] 3 Hare 999 –
‘Henderson’ Principle as a corollary of Constructive Res
Judicata – Discussed:
Held: 1. The ‘Henderson Principle’ is a foundational doctrine in
common law that addresses the issue of multiplicity in litigation –
It embodies the broader concept of procedural fairness, abuse of
process and judicial efficiency by mandating that all claims and
issues that could and ought to have been raised in a previous
1622 [2024] 12 S.C.R.

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litigation should not be re-litigated in subsequent proceedings –
The extended form of res-judicata more popularly known as
‘Constructive Res Judicata’ contained in Section 11, Explanation
VII of the CPC originates from this principle. [Para 135]
2.1. ‘Henderson Principle’ is a core component of the broader
doctrine of abuse of process, aimed at enthusing in the parties a
sense of sanctity towards judicial adjudications and determinations –
It ensures that litigants are not subjected to repetitive and vexatious
legal challenges – At its core, the principle stipulates that all claims
and issues that could and should have been raised in an earlier
proceeding are barred from being raised in subsequent litigation,
except in exceptional circumstances – This rule not only supports
the finality of judgments but also underscores the ideals of judicial
propriety and fairness. [Para 144]
2.2. There are, four situations where in second proceedings between
the same parties doctrine res judicata as a corollary of the principle
of abuse of process may be invoked: (i) cause of action estoppel,
where the entirety of a decided cause of action is sought to be
re-litigated; (ii) issue estoppel or, “decided issue estoppel,” where
an issue is sought to be re-litigated which has been raised and
decided as a fundamental step in arriving at the earlier judicial
decision; (iii) extended or constructive res judicata i.e., “unraised
issue estoppel,” where an issue is sought to be litigated which
could, and should, have been raised in a previous action but was
not raised; (iv) a further extension of the aforesaid to points not
raised in relation to an issue in the earlier decision, as opposed
to issues not raised in relation to the decision itself. [Para 145]
2.3. As part of the broader rule against abuse of process, the
Henderson principle is rooted in the idea of preventing the judicial
process from being exploited in any manner that tends to undermine
its integrity – This idea of preventing abuse of judicial process
is not confined to specific procedure rules, but rather aligned
to a broader purport of giving quietus to litigation and finality to
judicial decisions – The essence of this rule is that litigation must
be conducted in good faith, and parties should not engage in
procedural tactics that fragment disputes, prolong litigation, or
undermine the outcomes of such litigation – It is not a rigid rule
but rather a flexible principle to prevent oppressive, unfair, or
detrimental litigation. [Para 146]
[2024] 12 S.C.R. 1623

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

3. Although in the present case, the Borrower had raised the
issue of the validity of the measures taken by the Bank under
the SARFAESI Act and the legality of the 9th auction conducted
by it in the earlier stages albeit in a different proceeding, yet its
conduct of having conveniently abandoned the same in a different
proceeding elected by it for the same cause of action and then
later re-agitating it in the pretence that the two proceedings were
distinct, is nothing but a textbook case of abuse of process of
law. [Para 148]
4. Piecemeal litigation where issues are deliberately fragmented
across separate proceedings to gain an unfair advantage is in
itself a facet of abuse of process of law and would also fall foul
of this principle – Merely because one proceeding initiated by a
party differs in some aspects from another proceeding or happens
to be before a different forum, will not make the subsequent
proceeding distinct in nature from the former, if the underlying
subject matter or the seminal issues involved remains substantially
similar to each other or connected to the earlier subject matter
by a certain degree, then such proceeding would tantamount to
‘re-litigating’ and the Henderson Principle would be applicable –
Where a party deliberately withholds certain claims or issues in
one proceeding with the intention to raise them in a subsequent
litigation disguised as a distinct or separate remedy or proceeding
from the initial one, such subsequent litigation will also fall foul of
this principle – Similarly, where a plea or issue was raised in earlier
proceedings but later abandoned it is deemed waived and cannot
be re-litigated in subsequent – Parties must litigate diligently and in
good faith, presenting their entire case at the earliest opportunity.
[Paras 149, 150, 151]
5. The Henderson principle operates on the broader contours of
judicial propriety and fairness, ensuring that the judicial system
remains an instrument of justice rather than a platform for procedural
manipulation – Both logic and principle support the approach that
the judicial determination of an entire cause of action is in fact the
determination of every issue which is fundamental to establishing
the entire cause of action – The effect of a judicial determination on
an entire cause of action is as if the court had made declarations on
each issue fundamental to the ultimate decision. [Paras 152, 153]

Doctrines / Principles – Doctrine of lis pendens – Doctrine of
Pari Delicto – Property situated in Maharashtra – Applicability
of lis pendens in absence of any registration as required under
1624 [2024] 12 S.C.R.

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the State Amendment to s.52 of TPA – Even in absence of a
registered notice of pendency in terms of amended s.52 of TPA
the said provision will not be rendered ipso-facto inapplicable –
Even otherwise, in peculiar facts of the present case, non-
registration of notice of pendency not fatal to application
of the doctrine of lis pendens – Transfer of Property Act,
1882 – s.52 (as amended by State of Maharashtra) – Bombay
Amendment Act, 1939:
Held: 1.1. The amended Section 52 sub-section (1) of the TPA
casts upon a party who is claiming any right to a property which
is a subject-matter of any pending suit or proceeding an additional
duty to register a notice of pendency in respect of such property
so as to caution and put to notice any third-party who might
otherwise be unaware of such proceeding or litigation despite
the best of due diligence either due to inadvertence or deliberate
misleading by one of the parties to the lis and as result might
be genuinely considering to purchase or acquire any right in
the subject-matter proceeding – The requirement of registration
of notice of pendency is to prevent any undue or unwarranted
hardship to such third-parties who even after a reasonable due
diligence have bona-fidely purchased the property believing it to
be free from the encumbrances of any pending proceeding only
to later face the adverse consequence of losing their rights by a
mechanical application of lis pendens. [Para 171]
1.2. This additional requirement of registration of notice of pendency
is for the benefit of the party claiming any right in such subject-
matter property and also for the benefit of any third-party interested
in such subject-matter property by enabling the former to claim
the benefit of lis pendens as an absolute right after having duly
taken steps towards ensuring that the public is well-aware of the
impeding litigation in respect of such property by registering a notice
of pendency and to enable the latter to ascertain the veracity of
title of such property by exercise of its due diligence – Although,
the said provision is for the benefit of the third-party, yet such
subsequent purchasers cannot as a matter of absolute right claim
any title to such property solely on the ground of want of any
notice of pendency being registered – To hold otherwise would
undermine the object and purpose of the doctrine of lis pendens
which is based on the principle of equity, good conscience, and
public policy and discourage any thwarting or frustration of rights
of the parties so litigating by unscrupulous and unanticipated
transactions. [Para 172]
[2024] 12 S.C.R. 1625

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

1.3. The vital essence of this additional duty imposed upon the party
claiming a right to a property which is a subject matter of a pending
proceeding, is only to aid a third-party to exercise its due diligence
and obviate the possibility of any dishonesty, misrepresentation or
fraud by a party in order to gain an undue advantage or benefit
despite the pendency of proceedings – However, if the absence of
notice registration were to render the doctrine entirely inapplicable,
it would lead to exploitation of procedural gaps by parties who
deliberately delay or avoid registering such notices to defeat
substantive rights of the parties and undermine the very sanctity
of judicial proceedings – Such an interpretation would lead to a
very chilling effect whereby, third parties despite being expected to
verify the title and status of the property would simply abdicate their
duty to conduct thorough due diligence in transactions involving
immovable properties or that despite being fully aware of the
pendency of such proceedings would be able to deviously claim
absolute rights to such property or worse, mischievously execute
back-dated agreements in collusion with a party to a lis prior to
registration of such notice of pendency to circumventing the very
proceedings and render them infructuous. [Para 173]
2. Even in the absence of a registered notice of pendency in terms
of the amended Section 52 of TPA the said provision will not be
rendered ipso-facto inapplicable, at best it would preclude the party
seeking benefit of this doctrine to claim it as a matter of right, but
by no stretch would it mean that the third-party conversely would
be able to as matter of absolute right claim inapplicability of this
doctrine – It would be the discretion of the courts to see keeping
in mind the peculiar facts of the case to ascertain whether such
doctrine ought to be applied or not – Where the courts are satisfied
that the third-party had genuinely purchased the subject-matter
property after an exercise of a reasonable degree of care and
caution and that it was otherwise unaware of the pendency of
proceedings, the courts would be circumspect to displace the rights
of such bona-fide third-party by a mechanical application of the
doctrine of lis pendens – Even otherwise, in view of the peculiar
facts of this case, more particularly the fact that the petitioner could
not have registered the same being only an auction purchaser and
that it was the duty of the Bank to register the notice of pendency
which was not reasonably possible in view of the haste that
was shown by the Borrower and the Subsequent Transferee in
redeeming the mortgage and thereafter immediately transferring
the Secured Asset, the non-registration of notice of pendency is
1626 [2024] 12 S.C.R.

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not fatal to the application of the doctrine of lis pendens in the
present case. [Para 174]
3. In the present case, it is not as if the Subsequent Transferee was
not aware of what was happening however, when things went wrong,
they now cry foul of not being impleaded as parties and heard by
this Court in the Main Appeals – Even otherwise, assuming that the
petitioner and the Bank herein deliberately chose not to implead
the Subsequent Transferee herein in order to mislead this Court
in the Main Appeals, the same is immaterial as the Subsequent
Transferee too failed to implead itself despite being aware of the
pendency of the proceedings before this Court – If at all they were
so concerned about the transfer of the Secured Asset in their favour,
either they ought to have themselves attempted to implead itself
before this Court or requested the Borrower to do the same – In
view of the Doctrine of Pari Delicto i.e.., ‘in equal fault, the law
aids neither party’, the Subsequent Transferee cannot seek any
benefit from the fault of the petitioner or the Bank when it is itself
equally at fault – In view of the aforesaid, the execution of the
Assignment Agreement dated 28.08.2023 and the transfer of the
Secured Asset in pursuance thereto in favour of the Subsequent
Transferee is hit by lis pendens despite the fact that no notice of
pendency was registered in terms of the amended Section 52 of
the TPA. [Paras 175, 176]

Auction – Sale of secured asset by auction or any other method
under the SARFAESI Act – Circumstances when such sale
may be challenged or set-aside after its confirmation – Any
sale by auction or other public procurement methods once
already confirmed or concluded ought not to be set-aside or
interfered with lightly except on grounds that go to the core
of such sale process – Securitization and Reconstruction of
Financial Assets and Enforcement of Securities Interest Act,
2002 – Security Interest (Enforcement) Rules, 2002:
Held: 1. Any sale by auction or other public procurement methods
once already confirmed or concluded ought not to be set-aside
or interfered with lightly except on grounds that go to the core of
such sale process, such as either being collusive, fraudulent or
vitiated by inadequate pricing or underbidding – Mere irregularity
or deviation from a rule which does not have any fundamental
procedural error does not take away the foundation of authority
[2024] 12 S.C.R. 1627

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

for such proceeding – In such cases, courts in particular should
be mindful to refrain entertaining any ground for challenging an
auction which either could have been taken earlier before the sale
was conducted and confirmed or where no substantial injury has
been caused on account of such irregularity. [Para 218]
2.1. In the present lis, it is not the case of the Borrower herein
that the 9th auction conducted by the Bank was a result of any
collusion or fraud either at the behest of the Bank or the Successful
Auction Purchaser herein – Aside from the lack of any 15-days
gap between the notice of sale and the notice of auction, no other
illegality has been imputed to the aforesaid auction proceedings –
It is also not the case of the Borrower that due to the absence
of the aforesaid statutory period, any prejudice was caused or
that it was prevented from effectively exercising its rights due to
such procedural infirmity – Despite a total of eight auctions being
conducted by the Bank from April, 2022 to June, 2023, not once
did the Borrower express its desire to redeem the mortgage –
Even when the auction notice came to be issued on 12.06.2023,
the Borrower never intimated that it was in process of redeeming
the mortgage with the aid of the Subsequent Transferee and
that the auction be delayed even though, as per the parties own
submissions, they started exploring the possibility of redeeming
the mortgage and thereafter transferring in June, 2023 itself – In
such circumstances, given the fact that although the S.A. No. 46
of 2022 was still pending, yet since there was nothing before this
Court to doubt the validity of the 9th auction, this Court in the Main
Appeals confirmed the sale in favour of the petitioner and brought
the auction proceedings to its logical conclusion by directing the
issuance of the sale certificate – The Borrower never raised the
issue of the validity of the 9th auction notice despite having sufficient
opportunities to do so even after the pronouncement of the decision
in the Main Appeals, and that such pleas are being raised only
after the auction was confirmed in favour of the petitioner, there
is no good reason to interfere with the 9th auction conducted by
the Bank. [Para 217]
2.2. In the present lis, apart from the want of statutory notice period,
no other challenge has been laid to the 9th auction proceedings
on the ground of it being either collusive, fraudulent or vitiated by
inadequate pricing or underbidding, thus, the auction cannot be
said to suffer from any fundamental procedural error, and as such
1628 [2024] 12 S.C.R.

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does not warrant the interference of this Court, particularly when
the plea sought to be raised to challenge the same could have
been raised earlier – Even if the 9th auction were to be held illegal
and bad in law by virtue of the aforesaid S.A. No. 46 of 2022, it
would not mean that the auction purchaser would by virtue of such
finding lose all its rights to the secured asset, even after having
the sale confirmed in its favour. [Paras 219, 220]

Transfer of Property Act, 1882 – s.52 – s.52 does not render
a transfer pendente lite void – However, the court while
exercising contempt jurisdiction may be justified to pass
directions either for reversal of the transactions in question by
declaring the said transactions to be void or proceed to pass
appropriate directions to the concerned authorities to ensure
that the contumacious conduct on the part of the contemnor
does not continue to enure to the advantage of the contemnor
or anyone claiming under him. [Para 180]

Contempt of Court – Contumacious conduct – Duty of the
court – To issue appropriate directions for remedying or
rectifying the things done in violation of its orders – Power
to take restitutive measures at any stage of the proceedings –
Discussed. [Paras 221, 222]

Doctrines / Principles – Doctrine of election – Once a party has
elected to choose remedy under one forum, again the same
cause of action cannot be challenged before another forum:
Held: On facts, the Borrower decided to move the High Court for
seeking the very same relief that it had sought in the securitization
application u/s.17 of the SARFAESI Act before Debt Recovery
Tribunal – As there was virtually no difference between either
the scope of proceedings or the prayer sought before the DRT
and that before the High Court, once the Borrower had chosen
to espouse the same matter already sub-judice in one forum
before another, in this case the High Court, it was the duty of the
Borrower to bring within the fold of its case all issues and grounds
in respect of the 9th auction proceedings in the proceedings
arising from the writ petition, by virtue of the Doctrine of Election –
Furthermore, by virtue of the Doctrine of Election, the Borrower
cannot be permitted to pursue two inconsistent remedies, once
the Borrower had availed the remedy to redeem its mortgage and
[2024] 12 S.C.R. 1629

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

pay the dues sought to be recovered by way of the SARFAESI
proceedings initiated by the Bank and having failed in doing so,
it now cannot be permitted to challenge those very SARFAESI
proceedings – A litigant cannot approbate or reprobate at the same
time – Election is the obligation imposed upon a party by Courts
of equity to choose between two inconsistent or alternative rights
or claims in cases where there is clear intention of the person
from whom he derives one that he should not enjoy both. [Paras
126, 127 and 154(iii)]
Maxims – Expressio Unius Est Exclusio Alterius – Expression
of one thing is the exclusion of another – Where a court
consciously and specifically grants certain reliefs but does
not advert to other reliefs or rights, the relief so expressly
provided necessarily leads to the implied exclusion of the
other reliefs and rights. [Para 154(vii)]

Case Law Cited
State of U.P. v. Nawab Hussain [1977] 3 SCR 428 : (1997) 2 SCC
806; Devilal Modi v. Sales Tax Officer, Ratlam & Ors. [1965] 1
SCR 686 : AIR 1965 SC 1150; Shankara Coop. Housing Society
Ltd. v. M. Prabhakar [2011] 7 SCR 468 : (2011) 5 SCC 607;
Sanjay Verma v. Manik Roy [2006] Supp. 10 SCR 469 : (2006)
13 SCC 608; Thomson Press (India) Limited v. Nanak Builders
and Investors Private Limited & Ors. [2013] 2 SCR 74 : (2013) 5
SCC 397; T. Ravi & Anr. v. B. Chinna Narasimha & Ors. [2017]
3 SCR 1 : (2017) 7 SCC 342; Ashok Paper Kamgar Union v.
Dharam Godha and Ors. (2003) 11 SCC 1; Ram Kishan v. Tarun
Bajaj & Ors. [2014] 1 SCR 538 : (2014) 16 SCC 204; Murray &
Co. v. Ashok Kr. Newatia & Anr. [2000] 1 SCR 367 : (2000) 2
SCC 367; Pushpaben & Anr. v. Narandas Badiani & Anr. [1979]
3 SCR 636 : (1979) 2 SCC 394; Reliance Petrochemicals Ltd. v.
Proprietors of Indian Express Newspapers, Bombay Pvt. Ltd. &
Ors. [1988] Supp. 3 SCR 212 : (1988) 4 SCC 592; Rita Markandey
v. Surjit Singh Arora [1996] Supp. 7 SCR 56 : (1996) 6 SCC 14;
Jhareshwar Prasad Paul v. Tarak Nath Ganguly [2002] 3 SCR
913 : (2002) 5 SCC 352; Valji Khimji and Company v. Official
Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors [2008]
12 SCR 1 : (2008) 9 SCC 299; Ram Kishun & Ors. v. State of
Uttar Pradesh & Ors. [2012] 6 SCR 105 : (2012) 11 SCC 511;
PHR Invent Educational Society v. UCO Bank (2024) 6 SCC 579;
1630 [2024] 12 S.C.R.

Supreme Court Reports

V.S. Palanivel v. P. Sriram 2024 INSC 659 : [2024] 8 SCR 1263;
Janak Raj v. Gurdilal Singh & Ors. [1967] 2 SCR 77 : AIR 1967
SC 608; Baranagore Jute Factory Plc. Mazdoor v. Baranagore
Jute Factory Plc. [2017] 4 SCR 700 : AIR Online 2017 SC 410;
and State Bank of India & Ors. v. Dr. Vijay Mallya [2022] 15 SCR
384 : 2022 SCC Online SC 826 – relied on.
Patel Rajnikant Dhulabhai & Anr. v. Patel Chandrakant Dhulabhai
& Ors. [2008] 10 SCR 1169 : (2008) 14 SCC 561 – clarified and
relied on.
Arce Polymers Private Limited v. Alphine Pharmaceuticals Private
Limited & Ors. [2021] 11 SCR 1059 : (2022) 2 SCC 221; ITC Ltd.
v. Blue Coast Hotels Limited & Ors. [2018] 5 SCR 516 : (2018)
15 SCC 99; Supertech Limited v. Emerald Court Owner Resident
Welfare Association & Ors. [2021] 13 SCR 976 : (2023) 10 SCC
817; Collector of Customs, Bombay v. Kirshna Sales (P) Ltd. (1994)
Supp. 3 SCC 73; General Manager, Sri Siddeshwara Cooperative
Bank Limited & Anr. v. Ikbal & Ors. [2013] 8 SCR 532 : (2013) 10
SCC 83; Vasu P. Shetty v. Hotel Vandana Palace & Ors. [2014] 9
SCR 38 : (2014) 5 SCC 660; Govind Kumar Sharma & Anr. v. Bank
of Baroda & Ors. 2024 INSC 326 : [2024] 4 SCR 633; Phoenix ARC
(P) Ltd. v. Vishwa Bharati Vidya Mandir [2022] 1 SCR 950 : (2022)
5 SCC 345; Vodafone Idea Cellular Ltd. v. Ajay Kumar Agarwal
[2022] 2 SCR 748 : (2022) 6 SCC 496; Joint Action Committee
of Air Line Pilots’ Assn. of India (ALPAI) & Ors. v. DGCA [2011] 5
SCR 1019 : (2011) 5 SCC 435; Jayaram Mudaliar v. Ayyaswami
[1973] 1 SCR 139 : AIR 1973 SC 569; Guruswamy Nadar v. P.
Lakshmi Ammal [2008] 7 SCR 435: (2008) 5 SCC 796; Chander
Bhan (D) through Lr. Sher Singh v. Mukhtiar Singh & Ors. 2024
INSC 377 : [2024] 5 SCR 1148; M/s Siddamsetty Infra Projects
Pvt. Ltd. v. Katta Sujatha Reddy & Ors. 2024 INSC 861; B. Arvind
Kumar v. Govt of India & Ors. (2007) 5 SCC 745 and LICA (P) Ltd.
v. Official Liquidator (1996) 85 Comp Cas 788 (SC) – referred to.
Henderson v. Henderson [1843] 3 Hare 999; Johnson v. Gore
Wood & Co [2002] 2 AC 1; Virgin Atlantic Airways Ltd. v. Zodiac
Seats UK Ltd. [2014] AC 160; Newington v. Levy (1870) 6 CP
180 (J) and Bellamy v. Sabine (157) 1 De G&J 566 – referred to.

Books and Periodicals
Black’s Law Dictionary, Sixth Edition, at page 1599 – referred to.
[2024] 12 S.C.R. 1631

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

List of Acts
Transfer of Property Act, 1882; Contempt of Courts Act, 1971;
Constitution of India; Securitization and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002; Security
Interest (Enforcement) Rules, 2002.

List of Keywords
Wilful disobedience of judgment; Wilful; Sale certificate; Secured
asset; Borrower; Auction purchaser; Subsequent transferee; Third
party purchaser; Secured creditor; Bank; Release Deed; Discharge
of mortgage; Securitization application; Demand notice; Assignment
agreement; Lis pendens; Explicit prohibitory order; Contemptuous
conduct; Last opportunity; Contempt jurisdiction; Administration
of justice; Rule of law; Contempt of court; Beyond all reasonable
doubt; Res judicata; Constructive res judicata; Abuse of process;
Henderson Principle; Procedural fairness; Cause of action estoppel;
Issue estoppel; Decided issue estoppel; Unraised issue estoppel;
Piecemeal litigation; Registered notice of pendency; Doctrine of
Pari Delicto; Auction; Sale process; Transfer pendente lite; Duty of
the court; Power to take restitutive measures; Doctrine of election;
Maxim “expressio unius est exclusio alterius”

Case Arising From
INHERENT JURISDICTION: Contempt Petition (C) No(s). 158-159
of 2024
In
Civil Appeal No(s). 5542-5543 of 2023
Petition filed for contempt of this Court’s Judgment dated 21.09.2023
in Civil Appeal Nos. 5542-5543 of 2023
With
M.A. Nos. 600-601 of 2024 In C.A. Nos. 5542-5543 of 2023

Appearances for Parties
Mukul Rohatgi, Neeraj Kishan Kaul, Raju Ramachandran,
Dr. A.M. Singhvi, Parag Tripathi, Nikhil Nayar, Devadatt Kamat,
Kapil Sibal, Chander Uday Singh, Sr. Advs., Ms. Shyel Trehan,
Gaurav Y., Pranav Sarthi, Ms. Krushi Barfiwala, Divyanshu Gupta,
Ms. Shivalika Rudrabatla, Ms. Apoorva Singh, Ms. Ira Mahajan,
1632 [2024] 12 S.C.R.

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Keshav Sehgal, O.P. Gaggar, Sachindra Karn, Avishkar Singhvi,
Shreeyash Uday Lalit, Sanam Tripathi, Ms. Sugandha Batra,
Ms. Priyansha Sharma, Ms. Arushi Mishra, Shreyash Choudhary,
Ms. Runjhun Garg, Himanshu Vats, Angad Pahal, Lavam Tyagi,
Ishaan George, Shubhranshu Padhi, Sumeet Lal, Sidhant Kapoor,
Masoom Shah, D. Girish Kumar, Jay Nirupam, Pranav Giri, Ekansh
Sisodia, Ms. A.M. Harsavardhini, Ms. Sumedha Ray Sarkar,
Ms. Rupali Francesca Samuel, Ms. Palak Rawat, Advs. for the
appearing parties.

Judgment / Order of the Supreme Court

Judgment
J.B. Pardiwala, J.

For the convenience of exposition, this judgment is divided into the
following parts: -
INDEX*

A. FACTUAL MATRIX ............................................................ 3
i. Facts leading upto the Decision of this Court in Civil
Appeal Nos. 5542-5543 of 2023 ................................. 3
ii. Developments during the pendency of Civil Appeal
Nos. 5542-5543 of 2023 .............................................. 10
iii. Subsequent Developments and the Acts alleged to
be in contempt thereof ............................................... 13
B. SUBMISSIONS OF THE PARTIES .................................. 20
i. Submissions of the Successful Auction Purchaser/
the petitioner ............................................................. 20
ii. Submissions of the Borrower/the respondent
no. 1 ................................................................................. 28
iii. Submissions of the Subsequent Transferee/
respondent nos. 2 & 4 .............................................. 38
iv. Submissions of the Bank/the respondent no. 3 ....... 45

* Ed. Note: Pagination as per the original Judgment.
[2024] 12 S.C.R. 1633

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

C. ISSUES FOR DETERMINATION ........................................ 49
D. ANALYSIS .......................................................................... 50
i. Concept of Abuse of Process of Court and Collateral
challenge to judgments that have attained finality
.................................................................................... 50
a. The Decision of this Court in Celir LLP v. Bafna
Motors & Ors. (2023 INSC 838) and the Scope of
challenge before it .............................................. 77
b. The ‘Henderson’ Principle as a corollary of
Constructive Res-Judicata ..................................... 83
ii. Applicability of Lis Pendens in the absence of any
registration as required under the State Amendment
to Section 52 of the TPA .......................................... 104
iii. Whether any contempt is said to have been
committed by the respondents herein? .................... 121
iv. Circumstances when a sale of property by auction
or other means under the SARFAESI Act may be
set-aside after its confirmation ............................... 138
E. FINAL ORDER ................................................................... 146

1. Since the issues raised in both the captioned petitions are same
and the parties are also the same, they were taken up for hearing
analogously and are being disposed of by this common judgment
and order.
2. The present petitions have been filed under Section 2(B) of the
Contempt of Court Act, 1971 (for short, the “Act, 1971”) read with
Article(s) 129 and 142(2) of the Constitution respectively seeking
to initiate contempt proceedings against the respondents/alleged
contemnors for wilful disobedience of the final judgment and order
dated 21.09.2023 passed by this Court in Civil Appeal Nos. 5542-
5543 of 2023 respectively captioned as ‘Celir LLP v. Bafna Motors
(Mumbai)’.
1634 [2024] 12 S.C.R.

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3. For the sake of convenience, we clarify that the petitioner herein is
the successful auction purchaser, the respondent no. 1, Mr. Sumati
Prasad Bafna is the original borrower (hereinafter referred to as
the ‘Original Borrower’), the respondent no. 4 ‘Greenscape IT
Park LLP’ and its director, Mr. Jayesh A. Vavia i.e., the respondent
no. 2 herein are the subsequent transferee/third-party purchaser
(hereinafter referred to as the ‘Subsequent Transferee’) and the
respondent no. 3, ‘Union Bank of India’ is the secured creditor/bank
(hereinafter referred to as the ‘Bank’).

A. FACTUAL MATRIX

i. Facts leading upto the Decision of this Court in Civil Appeal
Nos. 5542-5543 of 2023.
4. The Original Borrower herein had availed credit facility from the
Bank. Accordingly, the Bank on 03.07.2017 sanctioned Lease Rental
Discounting (for short, ‘the LRD’) credit facility to the tune of Rs. 100
crore in favour of the Borrowers. The Bank vide its letter dated
02.01.2020 further sanctioned an additional amount of Rs. 6.77
Crore towards the said LRD term loan.
5. Against the aforesaid term loan, a simple mortgage was created over
a parcel of land admeasuring 16200 sq. metres having buildings
and ancillary structures on it at plot Nos. D-105, D 110 and D-111
respectively situated at the Trans Thane Creek Industrial Area
MIDC Village Shirwane, Thane, Belapur Road, Nerul, Navi Mumbai,
Thane, Maharashtra (hereinafter referred to as the “Secured Asset”)
belonging to the Borrower vide a Mortgage Deed dated 28.01.2020
in lieu of the sanctioned credit.
6. The Borrower defaulted in repayment of the said loan amount and
accordingly on 31.03.2021 the Borrower’s LRD Term Loan Account
was declared as a Non-Performing Asset (NPA).
7. The Bank on 07.06.2021 issued a demand notice under Section 13
sub-section (2) of the Securitization and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002 (for short,
the ‘SARFAESI Act’) for repayment of the principal amount along
with interest, cost, charges, etc. As of 30.04.23, an aggregate sum of
Rs. 123.83 crore was due and payable by the borrowers to the Bank.
[2024] 12 S.C.R. 1635

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

8. Owing to the failure of the Borrower & the guarantor in repaying the
outstanding amount referred to above, the Bank proceeded to take
measures for possession of the Secured Asset under the SARAFESI
Act. The Bank on 04.02.2022 issued a possession notice under
Section 13(4) read with Rule 8 of the Security Interest (Enforcement)
Rules, 2002 (for short, the “SARFAESI Rules”) to the Borrower and
took symbolic possession of the Secured Asset.
9. Aggrieved by the aforesaid, the Borrower preferred a Securitization
Application being S.A. No. 46 of 2022, under Section 17 of the
SARFAESI Act before the Debt Recovery Tribunal (for short, the
‘DRT’), assailing the aforesaid notice dated 07.06.2021 under
Section 13(2), and the notice dated 04.02.2022 under Section 13(4),
by the Bank, classifying the Borrower’s Account as an NPA and taking
symbolic possession of the Secured Asset, respectively.
10. In the meantime, the Bank decided to put the Secured Asset to
auction. On 25.03.2022, the Bank issued a notice of sale of the
Secured Asset by way of a public auction slated for 29.04.2022,
however, the said sale/auction failed on account of no bids being
received. It appears that between April 2022 & June 2023, the Bank
attempted eight auctions but all failed.
11. It appears that the borrowers informed the Bank that they were
trying to sell the secured asset but were not getting good offers.
The borrowers informed the Bank that the maximum they might be
able to fetch from the sale of the secured asset would be around
Rs. 91-92 crore and they were willing to settle the entire account by
offering such amount to the Bank.
12. The Bank however decided to go for one more auction. On 14.06.2023,
the Bank published the notice of sale in terms of Rule 8(6) of the
SARFAESI Rules for the 9th time. The public auction was scheduled
to be conducted on 30.06.2023. The terms of the aforesaid notice of
sale, inter-alia stipulated that the Secured Asset would be sold on ‘as
is what is and whatever there is basis’ at a reserve price of Rs. 105
crore and that the said auction would be subject to the outcome of
the S.A No. 46 of 2022 pending before the DRT. The relevant terms
and conditions of the aforesaid e-auction specified in the notice of
sale dated 12.06.2023 read as under: -
“TERMS AND CONDITIONS OF SALE OF IMMOVABLE
SECURED ASSETS:
1636 [2024] 12 S.C.R.

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“19. The Authorized Officer will deliver the property on the
basis of Symbolic possession taken on as is where is basis
to the purchaser free from encumbrances, known to the
Secured Creditor on deposit of money by the purchaser
towards the discharge of such encumbrances.
xxx xxx xxx
26, The above movable/immovable secured assets will
be sold in “As is where is”, “As is What is” and “whatever
there is” condition.
xxx xxx xxx
29. The sale is subject to outcome of S.A No. 46/2022
pending before DRT, Mumbai.”
13. The Borrower herein on 26.06.2023 preferred two applications
before the DRT being I.A. No. 2253 of 2023 and I.A. No. 2254
of 2023 in S.A. No. 46 of 2022, respectively inter-alia seeking to
amend amending its pleadings for the purpose of challenging the
9th auction proceedings and for seeking stay of the said auction in
the meantime, respectively.
14. Pursuant to the 9th notice of sale, the auction proceedings were
conducted on 27.06.2023. The petitioner herein participated in the
same and submitted its bid of Rs. 105.05 crore, along with a deposit
of Rs. 10.5 crore as earnest money.
15. In the said 9th auction conducted by the Bank, the petitioner herein
was declared as the highest bidder. The Bank on 30.06.2023 vide
its email sent a “Sale Confirmation Letter” to the petitioner, declaring
him as the highest bidder/H1 in the auction of the secured asset
and called upon the petitioner. to deposit 25% of the bid amount
by 01.07.2023 and the balance amount on or before 15.07.2023.
16. On 01.07.2023, the petitioner as per the terms and conditions of
the auction notice deposited an amount of Rs, 15,76,25,000/- (INR
Fifteen Crore Seventy-Six Lac Twenty-Five Thousand) as 25% of the
total sale consideration to the Bank, excluding the EMD already paid.
17. The Borrower realizing that the 9th auction being successful and
that the Secured Asset was likely to be sold off, it hurriedly filed an
Interlocutory Application bearing No. 2339 of 2023 in the S.A. No. 46
of 2022 on 05.07.2023, seeking to redeem the mortgage created
[2024] 12 S.C.R. 1637

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

over the Secured Asset by paying of the total outstanding sum of
Rs. 123.83 crore (approx..) in lieu of the LRD Term Loan. Over the
next few weeks, the aforesaid application was taken up by the DRT
and both the Bank and the Borrowers were heard at length, but no
consequential orders were passed.
18. On 27.07.23, the petitioner herein deposited the balance sum of
the total bid amount which was duly received and accepted by the
Bank. On the very same day, the redemption application referred
to above was also heard by the DRT. The redemption application
was opposed by both the petitioner herein as well as the Bank.
The DRT after hearing the parties at length, reserved orders to be
pronounced on 02.08.23.
19. While the parties were awaiting for the DRT to pass an appropriate
order on the redemption application, the borrowers went to the
High Court and filed the Writ Petition No. 9523 of 2023, inter-alia
i) challenging the demand notice dated 07.06.2021 and the measures
taken by the Bank under the SARFAESI Act more particularly the
possession notice dated 04.02.2022 and the initial sale/auction notice
dated 25.03.2022 AND ii) further seeking directions to the Bank
to permit them to redeem the mortgage of the secured asset. The
writ petition was filed on the premise that the Borrowers had strong
apprehension that the DRT may reject their redemption application
and the entire matter would become infructuous more particularly,
as the Bank had accepted the entire amount of the bid from the
petitioner herein towards the sale consideration. The relevant prayers
sought by the Borrowers in the aforesaid writ petition are reproduced
hereunder: -
“11. THE PETITIONERS, THEREFORE, PRAY:
(a) That this Hon’ble Court be pleased to issue Writ of
Certiorari or Writ in the nature of Certiorari or any
other appropriate Writ, calling upon the papers and
proceedings of the Securitization Application No. 46
of 2022 pending before the Hon’ble DRT I, Mumbai
and after examining the legality, validity and propriety
thereof, be pleased to allow the Petitioners to redeem
the mortgage as per schedule provided in the Interim
Application No. 2339 of 2023 filed before the Hon
1638 [2024] 12 S.C.R.

Supreme Court Reports

DRT I, Mumbai or within such reasonable period as
this Hon’ble Court may deem fit and proper;
(b) That this Hon’ble Court be pleased to direct the
Respondent to issue “No Dues Certificate” and
release All piece and parcel of leasehold land to
the extent of 16200 sq. mtrs various buildings and
ancillary structures at amalgamated plot no. D-105,
D-110 and D-111, Trans Thane Creek Industrial Area,
MIDC, Village Shirwane, Thane- Belapur Road, Navi
Mumbai, Dist- Thane, Maharashtra, 400706, after
getting the entire redemption amount;
(c) In the alternate, that this Hon’ble Court be pleased to
direct the Respondent not to take any further steps
for issuance of the sale Certificate by confirming
the sale until the hearing and final disposal of the
Securitization Application No. 46 of 2022 pending
before the Hon’ble DRT I, Mumbai;”
(Emphasis supplied)

20. Interestingly, the Borrower herein never challenged the legality or
propriety of the 9th Auction that was conducted by the Bank in the
aforesaid writ petition before the High Court of judicature at Bombay.
Although, in the aforesaid writ petition, the Borrower had itself stated
that the 9th notice of sale was published on 12.06.2023 and auction
thereto was conducted on 30.06.2023, yet far from imputing procedural
impropriety as regards the valuation of the Secured Asset in the said
9th Auction, no challenge was ever made to the manner in which the
notice of sale dated 12.06.2023 came to be issued i.e., there was
no challenge to the validity of the said notice. We shall discuss the
pleadings of the Borrower herein and the scope of proceedings before
the High Court in more detail in the latter part of this judgment.
21. Before the High Court, the Borrowers expressed their willingness
to pay a total sum of Rs. 129 crore for redeeming the mortgage
by 31.08.2023. The Bank which had earlier opposed the plea for
redemption of mortgage before the DRT for some good reason
expressed its willingness before the High Court to accept the offer
of the borrowers. The Bank perhaps got lured by the fact that the
[2024] 12 S.C.R. 1639

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

borrowers were paying almost Rs. 23.95 crore more than what
was paid by the petitioner herein and Rs. 5 crore more than the
outstanding amount.
22. In the wake of such development, the petitioner herein having come
to know about the aforesaid proceedings before the High Court
preferred Interim Application (ST) No. 21706 of 2023 for being
impleaded in the writ petition.
23. The writ petition along with interim application was heard by the High
Court and vide its judgment and order dated 17.08.2023 allowed the
writ petition and permitted the borrowers to redeem the mortgage
of the secured asset subject to payment of Rs. 25 crore on the
same day and the balance amount of Rs. 104 crore on or before
31.08.2023, failing which the sale of the Secured Asset in favour of
the petitioner herein would be confirmed.

ii. Developments during the pendency of Civil Appeal Nos.
5542-5543 of 2023.
24. Aggrieved by the aforesaid, the petitioner herein preferred Special
Leave Petition Nos. 19523-19524 of 2023 (later renumbered as
Civil Appeal Nos. 5542-5543 of 2023) before this Court, challenging
the final judgment and order dated 17.08.2023 passed by the High
Court. The aforesaid Special Leave Petitions were instituted on
21.08.2023 and it is pertinent to note that there was a caveat at the
end of the Borrower herein, and thus the Borrower was fully aware
of the aforesaid Special Leave Petition pending before this Court.
25. On 25.08.2023, the aforesaid special leave petitions were taken up for
hearing by this Court for the first time and the Borrower herein was
also present during the hearing through his counsel. However, since
the judgment and order dated 17.08.2023 passed by the High Court
was not made available, this Court vide its order dated 25.08.2023
adjourned the matter to 01.09.2023. It is material to note that there
was no interim stay or status quo operating between the parties.
26. On 26.08.2023, the judgment and order dated 17.08.2023 passed by
the High Court was uploaded and made available to the parties, and
the Borrower pursuant to the said order of the High Court transferred
a sum of Rs. 104 crore to the Bank for redeeming its mortgage.
1640 [2024] 12 S.C.R.

Supreme Court Reports

27. The Bank on 28.08.2023 issued a ‘No Dues Certificate’ to the
Borrower, and a Release Deed was executed between the parties
for discharge of the mortgage over the Secured Asset, upon which
the original title deeds and related documents were returned to the
Borrower. It appears from the material on record that there was a
second charge created over the said Secured Asset in favour of
one Tata Motors Financial Solutions Ltd. which came to be released
pursuant to payment of Rs. 15 crore by the Borrower on the same
date vide a Dead of Release registered before the Joint Sub Registrar,
Thane 8 having Registration No. 19283 of 2023.
28. On the very same day i.e., 28.08.2023, the Borrower entered into
an Agreement of Assignment of Leasehold Rights with a third-party
viz. M/s Greenscape I.T. Park LLP i.e., the Subsequent Transferee
herein for the transfer of leasehold rights in the Secured Asset. The
said agreement was registered before the Joint Sub Registrar, Thane
8 vide Registration No. 19286 of 2023, and franking was completed
on the same date.
29. On 01.09.2023, the aforesaid special leave petitions were taken up
for hearing. After the arguments from both sides were concluded,
leave to appeal was granted, and the matter came to be reserved
for judgment by this Court. The parties were further directed to file
their written submissions.
30. This Court vide its final judgment and order dated 21.09.2023 in
Civil Appeal Nos. 5542-5543 of 2023 inter-alia held that the High
Court erred in permitting the Borrower to redeem the mortgage after
publication of the notice of sale/auction under Rule 9 sub-rule (1)
of the SARFAESI Rules. Accordingly, the High Court’s order dated
17.08.2023 was set-aside. Furthermore, in light of the willingness
expressed by the petitioner to make good the difference between
the total outstanding dues and the bid amount submitted by him,
this Court directed the petitioner to pay an additional amount of
Rs. 23.95 crore to the Bank within a period of one week from the
date of pronouncement, upon which the Bank was to issue the sale
certificate for the Secured Asset in accordance with Rule 9(6) of the
SARFAESI Rules. The Bank was further directed to refund the entire
amount paid by the Borrower towards redemption of the mortgage
of the Secured Asset upon receipt of the balance amount from the
petitioner herein.
[2024] 12 S.C.R. 1641

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

iii. Subsequent Developments and the Acts alleged to be in
contempt thereof.
31. On 26.09.2023, the Borrower preferred a review against the aforesaid
final judgment and order dated 21.09.2023 passed by this Court in
Civil Appeal Nos. 5542-5543 of 2023 being R.P. (C) Nos. 611-612
of 2024. On 27.09.2023, the petitioner herein paid the remaining
amount of Rs. 23.95 crore in terms of the aforesaid judgment of this
Court whereupon Sale Certificate for the Secure Asset came to be
issued by the Bank.
32. It is alleged that the Bank on the very same day addressed one
letter to the Borrower requesting for the cancellation of the Release
Deed dated 28.08.2023 and for returning the original title deeds
to the Secured Asset in order to refund the amount paid towards
redemption of the mortgage. However, the Borrower on the other
hand disputed the receipt of the aforesaid letter. Nevertheless, the
Bank on 18.10.2023 addressed one another letter calling upon
the Borrower to execute a Deed of Cancellation of the aforesaid
Release Deed and to handover the original title documents of the
Secured Asset.
33. Thereafter, the petitioner herein sent several reminders to the
Bank inter-alia to handover the physical possession of the Secured
Asset along with its original title deeds. The Bank in response
reiterated from time to time that it was actively taking steps for
the purchase of complying with the directions passed by this
Court in its judgment dated 21.09.2023 in Civil Appeal Nos. 5542-
5543 of 2023. It further informed that it had filed an application
under Section 14 of the SARFAESI being S.A. No. 787 of 2023
for obtaining physical possession of the Secured Asset, and that
the said application was pending before the District Magistrate,
Thane, Mumbai.
34. In the interregnum, the Borrower filed I.A. No. 3220 of 2023 in S.A.
No. 46 of 2022 for amendment of pleadings in the securitization
application inter-alia for the purpose of: -
i) Bringing on record the subsequent development that had taken
place;
ii) For challenging the Notice of Sale dated 12.06.2023 on the
ground of want of a 30-days period between the date of issuance
1642 [2024] 12 S.C.R.

Supreme Court Reports

of the notice of sale and the date of auction in terms of Rule 8(6)
and 9(1) of the SARFAESI Rules respectively;
iii) Praying to set aside the auction dated 30.06.2023 of the Secured
Asset conducted by the Bank upon examination of the validity
and propriety of all measures taken by the Bank in terms of
Section 13(4) of the SARFAESI Act and Rule 8 and 9 of the
SARFAESI Rules respectively.
35. Several more correspondences took place between the petitioner
and the Bank herein for handing over of possession and title deeds
to the Secured Asset, however they were to no avail. The Bank
reiterated its helplessness in providing the aforesaid owing to the
non-cooperation of the Borrower and the Subsequent Transferee. In
view of the above, the petitioner herein issued a legal notice dated
29.12.2023 to all the respondents herein, calling upon them to (a)
handover the physical possession of the Secured Asset along with
its original title deeds and (b) to take steps towards cancelling the
Release Deed dated 28.08.2023. In response to the above, the
Borrower herein vide its letter dated 16.01.2024 inter-alia stated
that since the Secured Asset stood transferred to the Subsequent
Transferee, it had no role to play in handing over of the possession
or the original title deeds of the same. Whereas, the Bank vide its
Reply dated 23.01.2024 stated that as per the terms of the auction,
the Bank was obliged only to provide the symbolic possession of
the Secured Asset which had already been delivered. It further
assured that the Bank was exploring all options for handing over the
original title deeds. In regards to the physical possession, the Bank
informed that it had already filed an application under Section 14 of
the SARFESI Act, which was still pending and that until appropriate
orders were passed, it was not possible to handover the physical
possession of the Secured Asset.
36. On the other hand, the Subsequent Transferee upon receipt of the
aforesaid legal notice, instituted a suit being the Special Civil Suit
No. 5 of 2024 against the petitioner inter-alia seeking a declaration
that (a) they are the owners and title-holder of the Secured Asset;
(b) the Assignment Agreement dated 28.08.2023 is legal and valid
and (c) they are entitled to the physical possession of the Secured
Asset. It has been alleged that the Subsequent Transferee was
constrained to prefer the above suit, as the petitioner herein had
attempted to take forceful possession of the Secured Asset. The Bank
[2024] 12 S.C.R. 1643

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

on 16.01.2024 filed an application in the aforesaid suit for rejection
of plaint under Order VII, Rule 11 of Code of Civil Procedure, 1908
(for short, the “CPC”).
37. The District Magistrate vide its order dated 02.02.2024 in S.A.
No. 787 of 2023 allowed the Banks’ application under Section
14 of the SARFAESI and the Tehsildar, Thane was appointed to
take physical possession of the Secured Asset and the document
relating thereto. Pursuant to the aforesaid, the Tehsildar, Thane
on 14.02.2024 issued a notice of possession stipulating that in
the event the Subsequent Transferee does not handover physical
possession of the Secured Asset and the original title deeds within
15-days, then the possession shall be taken over forcefully with
the assistance of the local police.
38. In light of the above, the Borrower herein preferred a Securitization
Application under Section 17 of the SARFAESI Act for seeking
stay of the aforesaid notice of possession dated 02.02.2024 and
restraining the Bank from taking any further coercive steps in this
regard, even though, it had earlier taken the stance that since
the Secured Asset stood transferred by him to the Subsequent
Transferee it had no role or any concern with the handing over of
the physical possession. Thus, while the Borrower on one hand
is remarkably contending that it has nothing to do with the failure
in handing over of the Secured Asset yet in the same breath, he
is purposefully engaging in various acts to subvert any and all
attempts of the petitioner and the Bank herein to regain the physical
possession.
39. In the suit proceedings, on an application filed by the Subsequent
Transferee the Civil Court, Belapur vide its order dated 05.02.2024,
directed that status quo be maintained and restrained the Bank from
taking any steps towards obtaining the physical possession of the
Secured Asset till it filed its written statement.
40. The DRT vide its order dated 28.02.2024 observed that since
the decision of this Court in the Civil Appeal Nos. 5542-5543 of
2023 had allowed the sale in favour of the petitioner, the act of
the borrower to continue claiming a right to the Secured Asset on
the strength of the Release Deed dated 28.08.2023 was highly
deplorable. Accordingly, the DRT refused to grant stay of the notice
of possession and dismissed the Borrower’s IA No. 456 of 2024 in
S.A. No. 53 of 2024.
1644 [2024] 12 S.C.R.

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41. The Borrower preferred an appeal against the aforesaid order being
Misc. Appeal (D) No. 429 of 2024 before the Debts Recovery Appellate
Tribunal, Mumbai (for short, the “DRAT”). It appears from the material
on record that the DRAT vide its order dated 29.02.2024 granted
status quo and deferred the proceedings for physical possession,
and further directed the Bank to deposit Rs. 129 crore paid by the
Borrower before it, in contrast to the order of this Court in Civil Appeal
Nos. 5542-5543 of 2023 wherein the said amount was ordered to
be refunded in clear terms.
42. On 01.03.2024, the present contempt petition came to be filed
before this Court seeking initiation of contempt proceedings against
the respondents for wilful disobedience of this Court’s order in Civil
Appeal Nos. 5542-5543 of 2023 and further praying for i) handing
over of the physical possession and original title deeds to the Secured
Asset, ii) annulment of the Release Deed, the No Dues Certificate
and the Deed of Assignment in favour of the Subsequent Proceedings
and iii) the quashing of all proceedings pending in respect of the
Secured Asset before the DRT, DRAT and the suit proceedings of
the Subsequent Transferee.
43. It further emerges from the materials on record that in the suit
proceedings the Civil Court, Belapur vide its order dated 05.03.2024
rejected the Bank’s application under Order VII, Rule 11 of the CPC
and further extended the status quo granted earlier.
44. In the wake of such developments, the Bank on 12.03.2024 filed a
miscellaneous application before this Court being M.A. No. 600 of
2024 in Civil Appeal Nos. 5542-5543 of 2023 seeking directions to the
Borrower herein to handover the physical possession of the Secured
Asset and all original title deeds related thereto in compliance of the
decision of this Court in the Main Appeals.
45. The Borrower filed two applications in its Review Petitions that were
pending before this Court being I.A. No. 92135 of 2024 and I.A. No.
92136 of 2024 in R.P. (C) Nos. 611-612 of 2024 respectively seeking
permission to file additional grounds for review and for open court
hearing. The aforesaid Review Petitions along with the interlocutory
applications against the Main Appeals came to be dismissed by this
Court vide its order dated 18.07.2024.
[2024] 12 S.C.R. 1645

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

46. In such circumstances referred to above more particularly the dubious
actions of the respondents and the subsequent development that have
taken place after the decision of this Court in the Main Appeals, the
petitioner is here before this Court with the present contempt petitions.

B. SUBMISSIONS OF THE PARTIES

i. Submissions of the Successful Auction Purchaser/the
petitioner.
47. Mr. Mukul Rohatgi and Mr. Neeraj Kishan Kaul, the learned Senior
Counsel appearing for the petitioner submitted that this Court in its
decision rendered in the Main Appeals had looked into all the issues at
hand regarding the auction and the subsequent transfer, and thereafter
had taken a conscious decision to uphold the auction conducted
in favour of the petitioner and directed the Bank to issue the Sale
Certificate and handover possession of the Secured Asset. However,
despite such categorical directions of this Court, till date neither the
physical possession nor the original title deeds to the Secured Asset
has been handed over by the respondents herein to the petitioner.
48. It was submitted that the petitioner herein as per the directions of
this Court had paid an additional amount over and above the bid
submitted by it, to the tune of Rs. 24 crore approx. to match the
difference between the sale consideration and the amount towards
redemption of the mortgage, which the petitioner duly complied with.
In such circumstances, the petitioner placing reliance on para 98 of
the decision in the Main Appeals, submitted that once the entire bid
price is paid and there is no stay granted by any forum known to law,
the secured creditor is duty bound to issue a valid sale certificate
and handover the physical possession of the secured asset.
49. It was further submitted that the Borrower and the Subsequent
Transferee have not only refused to hand over the possession and
original title deeds to the Secured Asset in complete defiance of
the decision in the Main Appeals but have also resorted to frivolous
and malicious proceedings before various forums to undermine
and circumvent the decision of this Court. It was highlighted that
inasmuch as three different proceedings have been instituted by the
respondents for seeking prayers which are in teeth of the decision
of this Court in the Main Appeals. The details are as under: -
1646 [2024] 12 S.C.R.

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i. Securitization Application No. 46 of 2022 along with I.A. Nos.
3199 of 2023 & 3220 of 2023 before the DRT-I, Mumbai.
ii. Securitization Application No. 53 of 2024 along with I.A. No.
456 of 2024 before the DRAT, Mumbai
iii. Special Civil Suit No. 5 of 2024 before the Civil Court, Belapur.
50. It was submitted that the above acts of abject refusal to comply
with the directions passed in the Main Appeals and the act of
initiation of proceedings in different forums with prayers contrary
to the decision of this Court by the respondents, constitutes
contempt in itself.
51. It was further submitted that the acts of the Borrower and the
Subsequent Transferee to immediately enter into the Assignment
Agreement after redeeming the mortgage of the Secured Asset
had been done only to undermine the authority of this Court. The
contention of the respondents that they were well within their rights to
enter into the above transaction since there was no stay or prohibitory
order by this Court is patently erroneous and devoid of merit. It was
submitted that on the first day of hearing since the impugned order
of the High Court was not available, no effective hearing took place
and as such this Court had no occasion to grant or refuse stay. It
was further submitted that it is not the case that the respondents
were unaware of the pendency of the Main Appeals before this Court
at the time of entering into the Assignment Agreement, rather the
only reason why the respondents showed undue haste in entering
the aforesaid agreement was because they were well aware of the
proceedings pending before this Court. Thus, the conduct and actions
of the respondents are highly deplorable and cannot be termed to
be bona fide or in good conscience.
52. It was also submitted that after the decision of this Court in the
Main Appeals, both the Borrower and the Subsequent Transferee
herein committed several acts of contempt in order to circumvent
the judgment and order of this Court more particularly the direction
to issue the Sale Certificate and complete the sale in respect of the
Secured Asset, being as follows: -
(i) The Subsequent Transferee vide its letter dated 05.10.2023
asked the Sub-Registrar Office, Nerul Thane to not entertain
any request of the petitioner regarding the transfer of the
Secured Asset.
[2024] 12 S.C.R. 1647

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

(ii) The Borrower on 12.10.2023 addressed one letter to the Chief
Executive Officer of the Maharashtra Industrial Development
Corporation in whose industrial area the Secured Asset was
situated, inter-alia requesting them to not entertain any request
from the Bank or the petitioner regarding the transfer of the
leasehold rights of the Secured Asset in favour of the petitioner.
(iii) Similarly, the Subsequent Transferee vide its letter dated
17.10.2023 asked the Executive Officer of the Maharashtra
Industrial Development Corporation to not take any action
regarding the transfer of the Secured Asset to the petitioner.
(iv) In November, 2023, the Borrower filed I.A. No. 3220 of 2023
in S.A. No. 46 of 2022 to amend the securitization application
for inter-alia challenging the issuance of sale certificate by
the Bank as directed by this Court on the ground that such
issuance is contrary to the provisions of the SARFAESI Act,
as the property no longer vested with the Bank in view of the
No Dues Certificate and the Release Deed that was executed
during the pendency of the Main Appeal, and that the Bank
deliberately suppressed this fact from this Court.
(v) On 05.01.2023, the Subsequent Transferee filed Special Civil
Suit No. 5 of 2024 inter-alia for seeking a declaration that it
is the rightful owner of the property, as the Sale Certificate
issued to the petitioner does not confer ownership right and
title in respect of the property by contending that this Court
in its decision in the Main Appeals did not declare either
directly or indirectly that the sale transaction in its favour is
void or not binding. It has further contended in its plaint that
the interpretation of this Court as to the right of redemption
of the Borrower in the Main Appeals cannot be applied post-
exfacto to the sale executed in its favour so as to declare the
transaction as invalid.
(vi) That the Borrower in its response dated 16.01.2024 to the
petitioner’s legal notice outrightly refused to handover the
physical possession and the original title deeds to the Secured
Asset by contending that it no longer had any role to play
or authority over the property in view of its transfer to the
Subsequent Transferee. However, when the Tehsildar, Thane
1648 [2024] 12 S.C.R.

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in pursuance of the Bank’s application for obtaining physical
possession of the Secured Asset issued a notice to the
Subsequent Transferee, the Borrower filed an application for
seeking a stay of the same.
(vii) That the Subsequent Transferee on 17.01.2024 also sought for
registration of FIR against the Bank and the petitioner herein
inter-alia alleging that the Bank had been falsely claiming that
this Court in its decision in the Main Appeals had directed the
refund of the amount paid towards redemption of mortgage to the
Borrower and to transfer the vacant possession of the Secured
Asset to the petitioner, and that the Bank in collusion with the
petitioner had issued the sale certificate to the Secured Asset
despite having executed the Release Deed for the mortgage
and the pending litigation before the DRT.
53. In light of the above, it was contended by the petitioner that both the
Borrower and the Subsequent Transferee have been acting in tandem
with each other to frustrate the implementation of the decision of
this Court in the Main Appeals by misleading various authorities and
by mischievously instituting proceedings before different forums &
thereby thwart any attempt of the petitioner and the borrower to obtain
physical possession and original title deeds to the Secured Asset.
54. As regards the contention of the respondents on the issue of auction
that was conducted by the Bank being illegal and contrary to the
statutory provisions, it was submitted on behalf of the petitioners that
the requirement under Rule 8(6) read with Rule 9(1) to maintain a
30-day gap between the notice to the borrower and the notice of sale
is mandatory only for the first auction. Placing reliance on the Proviso
to Rule 9(1) it was submitted that for any subsequent auctions after
the first auction fails, only 15-days’ time period is required between
the notice of sale and the date of auction.
55. It was submitted that in the present case, since the Bank had
already conducted a total of 8 auctions prior to the auction in which
the petitioner emerged as the successful bidder, the same only
required a 15-days’ statutory notice period. As the notice of sale
for the 9th auction was published on 12.06.2023 and the ultimate
auction held on 30.06.2023, the statutory 15-day time period was
duly maintained. Thus the 9th auction was in due compliance of the
statutory requirements and constituted a valid sale.
[2024] 12 S.C.R. 1649

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

56. Reliance was also placed on the decision of this Court in Valji Khimji
and Company v. Official Liquidator of Hindustan Nitro Product
(Gujarat) Ltd. & Ors, reported in (2008) 9 SCC 299 to canvass that
a sale by way of public auction cannot be set aside until there is any
material irregularity and/or illegality committed in holding the auction
or if such sale was vitiated by any fraud or collusion.
57. It was further submitted on behalf of the petitioner that at no point
before the DRT or DRAT did the Borrower contend that there was
any material irregularity or fraud in connection with the 9th auction
that was conducted by the Bank or the sale of the Secured Asset
arising therefrom. Even in the Main Appeals before this Court, it was
never the case of the Borrower that the 9th Auction was invalid or
illegal and that no pleadings to this effect were made by the Borrower
before this Court.
58. In such circumstances, it was submitted that the stance taken by the
Borrower in the S.A No. 46 of 2022 and S.A. No. 53 of 2024 respectively
after the decision of this Court in the Main Appeals is unscrupulous
and self-serving. It was further pointed out that the Borrower in the
Assignment Agreement with the Subsequent Transferee had provided
an undertaking to withdraw the aforesaid S.A No. 46 of 2022. Thus,
in view of the aforesaid coupled with the fact that the Borrower
never questioned the validity of the 9th auction in the Main Appeals,
it was submitted that the Borrower had waived of its right under the
SARFAESI Act and is now estopped from challenging the legality
of the recovery measure taken by the Bank and the consequent 9th
Auction conducted by it. In this regard, the petitioner relied upon the
decision of this Court in Arce Polymers Private Limited v. Alphine
Pharmaceuticals Private Limited & Ors., reported in (2022) 2
SCC 221 to contend that if the party relinquishes its right under the
SARFAESI Act, then the Borrower is not entitled to subsequently
challenge the actions or measures taken under it.
59. In the last, it was submitted that the Sale Certificate of the Secured
Asset that was issued by the Bank in favour of the petitioner was
never contingent upon or subject to the outcome of the proceedings
before the DRT, more particularly S.A. No. 46 of 2022, as this Court
in the Main Appeals had upheld the auction and crystalized the
rights of the petitioner over the Secured Asset. Placing reliance on
paragraph 98 of the Main Appeals, it was contended that once the
Sale Certificate is issued, the bank is bound to hand over the physical
1650 [2024] 12 S.C.R.

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possession of the property and as such, this Court had concluded
the rights of all parties and that nothing remained in S.A. No. 46 of
2022 after the decision of this Court.

ii. Submissions of the Borrower/the respondent no. 1.
60. Dr. A.M. Singhvi the learned Senior Counsel appearing for the
Borrower submitted that this Court in its decision in the Main Appeals
only decided the issue of interpretation of Section 13(8) of the
SARFAESI Act, and rightly chose not to decide either the validity of
the 9th auction process or to interfere with the proceedings emanating
from S.A. No. 46 of 2022 that was pending before the DRT.
61. He further submitted that since the terms of the auction more
particularly clause 29 therein specifically stipulated that the auction
is subject to the outcome of the proceedings in S.A. No. 46 of 2022
pending before the DRT, this Court rightly never decided the validity
of the auction proceedings and left it for the DRT to decide.
62. It was submitted that in the Main Appeals, this Court held that writ
jurisdiction ought not to have been invoked by the Borrower having
already availed the statutory remedy and rightly did not decide
the issue of validity of the auction conducted by the Bank as such
remedy was available to the Borrower to avail in the S.A. No. 46 of
2022 pending before the DRT.
63. It was also submitted that the issues involved in the S.A. No. 46 of
2022 as to the validity of the measures taken by the Bank under the
SARFAESI Act, is still pending and to this date no court or judicial
authority has examined the same, and any interference with the said
proceedings would render the Borrower remediless and infringe its
rights under Article 21 and 300A of the Constitution. It was further
submitted that this Court ought not to decide the validity of such
measures in view of the fact that S.A. No. 46 of 2022 is pending
before the DRT which is the competent authority to decide these
issues.
64. It was submitted that the auction of the Secured Asset was conducted
on the basis of a symbolic possession and that said auction was
subject to the validity of such auction. Placing reliance on the terms
and conditions of the auction, it was submitted that as per clause 19,
[2024] 12 S.C.R. 1651

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

it was specified that only symbolic possession of the Secured Asset
would be delivered. As per clause 26 it was stipulated that the
Secured Asset would be sold to the auction purchaser on ‘as is
where is’ and ‘as is what is and whatever there is’ basis and lastly,
as per clause 29, it was stipulated that such sale would be subject to
the outcome of S.A. No. 46 of 2022 pending before the DRT. Thus,
any sale certificate issued in pursuance of such auction would also
be subject to such terms of the auctions.
65. He further submitted that, the petitioner herein being fully aware
about the aforesaid terms of auction, consciously participated in the
auction process, and thus now cannot be permitted to claim either
the absolute ownership of the Secured Asset despite the pendency
of the proceedings before the DRT or demand physical possession
of the same by relying upon the Sale Certificate that was directed
to be issued by this Court in the Main Appeals when no such terms
were stipulated in the 9th auction notice. He submitted that the Sale
Certificate that came to be issued to the petitioner in accordance with
the decision of this Court was purely on the basis of the terms of
the auction and cannot by any stretch be in derogation of the same.
66. It was also submitted that the present contempt petitions proceed on
a fundamental flaw that this Court in the Main Appeals had decided
and directed the handing over of physical possession of the Secured
Asset. Since physical possession was never the subject matter of the
Main Appeals and no prayer to this effect was made by the petitioner,
merely because physical possession has not been handed over it
cannot be said that any contempt of this Court’s decision has been
committed and thus, the present contempt petitions are misconceived.
67. It was further submitted that the petitioner was well aware that as per
the terms of auction it was not entitled to obtain physical possession
and thus, in its written submissions had only prayed that the Bank
be directed to issue a Sale Certificate and carry all other necessary
acts under the SARFAESI Act. Even this Court in the Main Appeals
only directed the issuance of the Sale Certificate and not the delivery
of physical possession of the Secured Asset.
68. He also submitted that where an auction is conducted on symbolic
possession, the correct approach for obtaining physical possession
of the secured asset is to initiate proceedings before the District
1652 [2024] 12 S.C.R.

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Magistrate in terms of Section 14 of the SARFAESI Act. In this regard,
reliance was placed on the decision of this Court in ITC Ltd. v. Blue
Coast Hotels Limited & Ors. reported in (2018) 15 SCC 99.
69. He further submitted that in the present case the Bank had rightly
filed an application under Section 14 of the SARFAESI Act for
seeking physical possession and had even obtained a favourable
order on 02.02.2024. Since, any order passed under Section 14 of
the SARFAESI Act is challengeable before the DRT and appealable
before the DRAT, the Borrower herein was well within its rights to
challenge the order dated 02.02.2024 before the DRT by way of
S.A. No. 53 of 2024 which came to be rejected. Against which, the
Borrower filed an appeal before the DRAT, wherein status quo was
granted. He submitted that the Bank and the petitioner herein instead
of challenging the order passed by the DRAT as required under the
statutory provisions, decided to take law in their hands by filing the
present contempt petition and MA, which is completely in negation
of the statutory provisions of the SARFAESI Act.
70. It was further submitted that after the decision of this Court in the
Main Appeals all the parties proceeded to pursue their remedies
in accordance with the statutory provisions. The Bank pursued its
application under Section 14 of the SARFAESI Act to obtain physical
possession of the Secured Asset, the Borrower pursued the S.A.
No. 46 of 2022 before the DRT, the petitioner pursued its IA in the
aforesaid securitization application and the Subsequent Transferee
pursued its suit. None of the parties complained of any contempt
for a period of nearly 5-6 months.
71. It was submitted that any order passed by a competent judicial
authority having jurisdiction to pass such order can only be challenged
by following the due process and cannot be set-aside under the
contempt jurisdiction, thus the present contempt petition is completely
misconceived. Similarly, since neither the Bank nor the petitioner
sought physical possession of the secured asset in the Main Appeals,
it cannot be permitted to now seek the same by expanding the scope
of the Main Appeals by way of an MA. In this regard, reliance has
been placed on the decision of this Court in Supertech Limited
v. Emerald Court Owner Resident Welfare Association & Ors.
reported in (2023) 10 SCC 817 to contend that filing of MA is not
permissible to expand the scope of SLP or re-litigate the matter.
[2024] 12 S.C.R. 1653

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

72. It was further submitted that since in the Main Appeals, there were no
directions passed against the Borrower herein to hand over physical
possession, no contempt could be said to have been committed.
Similarly, the transfer of the Secured Asset to the Subsequent
Transferee during the pendency of the Main Appeals also does not
amount to contempt as the same was done in compliance of the
High Court’s impugned order. Since the High Court had allowed the
Borrower to redeem the mortgage on the condition that it tenders
the entire dues payable by 31.08.2023 failing which the amount of
Rs. 25 crore paid by it would be forfeited, & the entire dues would
not have paid the Borrower would have not only lost the amount
already paid by it but would have also been in contempt of the order
passed by the High Court.
73. Thus, in order to comply with the High Court’s order to its letter
and spirit, the Subsequent Transferee paid the remaining dues to
the Bank on behalf of the Borrower and thereafter the Secured
Asset was transferred to it. He further submitted that, since during
the pendency of the Main Appeals, there was no prohibitory order
or stay by this Court, the transferring of ownership by way of the
Assignment Agreement does not amount to contempt. In this regard,
reliance has been placed on the decision of this Court in Collector
of Customs, Bombay v. Kirshna Sales (P) Ltd. reported in (1994)
Supp 3 SCC 73 that merely filing an appeal does not amount to a
stay of the order and the decision in Patel Rajnikant Dhulabhai &
Anr. v. Patel Chandrakant Dhulabhai & Ors. reported in (2008) 14
SCC 561 that without a prohibitory order, there can be no contempt
of court.
74. He further submitted that this Court in its decision in the Main Appeals
held that a notice of auction can be published in the newspaper
only after serving a 30-days clear notice to the borrower. It was
submitted that the mandatory nature of the period prescribed is not
a mere formality but a safeguard to the borrower to ensure that its
right of redemption is given meaningful expression. Since in the
present case both the notice to the borrower as-well as the auction
notice were made on 14.06.2023, the auction proceedings is said
to have taken place contrary to the mandate of law, and the sale of
the Secured Asset in favour of the petition pursuant to such auction
is illegal and void.
1654 [2024] 12 S.C.R.

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75. Placing reliance on the decisions of this Court in General Manager,
Sri Siddeshwara Cooperative Bank Limited & Anr. v. Ikbal & Ors.
reported in (2013) 10 SCC 83 and Vasu P. Shetty v. Hotel Vandana
Palace & Ors. reported in (2014) 5 SCC 660 it was submitted that
the 30-day notice to the borrower in terms of Rule 8 and 9 of the
SARFAESI Rules respectively is mandatory in nature and non-
compliance of the same would render the auction illegal. Similarly,
as per the decision of this Court in Govind Kumar Sharma & Anr.
v. Bank of Baroda & Ors. reported in 2024 INSC 326, an auction
would be liable to be quashed if no 30-day notice is given by the bank.
76. It was submitted that if S.A. No. 46 of 2022 pending before the
DRT is allowed then in light of the decision of this Court in the Main
Appeals, the auction would be illegal and the right of redemption of
the Borrower would survive and by extension all transactions executed
by it in pursuance thereto including the transfer of the Secured Asset
in favour of the Subsequent Transferee.
77. It was further submitted that the petitioner’s contention that the
pending proceedings under S.A. No. 46 of 2022 before the DRT did
not survive after the decision of this Court in the Main Appeals more
particularly after the issuance of the Sale Certificate is completely
misconceived and untenable. In this regard it was submitted that first,
the proceedings before this Court in the Main Appeals emanated
from an interlocutory stage and secondly, both the auction and the
Sale Certificate issued in pursuance thereto does not vest in the
petitioner an absolute ownership in the Secured Asset.
78. He submitted that S.A. No. 46 of 2022 was filed by the Borrower
assailing the validity of the measures taken by the Bank under the
SARFAESI Act and the same was still pending. When the 9th auction
came to be conducted, the Borrowers filed an interlocutory application
in the aforesaid securitization application for seeking redemption
of mortgage, wherein orders were reserved. Against the aforesaid,
the Borrower filed a writ petition before the High Court for seeking
redemption of mortgage which was allowed. The same came to be
challenged before this Court in the Main Appeals, wherein only the
right of redemption in terms of Section 13 sub-section (8) of the
SARFAESI Act was decided. Thus, the very proceedings before this
Court in the Main Appeals emanated from an interlocutory stage
and all other issues except the right of redemption continued to
[2024] 12 S.C.R. 1655

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

survive in the S.A. No. 46 of 2022. As a fortiorari, it was submitted
that if the Borrower had not filed the writ petition which culminated
into the proceedings before this Court in the Main Appeals, then the
petitioner would have never claimed that DRT cannot examine the
validity of the auction. Thus, it was submitted that this Court never
intended to take away the aforesaid right of the Borrower to contest
S.A. No.46 of 2022 before the DRT.
79. He further submitted that this Court whilst directing the Bank to issue
the Sale Certificate in the Main Appeals never intended to uphold
the legality of the auction, and that no such issue was also framed
by it. Since, the terms of auction were clear that it would be subject
to the outcome of the proceedings in S.A. No. 46 of 2022 before
the DRT, the issuance of the Sale Certificate neither confirms the
sale of the secured asset in favour of the petitioner sans the validity
of the auction proceedings nor vests any absolute ownership in the
same. In this regard, reliance has been placed on the decision of
this Court in Valji Khimji (supra) to contend that where the auction
is subject to subsequent confirmation by some authority (in this
case the DRT) the auction cannot be said to be completed and no
rights would accrue until the sale is confirmed by the said authority.
Thus, it was submitted that not only does the cause of action for
challenging the validity of the auction proceedings survive but also
the proceedings in S.A. No. 46 of 2022 pending before the DRT.
80. In the last, Dr. A.M. Singhvi submitted that the Borrower unconditionally
apologises to this Court for any of its actions, if they are perceived
to be incorrect or in contempt of its decision in the Main Appeal and
that the Borrower undertakes to comply with any further order that
this Court may deem fit and proper for the ends of justice.

iii. Submissions of the Subsequent Transferee/the respondent
nos. 2 & 4.
81. Mr. Kapil Sibal, the learned Senior Counsel appearing for the
Subsequent Transferee at the outset submitted that it unconditionally
apologizes for any of its actions that might have been perceived to
have contravened any direction/order of this Court.
82. Mr. Sibal submitted that the Subsequent Transferee is a bona fide
third party purchaser of the Secured Asset. He submitted that
1656 [2024] 12 S.C.R.

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the Subsequent Transferee was neither arrayed as a party to the
proceedings in the Main Appeals nor issued a notice of the said
proceedings either by the petitioner or by the Bank, despite the
fact that they were aware of the transactions entered into by the
Borrower for the transfer of the Secured Asset in its favour. He
further submitted that prior to entering into the transaction there
was no prohibitory order or interim order of stay concerning the said
Secured Asset either by this Court or any other court. Since, the
transaction which led to the purchase of the said property by it was
completed and duly registered with the knowledge and cooperation
of the Bank before the decision of this Court in the Main Appeals,
they are neither in breach or violation of this Court’s decision and as
such the present contempt proceedings deserves to be dismissed
qua the Respondent. It was further submitted that the title to the
Secured Asset in favour of the Subsequent Transferee was never
questioned or challenged before any forum or impeached in any
manner known to law even after the decision of this Court in the
Main Appeals.
83. He further submitted that when the Subsequent Transferee tendered
the entire consideration for the Secured Asset, there was admittedly
neither any lis pendens in respect of the property registered as per
due diligence conducted on its behalf nor had the petitioner acquired
any rights to the said property. He submitted that as per the State
amendment to Section 52 of the Transfer of Property Act, 1882 (for
short, the “TPA”) lis pendens will not apply if a notice is not registered.
He submitted that the consequence of this omission in registration
would be that lis pendens will not apply.
84. Since, in the present case admittedly there was no registration of
lis pendens by the petitioner as mandated in Maharashtra under
the mandatory provisions of Section 52 (1) of TPA, the Subsequent
Transferee did not come across any legal impediment or restrictions
or prohibitions to purchase of the Secured Asset and accordingly
paid the consideration to lawfully acquire the same as a bona-fide
purchaser.
85. He submitted that even if lis pendens is assumed to apply then too,
it cannot affect the Assignment Agreement in its favour as the matter
was neither sub-judice as against it nor was there any prohibitory/
stay order for the transfer of the said property at the time of execution
[2024] 12 S.C.R. 1657

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

of the aforesaid Assignment Agreement. It was submitted that the
aforesaid agreement was a lawful transaction pursuant to the High
Court’s order and that mere filing of an appeal does not operate as a
stay or suspension of the order appealed against as held in Krishna
Sales (supra). Therefore, the Subsequent Transferee is said to have
acquired a clear title to the said property.
86. When the Borrower redeemed the mortgage and executed the
Release Deed with the Bank in pursuance of the impugned order
of the High Court, the Bank relinquished its charge over the
property and the very contractual relationship of secured creditor
and borrower extinguished and as such the Bank had no authority
to transfer any interest in the Secured Asset to the petitioner at
the relevant time. Placing reliance on the decision of this Court in
the Main Appeals, it was submitted that the factual matrix recorded
therein discloses that the Subsequent Transferee had acquired
a clear title and possession of the said property prior to the said
decision and the Sale Certificate issued in lieu thereof. Since the
Bank had already issued a No Dues certificate, provided a No
Objection certificate, executed the Release Deed for its charge over
the Secured Asset and handed over the original title deeds thereto,
the Subsequent Transferee is said to have obtained a clear title
of the property. He further argued that since there was a second
charge over the said property, the Bank could have only confirmed
a conditional sale of the Secured Asset. Consequently, even if the
auction was completed, the said property would not have been free
from all encumbrances and the petitioner would have been required
to redeem the second charge to acquire a clear title. Since it is
the Subsequent Transferee who undertook the necessary steps to
redeem the second charge, it is said to have acquired a clear title
both in law and in equity.
87. It was submitted that the Subsequent Transferee was constrained to
prefer the Special Civil Suit No. 5 of 2023 as the petitioner herein had
attempted to take forceful possession of the Secured Asset. It was
further submitted that the said suit had to be filed to protect its right
and prevent its dispossession without following the due process of
law. However, in terms of the undertaking given to this Court during
the course of proceedings on 18.10.2024, it was submitted that the
Subsequent Transferee has instructed its counsel to unconditionally
withdraw the aforesaid suit.
1658 [2024] 12 S.C.R.

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88. He further submitted that the petitioner and the Bank are seeking to
expand the scope of the present proceedings by claiming physical
possession as a relief in the present contempt matter, when in fact
such relief was never prayed in the Main Appeal. As the substantive
relief seeking physical possession of the Secured Asset was not
sought in the Main Appeals, the said relief cannot be obtained in
the present contempt petitions.
89. He also submitted that the auction process with respect to the
Secured Asset was only on the basis of symbolic possession and
not physical possession of the said property and as such the parties
while transacting as part of an auction process are bound by the
process and the mandatory terms laid down therein. Even the Bank
in the present miscellaneous application has admitted that it only
had symbolic possession, and not the actual physical possession
of the said property.
90. He further submitted that the process for obtaining physical
possession of the Secured Asset is only by way of initiating a
subsequent and completely different proceeding in terms of the
statutory procedure laid down in Section 14 of the SARFAESI Act
which was never the subject matter before this Court and as such
the Subsequent Transferee ought not to be dispossessed without
following due process/ procedure laid down in law as per SARFAESI
Act/ Rules. The Bank had rightly pursued its remedy under Section
14 for seeking physical possession in line with the decision of this
Court in Blue Coast Hotels (supra) and the parties now cannot be
permitted to seek the same in the present contempt petitions and
the miscellaneous application.
91. He submitted that the aforesaid application of the Bank under
Section 14 came to be allowed, which was later challenged before
the DRT wherein the Tribunal refused to stay the same. Against this
an appeal was preferred wherein the DRAT granted status quo on
the ground that possession notice had not been given by the bank/
tehsildar. Rather than challenging the aforesaid order, the petitioner
and the Bank have mischievously preferred the present contempt
petitions and miscellaneous application respectively as an attempt
to short circuit the process of law for obtaining physical possession.
92. He further argued that the scope of proceedings before this Court in
the Main Appeals as evident from the questions of law framed therein,
[2024] 12 S.C.R. 1659

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

primarily related to the cut-off date to exercise right of redemption
under Section 13(8) of the SARFAESI Act and not regarding the
validity of the measures taken under the SARFAESI Act, 2002,
including the auction process.
93. Since the auction conducted by the Bank by which the Sale Certificate
was issued to the petitioner was subject to the outcome of S.A.
No. 46 of 2022 pending before the DRT, the petitioner ought not to
be permitted to extend the scope of the matter to overcome these
proceedings pending in the DRT.
94. He submitted that it is the bona fide understanding of the Subsequent
Transferee that the auction by which the petitioner claims its rights
is illegal, having regard to the law laid down by this Court in the
Main Appeals. He argued that the auction was bad in law as the
Bank has violated mandatory statutory requirements for the auction
process, more particularly the mandatory 30-days period required
to be maintained between the notice to the borrower and the sale
notice in terms of Rule 8(6) and 9(1) of the SARFAESI Rules. In the
present case both the aforesaid notices were issued on the same
date i.e., 12.06.2023 thereby rendering the auction null and void.
Thus, the petitioner at based could be said to have acquired only
inchoate rights to the Secured Asset subject to the terms of the
auction and the validity of the auction proceedings.
95. In light of the above, he submitted that it is the Bonafide understanding
of the Subsequent Transferee that the Borrower’s right of redemption
stood revived in view of the illegality of the auction proceedings
and thus, authenticated and crystalized the Assignment Agreement
executed in its favour.
96. He further submitted that neither this Court nor the High Court
in the writ petition has delved into the aspect of legality of the
auction proceedings, and thus, prayed that this Court be pleased
to relegate the parties to an appropriate forum in accordance with
law for adjudication of several issues relating to the said property
and the illegal process of auction conducted thereto to safeguard its
constitutional right enshrined under Article 300A of the Constitution.
97. He submitted that the entire gamut of proceedings before this
Court in the Main Appeals have emanated from an interlocutory
application filed in S.A. No. 46 of 2022 and that the very substantive
1660 [2024] 12 S.C.R.

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and procedural aspects relating to the Bank’s measures the under
SARFAESI Act and Rules thereunder are still pending adjudication.
98. In the last, Mr. Sibal submitted that the Subsequent Transferee had
to borrow significant amount for purchasing the Secured Asset from
its financiers who now have the title deeds to the property as security
against the loan taken by it. He submitted that if the reliefs sought
by the petitioner are granted grave prejudice and hardship would be
caused to the Subsequent Transferee. Accordingly he prayed that
the present contempt petition and the miscellaneous applications be
dismissed and the Subsequent Transferee be permitted to pursue
the S.A. No. 46 of 2022 pending before the DRT.

iv. Submissions of the Bank/the respondent no. 3.
99. Mr. Raju Ramachandran, the learned Senior Counsel appearing
for the Bank submitted that this Court in its decision in the Main
Appeals categorically held that under the amended Section 13(8)
of SARFAESI Act, the right of the borrower to redeem a secured
asset stands extinguished on the date of publication of public auction
notice and overruled the impugned order of the High Court that had
allowed the Borrower to redeem the mortgage.
100. He submitted that in the said decision, this Court not only held the
redemption of mortgage after auction notice as unlawful but also
confirmed the right of the auction purchaser to the Secured Asset
and directed the refund of the entire amount paid by the Borrower
towards redemption, and further directed the Bank to issue the sale
certificate in favour of the petitioner in accordance with Rule 9(6)
of the SARFAESI Rules upon payment of an additional amount of
Rs. 23.5 crore by it.
101. He submitted that the implied effect of this decision is that the
Release Deed executed by the Bank and the Assignment Agreement
executed by the Borrower had to be cancelled and the original title
deeds to the Secured Asset were to be returned to the bank so that
they may be handed over to the petitioner.
102. He submitted that the Bank in compliance of this Court’s decision
in the Main Appeals, issued the Sale Certificate for the Secured
Asset to the petitioner and on the same day addressed a letter
to the Joint Sub-Registrar, Thane, requesting it to take immediate
steps for cancellation of the aforesaid Release Deed. The Bank also
[2024] 12 S.C.R. 1661

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

addressed a letter to the Borrower requesting it to take steps for
cancellation of the aforesaid deed and provide the title document
to the said property along with the bank details to refund its money.
103. The Bank on 06.10.2023 further took steps and got the Sale Certificate
issued in favour of the petitioner registered before the Joint Sub-
Registrar, Thane– 8 vide Registration No. 22540 of 2023.
104. He submitted that the Bank further addressed another letter to the
Borrower requesting it to take immediate steps for cancellation of the
Release Deed and to hand-over the title documents of the property
to the Bank to enable it to initiate the refund of its money, however
the same were to no avail.
105. When the Subsequent Transferee instituted the suit for seek a
declaration of title to the Secured Asset in its favour, the Bank
immediately took steps by entering appearance and filing an
application under Order VII Rule 11 of the CPC inter-alia contending
that the reliefs claimed is in violation of the decision of this Court in
the Main Appeals.
106. He further submitted that the Bank in order to recover the physical
possession of the subject property filed an application under
Section 14 of the SARFAESI Act before the District Magistrate,
Thane. The said application came to be allowed on 02.02.2024
and possession was scheduled to be taken on 29.02.2024. Against
this, the Subsequent Transferee filed an application in the suit for
seeking ad-interim injunction and grant of status qua as regards the
possession which was allowed, the Bank promptly challenged the
same before the High Court. Whereas the Borrower challenged the
said possession notice before the DRT which was rejected but in
appeal status quo was granted by the DRAT.
107. He submitted that the as per the decision of this Court in the Main
Appeals, the Borrower was duty bound to return the possession and
title deeds of the secured asset to the Bank for the purpose of handing
the same over to the petitioner, and as a natural consequence of
the direction to issue the Sale Certificate the Borrower was required
to get the Release Deed and the Assignment Agreement cancelled.
However, the Borrower in league with the Subsequent Transferee has
prevented the implementation of the aforesaid directions as per the
judgment of this Court in the Main Appeals and complicated the issue
by taking recourse to untenable dilatory litigations against one and all.
1662 [2024] 12 S.C.R.

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108. In light of the above, the Bank was compelled to prefer the present
miscellaneous application before this Court for seeking directions for
the implementation of the decision of this Court in the Main Appeals
and inter-alia declare the Release Deed dated 28.08.2023 executed
by the Bank in compliance of the High Court’s impugned order
and the Assignment Agreement dated 28.08.2023 executed by the
Borrower in favour of the Subsequent Transferee as null and void
and further direct the Borrower to return the original title documents
of the subject property to the along with the details for initiating
refund of its money paid towards redemption of mortgage, and to
direct the District Magistrate Thane to immediately take possession
of the secured asset and handover the same to the Bank.

C. ISSUES FOR DETERMINATION
109. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the following questions
fall for our consideration: -
I. Whether any act of contempt could be said to have been
committed by the respondent nos. 1 to 4 respectively of the
judgment and order dated 21.09.2023 passed by this Court in
Civil Appeal Nos. 5542-5543 of 2023? In other words, whether the
respondents herein in light of the aforesaid decision of this Court
were duty bound to cancel the Release Deed dated 28.08.2023
and hand over the physical possession along with the original
title deeds of the Secured Asset to the petitioner herein?
II. Whether, the proceedings arising out of S.A. No. 46 of 2022
could have continued after this Court’s judgment and order dated
21.09.2023 directing the issuance of the Sale Certificate of the
Secured Asset to the petitioner herein? In other words, whether
the petitioner by virtue of the Sale Certificate dated 27.09.2023
is said to have acquired a clear title to the said property?
III. Whether the transfer of the Secured Asset in favour of the
Subsequent Transferee by way of the Assignment Agreement
dated 28.08.2023 is hit by lis pendens? In other words, whether
the absence of any registration in accordance with Section 52
of the TPA as amended by the State of Maharashtra renders
the lis pendens inapplicable?
[2024] 12 S.C.R. 1663

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

D. ANALYSIS

i. Concept of Abuse of Process of Court and Collateral
challenge to judgments that have attained finality.
110. Before we proceed with the analysis, it is necessary to understand
the stance of the Borrower throughout the present litigation, as
discernible from their pleadings before different forums, which has
left us quite perplexed.
111. It is the case of the Borrower that there is no contempt not to speak
of any violation of the decision of this Court rendered in the Main
Appeals as the issue of validity of the 9th auction was never touched
upon by this Court whilst deciding the right of the Borrower to redeem
the mortgage, rather this Court had preserved the right of the Borrower
to continue with its challenge to the auction proceedings before the
DRT. Thus, in essence it is the case of the Borrower that this Court
had adjudicated the right of redemption independent of the validity
or legality of the SARFAESI proceedings that involved these rights.
112. When the Bank published the notice of sale for the 9th Auction
on 12.06.2023, the Borrower herein on 26.06.2023 preferred two
applications before the DRT being I.A. No. 2253 of 2023 and I.A.
No. 2254 of 2023 in S.A. No. 46 of 2022 respectively, inter-alia for
amending its pleadings to challenge the 9th auction proceedings
and for seeking stay of the said auction in the meantime. In the
said application, the Borrower inter-alia sought to challenge the
9th Auction on the ground that there was no 30 or 15 days between
the ‘service’ of the notice of sale and the date of auction, and thus
was in violation of the statutory rules. The relevant grounds sought
to be included by way of amendment of pleadings are as under: -
“IN GROUNDS:
After Ground No. G: Insertion of Ground Nos. G(i)
to G(viii)
G-(i) Undisputedly, in the 1st auction proceeding under
sale notice dated 25th March, 2022, the Respondent failed
to give a clear 30 (thirty) days of notice. Likewise, in the
2nd auction proceeding under sale notice dated 30th April
2022, the Respondent failed to give a clear 15 (fifteen)
1664 [2024] 12 S.C.R.

Supreme Court Reports

days of notice. Additionally, there were several glaring
defects and illegalities in both the sale notices. Therefore,
the sale notices dated 25th March 2022 and 30th April,
2022 cannot be treated and terms as lawful sale notices.
The Respondent suo-moto cannot be considered to have
conducted the 1st or 2nd auction and failed. According to
the Applicants, the Respondent never conducted the 1st
and/or 2nd lawful auction/s process as per law. Therefor,
the Respondent is duty bound to give a clear 30 (thirty)
days gap as the 1st auction notice was never conducted
nor termed as lawful. Thus, the impugned Auction Sale
Notice dated 12th June 2023 has failed.
xxx xxx xxx
G-(v) That, the sale notice dated 12 June 2023 is bad in
th

law and not issued in accordance with the provisions of
SARFAESI Act and rules thereunder. More particularly, the
impugned Sale Notice is perverse for the following reasons;
a. There is no 30/15 days gap between service of the
notice and the auction as under law this is first auction.
b. Known encumbrance has not been disclosed as per
Rule 8 of the SIE Rules.
c. Sale process is in blatant violation of Rule 8 & 9 of
the SIE Rules.
d. Sale notice has not been pasted at the secured
assets.
e. It is not in a statutory format provided at Appendix
IV-A.
f. Rule 8(5) of the SIE Rules has not been followed in
its true spirit as it seems that reserve price is being
fixed based on desktop valuation. “
Accordingly, the Borrower by way of the aforesaid application for
amendment sought an additional prayer for quashing and setting-
aside of the Auction Sale Notice dated 12th June 2023 and all further
and consequential measures pursuant thereto. The prayer sought
reads as under: -
[2024] 12 S.C.R. 1665

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

“IN RELIEFS SOUGHT:
After Paragraph No. 6(b): Insertion of Paragraph No.
6-(b)-i
6-(b)-i That, this Hon’ble Tribunal may be pleased to quash
and set-aside the impugned Auction Sale Notice and
Public Notices dated 12th June 2023 and hold all further
and consequential measures pursuant to the impugned
Auction Sale Notice dated 12th June 2023 as defective
and in violation of the SARFAESI Act and Rules made
thereunder.”
113. While the aforesaid applications were still pending the Borrower
decided to move the High Court with Writ Petition No. 9523 of 2023
seeking the indulgence of the High Court to call for the proceedings
arising from the S.A. No. 46 of 2022 pending before the DRT-I,
Mumbai to itself, and then adjudicating the same by examining the
validity of the actions taken by the Bank under the SARFAESI Act
and thereafter permit the Borrower to redeem the mortgage. In the
alternative, it was prayed that the Bank may be directed to not take
any further steps in confirming the sale to the petitioner till the S.A.
No. 46 of 2022 is decided by the DRT. Thus, in essence, the prayer
of the Borrower before the High Court was two-fold: -
(i) Prayer (a) / Para 11(a) of the writ petition: Either to seize
the issues arising in the S.A. No. 46 of 2022 before the DRT
for itself and decide the same in favour of the Borrower and
consequentially permit it to redeem the mortgage of the Secured
Asset or;
(ii) Prayer (b) & (c) / Para 11(b) (c) of the writ petition: Alternatively,
stay the confirmation of the sale under the 9th auction by the
Bank till the S.A. No. 46 of 2022 is decided by the DRT along
with a further direction that the Borrower be given the liberty
to tender the remaining amount and redeem the mortgage i.e.,
prayers 11(c) and 11(b) respectively.
At the cost of repetition, the relevant prayers sought by the Borrower
in the writ petition before the High Court are reproduced hereunder: -
“11. THE PETITIONERS, THEREFORE, PRAY:
(a) That this Hon’ble Court be pleased to issue Writ of
Certiorari or Writ in the nature of Certiorari or any
1666 [2024] 12 S.C.R.

Supreme Court Reports

other appropriate Writ, calling upon the papers and
proceedings of the Securitization Application No. 46
of 2022 pending before the Hon’ble DRT I, Mumbai
and after examining the legality, validity and propriety
thereof, be pleased to allow the Petitioners to redeem
the mortgage as per schedule provided in the Interim
Application No. 2339 of 2023 filed before the Hon
DRT I, Mumbai or within such reasonable period as
this Hon’ble Court may deem fit and proper;
(b) That this Hon’ble Court be pleased to direct the
Respondent to issue “No Dues Certificate” and
release All piece and parcel of leasehold land to
the extent of 16200 sq. mtrs various buildings and
ancillary structures at amalgamated plot no. D-105,
D-110 and D-111, Trans Thane Creek Industrial Area,
MIDC, Village Shirwane, Thane- Belapur Road, Navi
Mumbai, Dist- Thane, Maharashtra, 400706, after
getting the entire redemption amount;
(c) In the alternate, that this Hon’ble Court be pleased to
direct the Respondent not to take any further steps
for issuance of the sale Certificate by confirming
the sale until the hearing and final disposal of the
Securitization Application No. 46 of 2022 pending
before the Hon’ble DRT I, Mumbai;”
(Emphasis supplied)

114. What can be discerned from the above is that the initial stance of the
Borrower before the High Court was that its right of redemption was
wholly dependent upon the adjudication of S.A No. 46 of 2022. In such
circumstances, it had prayed before the High Court to either decide
the said securitization application itself and thereupon permit the
redemption of mortgage or otherwise to stay the auction proceedings
till the same was decided by the DRT. Thus, the Borrower’s case at
that time was clearly that its right of redemption is not independent
of the challenge to the validity of the measures taken by the Bank
under the SARFAESI Act and rather was consequential to it, which
is why both its primary prayer and its alternative prayer sought for
the adjudication of the S.A No. 46 of 2022 on the basis of which its
right may then be adjudicated. The prayer made by the Borrower
[2024] 12 S.C.R. 1667

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

in paragraph 11(b) of its writ petition is particularly interesting,
inasmuch as it is seeking a direction from the High Court that it may
be permitted to redeem the mortgage during the pendency of the S.A
No. 46 of 2022, which further reinforces that until the securitization
application was decided it could not have redeemed its mortgage
without a specific direction permitting it to do so.
115. The pleadings of the Borrower in the aforesaid writ petition are also
significant to the controversy at hand. The Borrower had assailed
the demand notice dated 07.06.2021 under Section 13(2), the
possession notice dated under Section 13(4) and the e-auction
sale notices dated 25.03.2022 issued under the SARFAESI Act on
various grounds. Pertinently, the Borrower in its writ petition never
imputed any illegality or perversity to the 9th Auction notice. From
a plain reading of the aforesaid writ petition, the following position
emerges: -
(i) Although the Borrower at paragraph 4.28 has stated that the
aforesaid auction notice was issued on 12.06.2023 scheduling
the auction for 30.06.2023, yet there is nothing to indicate that
the Borrower had assailed the said notice on the ground of
want of a 30/15 days period of notice in terms of Rule 8 and 9
of the SARFAESI Rules.
(ii) In the very next paragraph i.e., at paragraph 4.29, although
the Borrower has stated that the sale process is absolutely
erroneous, yet it has not laid any specific challenge to the
9th auction notice dated 12.06.2023. Thus, far from a mere bald
assertion that the sale process is erroneous, no specific plea
as regards the absence of a 30/15 days gap between the sale
notice and auction was taken, which the Borrower now seeks
to espouse in the present contempt petition.
(iii) Pertinently, in the grounds, the Borrower has left no stone
unturned for challenging the demand notice, the possession
notice, the first sale notice, the valuation of the Secured Asset
by the Bank etc. Yet again, the plea which the Borrower seeks
to take in the present contempt petition is conspicuously absent.
The ground taken by the Borrower at paragraph ‘x’ again at
best can be construed as seeking to challenge the validity of
the first sale notice and not the 9th auction notice.
1668 [2024] 12 S.C.R.

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(iv) The only ground which remotely touches the validity of the
9th auction notice dated 12.06.2023 appears to be at paragraph
hh. which again does not contain the plea which the Borrower
has taken in the present contempt petition as regards the validity
of the said sale notice, rather, the Borrower’s contention in the
said paragraph is plain & simple that due to the infirmities in
the earlier measures taken by the Bank under the SARFAESI
Act, namely the demand notice, the possession notice and the
first sale notice, all subsequent actions are also rendered illegal
and contrary to the provisions of the Act.
The relevant paragraphs of the Borrower’s writ petition referred to
above are reproduced hereunder: -
“4.28 On 12th June, 2023, Respondent No. 1 has published
Sale Notice scheduling auction of the said property on
30th June, 2023 with a Reserve Price of Rs. 105,50,00,000/-
. Hereto annexed and marked Exhibit “F” is a copy of
the Sale notice dated 12th June, 2023.
4.29 The Petitioners most respectfully submit that without
prejudice to their rights and contentions, the sale process
was absolutely erroneous in addition to the defects already
committed by the Bank as stated herein above.
xxx xxx xxx
GROUNDS: -
xxx xxx xxx
n. that the actions on the part of the Respondent as
measures under ·provisions of SARF AESI Act are entirely
illegal, arbitrary, unreasonable and unjustified;
xxx xxx xxx
r. that, the E-auction sale notice dated 25 March 2022
th

which was delivered upon the Petitioners only on 3lst March
2022, whereas the Auction is fixed on 29th April 2022 Thus,
there is no clear gap of 30 (thirty) days. Being 1st auction
Respondent is duty bound to give clear 30 (thirty) day
notice to the Petitioners as per the mandate· of Rule 8(6)
read with Rule 9(1) of the SIE Rules. Thus, the impugned
e-auction notice dated 25th March 2022 and all further and
consequential action become perverse;
[2024] 12 S.C.R. 1669

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

s. that, the impugned sale notice dated 25th March 2022
is in violation of Rule 8(7) (b) of SIE Rules. Under Rule
8(7)(b), legislature requires authorized officer to state
the “secured debt for recovery of which the property
is to be sold”. Perusal of the impugned auction notice,
demonstrates that Respondent has recorded alleged
outstanding as on 28th February 2022 and failed to state
exact outstanding as on the date of sale notice for which
the property is getting sold. The amount of dues mentioned
in the purported auction· notice is uncertain and vague.
In these peculiar circumstances it is more than enough to
prove that there is basic and patent illegality in the. entire
E-auction proceeding;
t. that, as per the mandate of Rule 8(6)(f), mandates
of the secured creditor/authorized officer to disclose
the encumbrances known to the Respondent. Herein,
admittedly the Secured creditor was fully aware about the
encumbrances of Rs.2,08,40;362/- (Rupees· Two Crores
Eight Lakhs Forty Thousand Three Hundred and Sixty-Two
Only) OR Rs.2,53,40,362/- (Rupees Two Crores Fifty-Three
Lakhs Forty Thousand Three Hundred and Sixty-Two
Only). towards property tax bill which was found pasted
by the Respondent during their site visit as, duly recorded
in a Bank’s letter dated 14th January 2022. Once, again,
Petitioner vide letter dated 17th January 2022 confirmed
that the property tax dues are pending and Corporation has
pasted the notice for an encumbrance of Rs. 2,53,40,362/-
(Rupees Two Crores Fifty-Three Lakhs Forty Thousand
Three Hundred and Sixty Two Only);
u. that moreover, the Rule 9(10) of the Security Interest
(Enforcement) Rule states that the certificate of sale to be
issued by the Authorised Officer shall specifically mention
that whether purchaser has purchased the immovable
secured asset free from any encumbrance known to the
secured creditor or not. A plain reading of the SARFAESI.
Act/Rules casts a duty upon the, Bank/Financial Institution
to furnish those encumbrances which are known to them
on the property which are sold by them. As stated above,
despite having fully known about the encumbrances of
1670 [2024] 12 S.C.R.

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property tax, Authorized Officer at clause 4 of the impugned
sale notice has falsely and misleadingly recorded that
‘’NOT KNOWN”. On this ground alone, impugned sale
notice dated 25 March, 2022 fails in its entirety;
w. that, sale notice dated 25th March, 2022 is bad in
law and not issued in accordance with the provisions of
SARFAESI Rules thereunder. Impugned Sale Notice is
perverse for following reasons;
x. that there is no 30 days gap between service of notice
and auction;
y. that known encumbrance has not disclosed as per Rule 8;
z. that sale process is in blatant violation of Rule 8 & 9;
aa. that sale notice has not been pasted at the secured
assets and the same is not in statutory format provided
at Appendix IV-A;
cc. that Rule 8(5) has not been followed in its true spirit
as it seems that ·reserve· price is being fixed based· on
desktop valuation;”
(Emphasis supplied)

116. Even before the High Court, as evident from the impugned order,
the Borrower had not canvassed any submissions on the illegality or
invalidity of the measures taken by the Bank under the SARFAESI Act
including the validity of the 9th auction notice dated 30.06.2023. The
specific plea which the Borrower had taken in the present contempt
petition, namely the lack of a 30/15 days gap between the sale notice
and auction is conspicuously absent. On the contrary it appears that
the Borrower in the aforesaid writ petition had abandoned its right
to challenge the validity of all measures taken by the Bank under
the SARFAESI Act. We say so because of the following reasons: -
(i) First, before the High Court the Borrower had submitted that
if they are unable to pay the entire dues for redemption of
mortgage by 31.08.2023, then the possession of the Secured
Asset would be voluntarily handed over to the petitioner. The
relevant observations read as under: -
[2024] 12 S.C.R. 1671

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

“5. Today, Mr. Shinde, the learned Advocate appearing
for the Respondent Bank, on instructions, has stated
that if the Petitioners are willing to pay the entire
amount of Rs. 129 crores on or before 31st August
2023 and subject to them paying over to the Bank
a sum of Rs. 25 crores today [by Demand Drafts],
they have no difficulty in allowing the Petitioners to
redeem the mortgage. The further condition that
Mr. Shinde put forth for accepting this offer was that
the Securitization Application filed before the DRT
would stand dismissed on the passing of this order,
and if the payment is not made by 31st August 2023,
possession of the secured asset would be handed
over by the Petitioners to the Auction Purchaser on
5th September 2023.
6. Mr. Khandeparkar, on taking instructions, has fairly
stated that in the event the entire amount of Rs. 129
crores is not paid by the Petitioners on or before 31st
August 2023, then the Petitioners shall voluntarily
hand over vacant, peaceful, and quiet possession
of the secured asset to the Auction Purchaser on or
before 5th September 2023.”
(Emphasis supplied)

(ii) Secondly, the High Court in view of the aforesaid categorically
held that on passing of the impugned order the entire challenge
laid to the actions of the Bank under the SARFAESI Act would
come to an end. It further held that even if the Borrower failed
to redeem the mortgage even then no challenge could be laid to
the sale of the secured asset and that the physical, vacant and
quiet possession would be handed over to the auction purchaser.
The relevant observations are reproduced hereunder: -
“11. We have heard the learned Counsel for the parties
at some length. We have also perused the papers
and proceedings in the above Writ Petition. It is not in
dispute that the Petitioners have approached the DRT
by filing an application for redemption of the mortgage.
As mentioned earlier, this application is an Interim
1672 [2024] 12 S.C.R.

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Application filed in Securitization Application No. 46
of 2022 and which is also pending. Considering these
facts, under normal circumstances, we would not have
entertained the above Writ Petition. However, in the
peculiar facts and circumstances of the present case,
we are of the opinion that considering stand taken by
the Respondent Bank [and which is accepted by the
Petitioners without any conditions or reservations],
it would be in the interest of all concerned if the
consensus reached between the Respondent Bank
and the Petitioners is taken cognizance of by us.
We say this because in the present scenario, by 31st
August 2023, the Respondent Bank will receive its
entire dues one way or the other. In the event the
Petitioners adhere to its promise to pay the entire
dues [of 129 crores] by 31 st August 2023, then
naturally, the Bank will receive its entire money. In
contrast, if the Petitioners default in making payment
of the entire sum of Rs.129 crores, the sum of Rs.
25 crores to be paid over to the Respondent Bank
today, would be appropriated by the Bank towards the
outstanding dues of the Petitioners, and the balance
Rs.105.05 crores would be received from the Auction
Purchaser who has already deposited the entire
sale consideration with the Respondent Bank. It is
taking these circumstances into consideration that
the Respondent Bank has changed its stand from
the stand it took before the DRT when it opposed
the Petitioners’ application for redemption. Another
reason why the Respondent Bank has changed its
stand is because the entire litigation will come to an
end on the passing of this order. In other words, on
the passing of this order itself, the entire challenge
laid by the Petitioners to the actions of the Bank
[under the provisions of the SARFAESI Act, 2002]
comes to an end. Therefore, even if the Petitioners
default in making payment by 31st August 2023, no
challenge can be laid to the sale of the secured
asset to the Auction Purchaser. Further, as per the
[2024] 12 S.C.R. 1673

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

statement of Mr. Khandeparkar, in the event the
Petitioners fail to pay the entire dues of Rs.129
crores to the Respondent Bank by 31st August 2023,
vacant, quiet, and peaceful possession of the secured
asset would be handed over by the Petitioners to the
Auction Purchaser and the Bank would then issue
a sale certificate in favour of the Auction Purchaser.
When one looks at all these facts, we find that the
arrangement referred to above is in the interest of
all, including the Auction Purchaser. We say this
because, by 31st August 2023, the Auction Purchaser
will either get the secured asset free from litigation
or will get a refund of the entire amount paid by it to
the Respondent Bank for agreeing to purchase the
secured asset.”
(Emphasis supplied)

(iii) Lastly, the High Court whilst permitting the Borrower to redeem
the mortgage specifically noted, that in light of its order nothing
survived in the S.A. No. 46 of 2022 pending before the DRT
and that the sale of the Secured Asset shall stand confirmed
in favour of the petitioner. Furthermore, the High Court treated
the Borrower’s leave to withdraw the aforesaid securitization
application and not challenge the validity of the measures taken
under the SARFAESI Act as an undertaking to the High Court.
The relevant observations read as under: -
“15. In light of the foregoing discussion, the following
order is passed: -
xxx xxx xxx
(e) In the event the balance amount of Rs. 104 crores
are not paid by the Petitioners to the Respondent-
Bank on or before 31st August 2023, the Respondent
Bank shall then be entitled to appropriate the money
from the No Lien interest bearing account towards
the dues payable by the Petitioners and the sale of
the secured asset shall be confirmed in favour of
the Auction Purchaser and a sale certificate shall
be issued in their favour. All formalities in relation to
1674 [2024] 12 S.C.R.

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registration of that certificate shall also be done by
the Respondent-Bank and the Auction Purchaser.
(f) In light of this order, Mr. Khandeparkar has
stated that, nothing would survive in Securitization
Application No. 46 of 2022 and/or the Interim
Applications filed therein and seeks leave to withdraw
the same within a period of one week from today.
The said statement is accepted as an undertaking
given to the Court. It is needless to clarify that even
if the Petitioners do not withdraw the Securitization
Application, the same shall stand dismissed in light
of this order and the Petitioners will not be permitted
to litigate any further with the Respondent Bank in
relation to the secured asset. In other words, if the
Petitioners default in making the balance payment of
Rs.104 crores to the Respondent Bank by 31st August
2023, the Auction Purchaser shall get the secured
asset free from litigation. As per the statement made
by Mr. Khandeparkar, and which is accepted as an
undertaking given to the Court, if the Petitioners
default in making the balance payment of Rs.104
crores by 31st August 2023, physical, vacant, quiet,
and peaceful possession of the secured asset shall
be handed over to the Auction Purchaser on or before
5th September 2023.”
(Emphasis supplied)

117. What can be discerned from the above is that although the Borrower
in its writ petition had initially prayed for adjudication of the S.A.
No. 46 of 2022 either by the High Court itself or in the alternative
by the DRT subject to the auction proceedings being stayed, yet
during the hearing it had effectively waived of its right to pursue the
said securitization application and to challenge the actions taken by
the Bank under the SARFAESI Act including the 9th auction notice.
Similarly, although the High Court permitted the Borrower to redeem
the mortgage yet its right to challenge the validity of the sale had been
foreclosed by the High Court irrespective of whether the Borrower
is able to actually tender the dues for redemption or not. Moreover,
[2024] 12 S.C.R. 1675

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

the proceedings under the said S.A. No. 46 of 2022 did not merely
come to an end as a consequence of the impugned order of the High
Court but rather due to the unconditional undertaking of the Borrower
to withdraw the same within a period of 1-week, independent to the
exercise of its right of redemption. Thus, effectively the Borrower at
that stage had waived its right to pursue the S.A. No. 46 of 2022
on its own accord, and at no point of time did it contend before
the High Court to preserve this right in the event it was unable to
redeem the mortgage.
118. Thereafter the said matter travelled to this Court. Manifold submissions
were made by the Borrower, the Bank and the petitioner on the issue
of redemption of mortgage in terms of Section 13(8) of the SARFAESI
Act. The petitioner herein assailed the impugned order of the High
Court permitting the borrower to redeem the mortgage inter-alia on
the ground that it was contrary to the amended Section 13(8) of the
SARFAESI Act, and that once the sale stood confirmed by the Bank,
the sale certificate of the Secured Asset could not have been withheld.
Accordingly, the petitioner prayed that not only the impugned order
of the High Court be set-aside, but the Bank be further directed to
issue the sale certificate for the Secured Asset. In response, the
Borrower herein inter-alia contended that no error not to speak of
any error law could be said to have been committed by the High
Court in the interpretation of Section 13(8) of the SARFAESI Act, and
that since the Borrower has already redeemed the mortgage during
the pendency of the Main Appeals in compliance of the High Court’s
order, the only issue which remained was the refund of the amount
deposited by the petitioner pursuant to the auction. After hearing the
parties at length, this Court vide its order dated 01.07.2023 reserved
the matter for judgment and further directed the parties to file their
written submissions.
119. Pursuant to the above, the petitioner herein on 04.09.2023 at 15:40
PM filed its written submissions wherein it inter-alia submitted that
since the auction was already completed and the Bank had confirmed
the sale of the Secured Asset to the petitioner, a vested right in
the Secured Asset had accrued in its favour. It further submitted
that of the manner in which the Borrower and the Bank during the
pendency of the Main Appeals, had precipitated the matter by hastily
entering into private arrangements to overtake the proceedings and
undermine the issue involved, prayed that this Court not only set-
1676 [2024] 12 S.C.R.

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aside the High Court’s impugned order but also inter-alia order the
issuance of sale certificate of the Secured Asset and the handing
over of its original title deeds along with reversal of all steps taken
by the Bank and the Borrower pursuant to the High Court’s order.
The relevant portion of the petitioner’s written submissions are
reproduced hereunder: -
“5.6 Knowing that the Supreme Court may consider the
legality of what was being attempted, the Borrowers and
the Bank have precipitated matters with the intention of
letting events overtake this Hon’ble Court’s scrutiny. Not
only has the Bank accepted payment of Rs. 129 crore
but it has also hastily proceeded to sign and register the
mortgage cancellation documents and issue a no-dues
certificate.
5.7 No regard has been shown for this Hon’ble Court
considering the matter. One can understand that the
Borrowers would pay the Rs. 129 crores by 31.08.2023.
However, the haste with which steps have been taken
thereafter is for everyone to see. The petitioner has
obviously refused refund of its money, pending the decision
of this Hon’ble Court.
5.8 However, considering the illegality which the Impugned
Judgment has permitted and that steps have been taken to
implement the Impugned Judgment during the pendency
of this SLP, the Petitioner respectfully submits that to do
complete justice, this Hon’ble Court must not only set
aside the Impugned Judgment but must also order that:
i) All steps taken pursuant to the Impugned Judgment
be reversed;
ii) The registered documents executed pursuant to the
Impugned Judgment be cancelled;
iii) The borrowers be ordered to handover the title
documents of the secured asset back to the Bank;
iv) The Bank be ordered to pay to the Borrowers, a sum
of Rs. 129 crores;
[2024] 12 S.C.R. 1677

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

v) The Bank be permitted to cancel its no-dues
certificate issued to the Borrowers and also be
permitted to take recourse to whatever remedies it
has in law to recover the remained of its outstandings
from the Borrowers;
vi) The Bank be ordered to issue in the Petitioner’s
favour, a sale certificate; have the same registered
and do and carry out all other acts necessary under
the SARFAESI Act and the Security Interest Rules.
5.9 It is only because the High Court has interfered in the
matter and every step has been taken by the Borrowers
and the Bank to defeat the vested rights of the Petitioner,
that such extra-ordinary orders are warranted. This is the
only manner in which the Petitioner’s vested right as an
auction purchaser can be protected and given effect to.”
(Emphasis supplied)

120. On the very next day i.e., 05.09.2023 at 10:32 AM, the Borrower
herein filed its written submissions wherein apart from contending
that the right of redemption under the amended Section 13(8) of
the SARFAESI Act does not get extinguished upon issuance of
the notice of sale and that the impugned order of the High Court
warranted no interference of this Court in view of the fact that the
mortgage has already been redeemed and that even the Secured
Asset stood transferred to a third-party, the Borrower interestingly
never raised the issue of the illegality of the 9th auction notice. Even
though the petitioner herein had contended that it had a vested right
in the Secured Asset and prayed for issuance of sale certificate to
that effect and handing over of original title deeds, the Borrower
remarkably neither disputed the same nor imputed any illegality in
the very auction process through which the petitioner claimed its
vested right. The Borrower having already waived/abandoned its
right to challenge the legality of the auction proceedings before the
High Court did not even put forth an alternative plea to preserve its
right to pursue S.A. No. 46 of 2022 in the event this Court held that it
had no right to redeem the mortgage. The entire written submissions
of the Borrower is being reproduced hereunder: -
1678 [2024] 12 S.C.R.

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“WRITTEN SUBMISSIONS ON BEHALF OF
RESPONDENT NO. 1
1. The present Special Leave Petition arises out of
the impugned order dated 17.08.2023 (uploaded on
26.8.2023) in Writ Petition No. 9523 of 2023 along with
Interim Application Stamp No. 21706 of 2023 before
the Hon’ble High Court of Judicature at Bombay.
2. Vide the impugned order, the Hon’ble High Court has
allowed the original Petitioners i.e. Respondent No.1
herein, to exercise their right of redemption upon
property being Plot No. D-105, D-110 and D-111,
Trans Thane Creek Industrial Area, MIDC Village
Shirwane, Thane, Belapur Road, Nerul, Navi Mumbai,
Thane, Maharashtra 400906 (for short “the secured
asset”), prior to the issue of the Sale Certificate, in
lieu of repayment of the Entire Mortgage Amount on
Ledger Balance (Principal+Interest+Penal Interest+
Overdue Charges + Costs) of the Secured Creditor
i.e. Respondent No. 3, Union Bank of India. .
3. Through the said Writ Petition, the Hon’ble High Court
rightly, in the peculiar facts and circumstances (as
noted in para 11 of the impugned order) exercised
its in extraordinary jurisdiction under Article 226,
passed the following directions favour of Respondent
No.1 herein:-
a. The Respondent No.1 herein shall hand over a
sum of Rs. 25 Crores to the Respondent Bank
today i.e. on 17.8.2023 (in compliance with this
direction, the Counsel for the Respondent before
High Court handed over three Demand Drafts
in the sum of Rs. 10 Crores, 10 Crores and 5
Crores respectively to the Advocate appearing on
behalf of which was duly acknowledged by him);
b. The balance amount of Rs. 104 Crore shall
be paid by the Respondent No.1 herein to the
Respondent Bank on or before 31%* August
[2024] 12 S.C.R. 1679

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

2023 in the designated account (Already
Complied with on 28” August 2023);
c. If the amount of Rs. 104 Crores is paid in the
said account on or before 31.8.2023, the same
shall be appropriated by the Respondent Bank
towards the dues of the Respondent No.1 herein.
The Bank shall then return the original title
deeds of the secured asset to the Respondent
No.1 herein, execute all such documents for
cancellation of mortgage, and issue a ‘No Dues
Certificate’ to the Respondent No.1 herein.
4. It is necessary to note that the said land was mortgaged
with Union Bank of India i.e. the Respondent No.2
and Tata Motors Finance Solutions Limited had a
second charge on the said property. The said charge
was duly registered with MIDC.
Respondent No.1 was constrained to approach the
Hon’ble High Court invoking extraordinary jurisdiction
under Article 226
5. The Respondent No. 1 had approached Debt Recovery
Tribunal no 1-Mumbai challenging Auction Proceedings
initiated by Respondent no 3 whereby upon urgent
mentioning, Securstisation Application no 46/2022
was placed for urgent hearing on 18th June 2023
along with Connected Applications, i.e. Application for
Right to Redemption. Despite various hearings taking
place, where on multiple occasions, the Respondent
No. 1 informed the DRT that a Demand Draft of Rs.
10 Crores is ready (And during course of hearing
before the Hon’ble DRT Demand Draft totalling
Rs. 25,00,00,000/- were ready to be submitted),
and the total amount of Rs. 1,24,00,00,000/- would
be paid on or before 31.08.2023, no orders came to
be passed by the Hon’ble DRT 1. This was even prior
to the Auction Purchaser 1.e. The Petitioner herein,
depositing 100% of the Purchase value, and despite
the Auction Purchaser not having paid the balance
75% purchase fees.
1680 [2024] 12 S.C.R.

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6. It is DRT), relevant to note that before the Mumbai
Debt Recovery Tribunal-I (the Respondent No. 1 had
carried a draft for Rs. 10 crores and also expressed
it willingness to make the balance payment by
31.8.2023 See para 4.31 of Writ Petition at pg. 133
of the SLP (as has been eventually directed by
the High Court in the impugned order). Since
Respondent No.1, the borrower, has a subsisting
right of redemption till a sale certificate is issued (as
detailed hereinbelow), it was constrained to approach
the High Court by way of a writ petition, as there was
a genuine apprehension that the right of redemption
would be extinguished pending the hearing and final
disposal of the Interim Application in the Secutitization
Application No. 46/2022.
Subsequent events have rendered the SLP infructuous:
7. The present SLP, at the time of its filing, has been
rendered infructuous due to the following events.
8. That after the impugned order was dictated in open
court on 17.8.2023 and subsequently uploaded
on the website of Hon’ble Bombay High Court on
26.8.2023, the following developments have taken
place:
a. The Respondent No.1 and Respondent no.2
transferred an amount of Rs. 104 Crores
to the Respondent No. 3 i.e. Union Bank
o f I n d i a v i d e RT G S , h a v i n g U T R N o .
HDFCR52023082882894716.
b. This was followed by the Respondent No.3 1.e.
Union Bank of India issuing a No Dues Certificate
dated 28.08.2023 thereby acknowledging that
the Respondent No.1 does not owe any further
amount to the Bank and releasing the personal
guarantees as well.
c. Further, after the No Dues Certificate was
issued by Respondent No. 3, Respondent
No.1 executed a registered Deed of Release
[2024] 12 S.C.R. 1681

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

with Tata Motors Financial Solutions Limited
registered with the Joint Sub Registrar, Thane
8 having registration No. 19283/2023, whereby
the second charge that Tata Motors Finance
Solutions Limited had on the second property
came to be released, pursuant to payment of
Rs. 15 Crores (Rs. 10 Crores on 18.08.2023 and
Rs. 5 Crores on 22.08.2023 ), which came to
be duly acknowledged by Tata Motors Finance
Solutions Limited.
d. Following this, the Respondent No. 1 has
also entered into a registered Agreement of
Assignment of Leasehold Rights for transfer
of leasehold rights in the secured asset with
M/s Greenscape L.T. Park LLP on 28.8.2023,
which came to be registered before the Joint
Sub Registrar, Thane 8 having registration No.
19286/2023. Copies of Documents issued/
registered/executed subsequent to passing of
the Impugned Order are attached herewith as
Annexure R-1 (Colly).
9. Since there has been full compliance of the Impugned
Order by the Respondent No.1 herein as well as
the Respondent No.3 Bank, the SLP has essentially
become infructuous.
10. The only issue which remains is the refund of the
amount deposited by the Petitioner herein. This is
an issue between the Petitioner and the Respondent
No.3 Bank and the Respondent No.1 has no reason
to come in the way of the refund of the amount to
the Petitioner herein.
11. There is a specific direction of the Hon’ble High Court
that the Respondent Bank shall immediately keep
the entire amount of Rs. 105.05 Crores (deposited
by the Auction Purchaser/Petitioner herein) in a ‘No
Lien Interest Bearing Account’ and if the Respondent
No.1 pays the balance amount of Rs. 104 Crores to
the Respondent Bank by 31.8.2023 (which it has),
1682 [2024] 12 S.C.R.

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then the Respondent Bank shall refund the amount of
Rs. 105.05 Crores deposited by the Auction Purchaser
together with accrued interest on or before 7.9.2023.
The impugned order correctly interprets Section 13(8)
of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security interest Act,2002
(SARFAESI Act):
12. During the arguments on 01.9.2023, the main issue
of contention that arose was till what stage does the
right of redemption survive, more so, in the light of
the 2016 Amendment which amended Section 13(8)
of the SARFAESI Act, 2002.
13. It is stated by the Respondents that the right of
redemption is nowhere mentioned in the SARFAESI
Act, and one has to refer to Section 60 of the Transfer
of Property Act, 1882, which has been interpreted to
reserve the right of Mortgagor to redeem the property
fill the stage of the same being conveyed/transferred
to a third party.
14. This interpretation has been upheld in the landmark
case of Nardas Karsondas V/s S.A. Kamtam and
Anr [Annexure R-2] (1977) 3 SCC 247 where it has
been held that:
“34. The right of redemption which is embodied
in Section 60 of the Transfer of Property Act is
available to the mortgagor unless it has been
extinguished by of parties. The combined effect
of Section 54 of the Transfer of Property Act and
Section 17 of the Indian Registration Act is that a
contract for sale in respect of immovable property
of the value of more than one hundred rupees
without registration cannot extinguish the equity
of redemption. In India, it is only on execution
of the conveyance and registration of transfer of
the Mortgagor’s interest by registered instrument
that the mortgagor’s right of redemption will be
extinguished. The conferment of power to sell
without intervention of the Court in a Mortgage
[2024] 12 S.C.R. 1683

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

Deed by itself will not deprive the mortgagor of
his right t redemption. The extinction of the right
of redemption is not extinguished at the expiry
of the period. The equity of redemption is not
extinguished by mere contract for sale.
35. The mortgagor’s right to redeem will survive
until there has been completion of sale by the
mortgagee by a registered Deed. In England a
sale of property takes place by agreement but
it is not so in our country. The power to sell
shall not be exercised unless and until notice
in writing requiring payment of the principal
money has been served on the mortgagor.
Further Section 69(3) of the Transfer of Property
Act shows that when a sale has been made in
professed exercise of such a power, the right
of the purchaser shall not be impeachable on
the ground that no case had arisen to authorize
the sale. Therefore, until the sale is complete by
registration the mortgagor does not lose right
of redemption.”
15. This position has also been echoed in the case of
Mathew Varghese V/s M. Amrithakumar, 2014
5 SCC 610 [Annexure R-3] where this Hon’ble
Court has held that upon a combined reading of S.
60, 54 of the Transfer of Property Act and S. 17 of
the Registration Act, it can be concluded that the
extension of the right of redemption comes much
later than the sale notice.
16. Though the decision in Mathew Varghese (supra)
was prior to the 2016 Amendment to SARFAESI Act,
its applicability has been continued to be held valid
even after the amendment to the said Act. A Division
Bench of the Hon’ble High Court of Telangana in the
case of Concern Readymix V/s Authorized Officer,
Corporation Bank and Anr, 2018 SCC OnLine
Hyd 783 [Annexure R-4], whereby the Hon’ble Court,
after juxtaposing the Amended and Unamended
provisions of Section 13(8) of the SARFAESI Act,
1684 [2024] 12 S.C.R.

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qua the right of redemption available to the Mortgagor
held that the Amended S. 13(8) of the SARFAESI Act
only puts a restriction on the right of the Mortgagee to
deal with the property and does not speak in express
terms about the equity of redemption available to the
Mortgagor (at para 13). It was further held that the
danger of interpreting Section 13(8) as though
it relates to the right of redemption, is that if
payments are not made as per Section 13 (8), the
right of redemption may get lost even before the
sale is be complete in all respects and that holding
that the right of redemption would extinguished
at the stage of issue of notice under Rule 9(1)
would be tantamount to annulling the relevant
provision of the Transfer of Property Act, 1862
which do not stand expressly excluded insofar as
the question of redemption is concerned (para 14).
The said judgment was challenged before this Hon’ble
Court vide SLP (Civil) Diary No. 28967/2019 and the
same came to be dismissed, hence, confirming the
said judgment.
17. The view expressed in Concern Readymix (supra)
was echoed by a Division Bench of the High Court of
Punjab and Haryana in the case of M/s Pal Alloys
& Metal India Private Limited and others V/s
Allahabad Bank and Ors. CWP No. 6402 0£2019
(O & M) dated 23.12.2021 [Annexure R-5] wherein
the Hon’ble High Court, inter alia, considered the
specific issue “(a) till what time and date can the right
of redemption of the Mortgage can be exercised by the
Mortgagors/Borrowers in the light of the amendment
to Section 13 (8) of the SARFAESI Act”.
18. While answering the said question, the Court
considered the report of the Joint Committee on
the Enforcement of Security Interest and Recovery
of Debts Laws and Miscellaneous Provisions
(Amendment) Bill, 2016 (the Report) as well as the law
laid down by this Hon’ble Court in Mathew Varghese
(supra) and the judgment in Concern Readymix
[2024] 12 S.C.R. 1685

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

(supra), in order to determine whether the said right
of redemption was available up to the date of transfer
of the asset or only up to the date of publication of
the sale notice. On a consideration of Section 60 of
the Transfer of Property Act as well as the judgment
in Nardas Karsondas (supra), it was observed that:
“Thus even if the sale of secured assets is
under a special statute like State Financial
Corporations Act, there is no deviation from the
general principle that the mortgagor’s right of
redemption is not extinguished till the execution
of conveyance.”
19. It was ultimately held as below:-
“that the amended Section 13 (8) of the
SARFAESI Act merely prohibits a secured
creditor from proceeding further with the
transfer of the secured asset by way of lease,
assignment or sale; a restriction on the right of
the mortgagee to deal with the property is not
exactly the same as the equity of redemption
available to the mortgagor, the payment of the
amount mentioned in Section 13 (8) of the
SARFAESI Act ties the hands of the mortgagee
(secured creditor) from exercising any of the
powers conferred under the Act; that redemption
comes later; extinction of the right of redemption
comes much later than the sale notice; and
the right of redemption is not lost immediately
upon the highest bid made by a purchaser in
an auction being accepted. We also hold that
such a right would continue till the execution of
a conveyance i.e. issuance of sale certificate
in favour of the mortgagee. A similar view has
been taken by this Branch in M/s Hoshiarpur
Roller Flour Mill Private Limited and another V/s
Punjab National Bank (CWP No. 1440 of 2021).
…
1686 [2024] 12 S.C.R.

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It would therefore, certainly be available to the
Petitioners herein before the issuance of sale
certificate in favour of Respondent Nos. 2 and
3. Point (a) is answered accordingly in favour of
the Petitioners and against the Respondents.”
20. The said judgment also considered and distinguished
the judgment of this Hon’ble Court in Shakeena and
Anr. V/s Bank of India and Ors. (2021) SCC 761
[Annexure R-6] holding that that the said case did
not consider the concept of redemption u/s 60 of the
Transfer of Property Act, 1882. It is submitted that
the observations in para 30 of Shakeena are in the
nature of obiter dicta as in the said case the auction
had concluded prior to the amendment of Section
13(8) and in any event the sale certificate had already
been issued. Thus, the question of interpretation of
Section 13(8) was not directly in issue.
Effect of amendment to S. 13(8) of the SARFAESI Act,
2002
21. It was vehemently argued by the Petitioners that
the amended provisions of Section 13(8) of the
SARFESI Act, 2002 puts a positive restriction upon
the Mortgagor to restrict its right of redemption until
the date of publication of the notice.
22. A perusal of the Report The report of Joint
Committee on the Enforcement of Security
Interest and Recovery of Debts Laws and
Miscellaneous Provisions (Amendment) Bill,
2016 [Annexure R-7], more particularly para 24,
shows that the proposed amendment to S. 13(8) of
the Act was intended to deal with: - “Provisions to
stop secured creditor to lease or assignment or sale
in the prescribed conditions”. The important thing to
note is also that the report does not indicate that
the Committee had considered the effect of Section
60 of the Transfer of Property Act, 1882, which is a
[2024] 12 S.C.R. 1687

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

general law regarding redemption of mortgage vis a
vis the provisions of SARFAESI.
23. The focus of the Committee in the said reply is on the
obligations of the Mortgagee to not create third party
rights up to a certain time-period, but it is silent on
the rights of the Mortgagor to exercise its redemption
for which Section 60 of the Transfer of Property Act,
1882 is the relevant provision.
24. It is further necessary to note that the non obstante
clause in Section 13 specifically excludes only S.
69 and 69A of the Transfer of Property Act, 1882.
This section does not specifically include the
words “Notwithstanding anything contained in any
other Act for the time being in force” which is the
standard term used in non obstante clauses. In view
thereof, the legislative intent has to be interpreted
to only exclude S. 69 and 69A of the Transfer of
Property Act, 1862 and the same does not affect
the applicability of Section 60 of the Transfer of
Property Act, 1862.
25. It is thus humbly submitted that the arguments and
contentions of the Petitioner are liable to be rejected.
Various High Courts have consistently held that the
right of redemption has to be exercised in terms of
S. 60 of the Transfer of Property Act, 1862 and not
u/s 13 (8) of the SARFAESI, 2002 and the amendment
to Section 13(8) does not affect or take away this
right in any manner.
It is therefore respectfully submitted that the present case
is not a case warranting exercise of this Hon’ble Court’s
jurisdiction under Article 136 of the Constitution.”
121. What can be discerned from the above is that: -
(i) It is true the Borrower had assailed the actions of the Bank
under the SARFAESI Act before the DRT by way of S.A. No.
46 of 2022. When the 9th Auction notice came to be issued on
1688 [2024] 12 S.C.R.

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12.06.2023 which the Borrower alleges to have received on
14.06.2023, the same was also challenged in the aforesaid
securitization application by way of I.A. No. 2253 of 2023.
(ii) Before the DRT could conclude the proceedings, the Borrower on
its own volition moved the High Court by way of its Writ Petition
No. 9523 of 2023, wherein the Borrower sought to subsume
the entire issue emanating from the S.A. No. 46 of 2022 in
the writ petition before the High Court and as a primary relief
prayed that either the High Court should decide the same and
thereafter allow it to redeem the mortgage or in the alternative
the DRT be directed to ultimately decide the issue and then
permit it to redeem the mortgage.
(iii) Thereafter, in the proceedings before the High Court, the
Borrower voluntarily abandoned its aforesaid prayers and waived
the right to pursue the S.A. No. 46 of 2022 before the DRT,
irrespective of whether it was able to redeem the mortgage or
not. In view of the above, the High Court by its impugned order
permitted the Borrower to redeem the mortgage and directed that
within a period of 1-week the S.A. No. 46 of 2022 be withdrawn
and further clarified that even if the Borrower failed to withdraw
the same, the said application would stand dismissed in light
of its order and the Borrower would no longer be permitted to
litigate any further in respect of the Secured Asset.
(iv) When the judgment in Main Appeals was reserved by this Court
on 01.07.2023, the aforesaid period of 1-week had already
elapsed. The Borrower never withdrew the securitization
application. The Borrower in its written submissions before
this Court claimed that it had already complied with the terms
of the impugned order, but conveniently it never withdrew the
S.A. No. 46 of 2022 which it was required to.
(v) Pertinently, during the course of hearing of the Main Appeals
before this Court the petitioner herein/the successful auction
purchaser apart from contending that the Borrower’s right to
redeem the mortgage had been extinguished under the law, it
specifically prayed that not only the impugned order of the High
Court be set-aside but that the Bank be directed to issue the
sale certificate to the Secured Asset and by its extension confirm
the sale in its favour as evinced from its written submissions.
[2024] 12 S.C.R. 1689

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

(vi) The Borrower being fully aware of the aforesaid prayers and
even after having gone through the written submissions of the
petitioner never contended that irrespective of whether its right
to redeem the mortgage is available under the law or not, the
sale at any cost cannot be confirmed in favour of the petitioner
due to alleged illegality in the auction process. Not once did
the Borrower raise the issue of there being no 30/15-days’ time
gap between the notice of sale and the auction nor the issue
that as per the terms of the auction, the same was subject to
the outcome of the S.A. No. 46 of 2023.
(vii) Remarkably, although the Borrower during the course of hearing
of the Main Appeals urged that no indulgence of this Court was
warranted as it had already complied with the terms of the High
Court’s impugned order and that the entire matter had been
rendered infructuous, yet at the same time, not once did the
Borrower even remotely indicate that it was in the process of
withdrawing the S.A. No. 46 of 2023 as evinced from its written
submissions.
(viii) Moreover, the Borrower despite being fully aware of the prayer
of the petitioner for seeking confirmation of the sale in its favour
and issuance of the sale certificate to the Secured Asset both
during the course of hearing and in its written submissions which
would have rendered the S.A. No. 46 of 2022 infructuous, it
never prayed that in the event sale certificate is issued, its right
to pursue S.A. No. 46 of 2022 be preserved, or that the sale
certificate be made subject to the outcome of the said application.

a. The Decision of this Court in Celir LLP v. Bafna Motors &
Ors. (2023 INSC 838) and the Scope of challenge before it.
122. It would now be apposite to understand what was the nature and
scope of challenge before this Court in the Main Appeals, and what
was ultimately decided in it. As discussed earlier, the Borrower had
preferred a writ petition wherein it had sought to subsume the issue
arising out of S.A. No. 46 of 2022 pending before the DRT, particularly
the challenge to the actions of the Bank under the SARFAESI Act. The
writ petition was not a separate remedy distinct from the securitization
application pending before the DRT, as the prayers made therein
indicate that it was not merely for seeking redemption of mortgage.
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123. We say so, because it is not the case that the remedy for redeeming
mortgage could not have been a part of the S.A. No. 46 of 2022 nor
can it be said that such a remedy was wholly alien to the provisions of
the SARFAESI Act, and could not have been granted by the DRT at all.
124. It is no longer res integra that Section 17 of the SARFAESI Act, is a
complete code that confers upon the DRT the jurisdiction to examine
all the steps or measures taken by the secured creditor under the
Act and provide remedies to any person aggrieved by any of those
measures. By virtue of the said provision the DRT is clothed with a
wide range of powers, to determine any issue or aspect pertaining
to the SARFAESI proceedings initiated by the secured creditor
and further a power to interfere with the same where necessary.
Section 17 of the SARFAESI Act provides a broad mechanism for an
efficacious remedy to “any person” who is aggrieved by any of the
“measures” taken or proposed to be taken by the secured creditor
under the Act. The omnibus provision of Section 17 sub-section (3)
is of a wide import and enables the DRT to grant any relief in respect
of any action or proceeding under the Act.
125. In Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir reported
in (2022) 5 SCC 345, this Court held that where the Borrower is
aggrieved by any proceedings initiated under the SARFAESI Act
or any action proposed to be taken by a secured creditor, it has to
avail the remedy under the SARFAESI Act and no writ petition would
lie or be maintainable. The relevant observations read as under: -
“18. [...] If proceedings are initiated under the Sarfaesi
Act and/or any proposed action is to be taken and the
borrower is aggrieved by any of the actions of the private
bank/bank/ARC, borrower has to avail the remedy under
the Sarfaesi Act and no writ petition would lie and/or is
maintainable and/or entertainable. [...]”
(Emphasis supplied)

126. Thus, the remedy for seeking redemption of mortgage was not only
available to the Borrower under Section 17 of the SARFAESI Act
but was also availed by him, by way of I.A. No. 2339 of 2023 in S.A.
No. 46 of 2022. This application for seeking redemption of mortgage
was also heard by the DRT for quite some time, and even orders
were reserved. However, suddenly, the Borrower decided to move
[2024] 12 S.C.R. 1691

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

the High Court for seeking the very same relief that it had sought in
the securitization application.
127. As there was virtually no difference between either the scope of
proceedings or the prayer sought before the DRT and that before
the High Court, once the Borrower had chosen to espouse the same
matter already sub-judice in one forum before another, in this case
the High Court, it was the duty of the Borrower to bring within the
fold of its case all issues and grounds in respect of the 9th auction
proceedings in the proceedings arising from the writ petition, by
virtue of the Doctrine of Election.
128. Once, the Borrower had elected to move the High Court for the very
same cause of action and underlying prayers, the moment the same
was entertained by the High Court, which it did, the Borrower was
precluded from pursuing its remedies before the DRT by way of
S.A. No. 46 of 2024, and was duty bound to now espouse it only in
the writ proceedings, as otherwise it would tantamount to having a
second bite at the cherry and relitigating what it has already litigated.
129. Thus, when the impugned order of the High Court was challenged
before this Court in the Main Appeals, the scope of proceedings
before us also entailed the issue of validity of the Bank’s actions under
the SARFAESI Act. As discussed by us in the foregoing paragraphs
of this judgment, that the Borrower for reasons best known to it,
never agitated the validity of the proceedings under the SARFAESI
Act including the legality of the 9th auction notice. Not once did the
Borrower submit either in the course of its arguments or in its written
submissions that the very auction process is allegedly illegal and in
contravention of the SARFAESI Act.
130. It was in this backdrop, that the decision in the Main Appeals being
Celir LLP v. Bafna Motors & Ors. was rendered by this Court. Since,
no challenge had been raised to the measures taken by the Bank
under the SARFAESI Act and the 9th auction notice by the Borrower,
this Court proceeded to determine only the issue of right of redemption
under Section 13 sub-section (8) of the SARFAESI Act. Accordingly,
this Court held that under the unamended Section 13(8) of the
SARFAESI Act, the right of the borrower to redeem the secured asset
was available till the sale or transfer of such secured asset. However,
under the amended provisions of Section 13(8) of the SARFAESI
Act the right of the borrower to redeem the secured asset would
1692 [2024] 12 S.C.R.

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be available only till the date of publication of the notice under Rule
9(1) of the SARFAESI Rules and not till the completion of the sale
or transfer of the secured asset in favour of the auction purchaser.
131. This Court thereafter proceeded to determine the Borrower’s right of
redemption and after going through the facts of the case, held that
since at the time of redemption of mortgage the notice of auction
had already been published, it was impermissible for the High Court
to allow the Borrower to redeem the same.
132. Thus, this Court only went on to determine the Borrower’s right to
redeem the mortgage and having done so, this Court inter-alia set-
aside the impugned order of the High Court and in view of the fact that
the Bank had already confirmed the sale in favour of the petitioner,
and in the absence of any challenge to the auction process, further
directed that the sale certificate of the Secured Asset be issued to
the petitioner. The operative portion of the said decision reads as
under: -
“106. In the result, both the appeals succeed and are
hereby allowed.
107. The impugned judgment and order passed by the
High Court is hereby set aside.
108. The respondent Bank shall refund the entire amount
deposited by the borrowers i.e., an amount of Rs.129
crore paid by them in lieu of the redemption of mortgage
of the secured asset at the earliest. The appellant herein
shall pay an additional amount of Rs. 23.95 crore to the
Bank within a period of one week from today and subject
to such deposit, the Bank shall issue the sale certificate
in accordance with Rule 9(6) of the Rules of 2002.
109. The pending applications if any shall stand disposed
of.”
133. It is material to note that even in the review petition preferred by the
Borrower including the application for additional grounds of review
therein, the contention of the Borrower in the present contempt
petition as to the illegality of the SARFAESI proceedings including
the 9th auction or the contravention of the 30/15 days statutory period,
does not figure. In fact, the Borrower in the review petition did not
[2024] 12 S.C.R. 1693

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

even lay any challenge to the direction of this Court to issue the
sale certificate in the Main Appeals. No averment at all was made in
countenance of the S.A. No. 46 of 2022, or as regards the measures
of the Bank under the SARFAESI Act, the 9th auction notice issued
in lieu thereof, or the approval of the sale of the Secured Asset by
issuance of the sale certificate in its respect. The said review petition
was ultimately dismissed by this Court vide its order dated 18.07.2024.
134. Thus, the Borrower having admittedly failed to even remotely indicate
the aforesaid issues to this Court let alone contend it in both the
Main Appeals and the review thereof, the only question that now
remains to be answered is whether it is permissible for the Borrower
to raise it and again litigate the same subsequently either in the
present contempt petition or in the S.A. No. 46 of 2022 which is still
pending before the DRT.

b. The ‘Henderson’ Principle as a corollary of Constructive
Res- Judicata.
135. The ‘Henderson Principle’ is a foundational doctrine in common
law that addresses the issue of multiplicity in litigation. It embodies
the broader concept of procedural fairness, abuse of process and
judicial efficiency by mandating that all claims and issues that could
and ought to have been raised in a previous litigation should not
be relitigated in subsequent proceedings. The extended form of
res-judicata more popularly known as ‘Constructive Res Judicata’
contained in Section 11, Explanation VII of the CPC originates from
this principle.
136. In Henderson v. Henderson reported in [1843] 3 Hare 999, the
English Court of Chancery speaking through Sir James Wigram, V.C.
held that where a given matter becomes the subject of litigation and
the adjudication of a court of competent jurisdiction, the parties so
litigating are required to bring forward their whole case. Once the
litigation has been adjudicated by a court of competent jurisdiction,
the same parties will not be permitted to reopen the lis in respect of
issues which might have been brought forward as part of the subject
in contest but were not, irrespective of whether the same was due to
any form of negligence, inadvertence, accident or omission. It was
further held, that principle of res judicata applies not only to points
upon which the Court was called upon by the parties to adjudicate
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and pronounce a judgement but to every possible or probable point
or issue that properly belonged to the subject of litigation and the
parties ought to have brought forward at the time. The relevant
observations read as under: -
“In trying this question I believe I state the rule of the Court
correctly when I say that, where a given matter becomes
the subject of litigation in, and of adjudication by, a Court
of competent jurisdiction, the Court requires the parties
to that litigation to bring forward their whole case, and will
not (except under special circumstances) permit the same
parties to open the same subject of litigation in respect of
matter which might have been brought forward as part of
the subject in contest, but which was not brought forward,
only because they have, from negligence, inadvertence,
or even accident, omitted part of their case. The plea of
res judicata applies, except in special cases, not only to
points upon which the Court was actually required by the
parties to form an opinion and pronounce a judgment,
but to every point which properly belonged to the subject
of litigation, and which the parties, exercising reasonable
diligence, might have brought forward at the time. [...]”
(Emphasis supplied)

137. The above proposition of law came to be known as the ‘Henderson
Principle’ and underwent significant evolution, adapting to changing
judicial landscapes and procedural requirements. The House of Lords
in Johnson v. Gore Wood & Co reported in [2002] 2 AC 1, upon
examining the ‘Henderson Principle’ authoritatively approved it with
the following observations: -
(i) Lord Bingham of Cornhill integrated the principle with the broader
doctrine of abuse of process and held that the bringing of a claim
or the raising of a defence in later proceedings which ought to
have been raised earlier will not always be hit by this principle,
but rather will apply where such point is sought to be raised as
an additional or collateral attack on a previous decision and the
bringing forth of such ground amounts to misusing or abusing
the process of the court or as a means for unjust harassment
of a party. The relevant observations read as under: -
[2024] 12 S.C.R. 1695

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

“Henderson v Henderson abuse of process, as now
understood, although separate and distinct from
cause of action estoppel and issue estoppel, has
much in common with them. The underlying public
interest is the same : that there should be finality in
litigation and that a party should not be twice vexed
in the same matter. This public interest is reinforced
by the current emphasis on efficiency and economy
in the conduct of litigation, in the interests of the
parties and the public as a whole. The bringing of a
claim or the raising of a defence in later proceedings
may, without more, amount to abuse if the court is
satisfied (the onus being on the party alleging abuse)
that the claim or defence should have been raised in
the earlier proceedings if it was to be raised at all. I
would not accept that it is necessary, before abuse
may be found, to identify any additional element
such as a collateral attack on a previous decision
or some dishonesty, but where those elements are
present the later proceedings will be much more
obviously abusive, and there will rarely be a finding
of abuse unless the later proceeding involves what
the court regards as unjust harassment of a party.
It is, however, wrong to hold that because a matter
could have been raised in earlier proceedings it should
have been, so as to render the raising of it in later
proceedings necessarily abusive. That is to adopt too
dogmatic an approach to what should in my opinion
be a broad, merits-based judgment which takes
account of the public and private interests involved
and also takes account of all the facts of the case,
focusing attention on the crucial question whether, in
all the circumstances, a party is misusing or abusing
the process of the court by seeking to raise before it
the issue which could have been raised before. As
one cannot comprehensively list all possible forms
of abuse, so one cannot formulate any hard and fast
rule to determine whether, on given facts, abuse is
to be found or not [...]”
(Emphasis supplied)
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(ii) Lord Millett construing the Principle held that it does not belong
to the doctrine of res-judicata in the strict sense but rather was
analogous to the doctrine, as it goes a step further to encompass
even those proceedings that either culminated into a settlement
or issues which had never been adjudicated previously in order
to protect the process of the court from abuse and the defendant
from oppression. The relevant observations read as under: -
“As the passages which I have emphasised indicate,
Sir James Wigram V-C did not consider that he
was laying down a new principle, but rather that he
was explaining the true extent of the existing plea
of res judicata. Thus he was careful to limit what
he was saying to cases which had proceeded to
judgment, and not, as in the present case, to an out
of court settlement. Later decisions have doubted the
correctness of treating the principle as an application
of the doctrine of res judicata, while describing it as
an extension of the doctrine or analogous to it … But
these various defences [res judicata, issue or cause
of action estoppel] are all designed to serve the same
purpose : to bring finality to litigation and avoid the
oppression of subjecting a defendant unnecessarily
to successive actions. While the exact relationship
between the principle expounded by Sir James
Wigram V-C and the defences of res judicata and
cause of action and issue estoppel may be obscure,
I am inclined to regard it as primarily an ancillary and
salutary principle necessary to protect the integrity
of those defences and prevent them from being
deliberately or inadvertently circumvented.
In one respect, however, the principle goes further
than the strict doctrine of res judicata or the
formulation adopted by Sir James Wigram V-C, for
I agree that it is capable of applying even where
the first action concluded in a settlement. Here it is
necessary to protect the integrity of the settlement
and to prevent the defendant from being misled into
believing that he was achieving a complete settlement
[2024] 12 S.C.R. 1697

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

of the matter in dispute when an unsuspected part
remained outstanding.
However this may be, the difference to which I have
drawn attention is of critical importance. It is one thing
to refuse to allow a party to relitigate a question which
has already been decided; it is quite another to deny
him the opportunity of litigating for the first time a
question which has not previously been adjudicated
upon. This latter (though not the former) is prima
facie a denial of the citizen’s right of access to the
court conferred by the common law and guaranteed
by article 6 … While, therefore, the doctrine of res
judicata in all its branches may properly be regarded
as a rule of substantive law, applicable in all save
exceptional circumstances, the doctrine now under
consideration can be no more than a procedural rule
based on the need to protect the process of the court
from abuse and the defendant from oppression [...]”
(Emphasis supplied)

138. In Virgin Atlantic Airways Ltd. v. Zodiac Seats UK Ltd. reported
in [2014] AC 160 Lord Sumption JSC further expounded the
‘Henderson Principle’ as although separate and distinct from cause
of action estoppel or res judicata yet having the same underlying
public interest that there should be finality in litigation and that a
party should not be twice vexed in the same matter. The relevant
observations read as under: -
“The principle in Henderson v Henderson has always
been thought to be directed against the abuse of process
involved in seeking to raise in subsequent litigation points
which could and should have been raised before. There
was nothing controversial or new about this notion when
it was expressed by Lord Kilbrandon in the Yat Tung
case [1975] AC 581. The point has been taken up in a
large number of subsequent decisions, but for present
purposes it is enough to refer to the most important of
them, Johnson v Gore-Wood & Co [2002] 2 AC 1, in which
the House of Lords considered their effect. This appeal
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arose out of an application to strike out proceedings on the
ground that the plaintiffs claim should have been made in
an earlier action on the same subject matter brought by
a company under his control. Lord Bingham of Cornhill
took up the earlier suggestion of Lord Hailsham of St
Marylebone LC in Vervaeke (formerly Messina) v Smith
[1983] 1 AC 145, 157 that the principle in Henderson
v Henderson was “both a rule of public policy and an
application of the law of res judicata”. He expressed his
own view of the relationship between the two at p. 31
as follows: “Henderson v Henderson abuse of process,
as now understood, although separate and distinct from
cause of action estoppel and issue estoppel, has much in
common with them. The underlying public interest is the
same: that there should be finality in litigation and that a
party should not be twice vexed in the same matter. This
public interest is reinforced by the current emphasis on
efficiency and economy in the conduct of litigation, in the
interests of the parties and the public as a whole”.”
(Emphasis supplied)

139. Even in a common law action it was said by Blackburn, J.: “I incline
to think that the doctrine of res judicata applies to all matters which
existed at the time of giving of the judgment, and which the party
had an opportunity of bringing before the Court.” [See: Newington
v. Levy reported in (1870) 6 CP 180 (J)].
140. The fundamental policy of the law is that there must be finality to
litigation. Multiplicity of litigation benefits not the litigants whose
rights have been determined, but those who seek to delay the
enforcement of those rights and prevent them from reaching the
rightful beneficiaries of the adjudication. The Henderson Principle,
in the same manner as the principles underlying res judicata, is
intended to ensure that grounds of attack or defence in litigation
must be taken in one of the same proceeding. A party which avoids
doing so does it at its own peril. In deciding as to whether a matter
might have been urged in the earlier proceedings, the court must ask
itself as to whether it could have been urged. In deciding whether
the matter ought to have been urged in the earlier proceedings, the
court will have due regard to the ambit of the earlier proceedings and
[2024] 12 S.C.R. 1699

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

the nexus which the matter bears to the nature of the controversy.
In holding that a matter ought to have been taken as a ground of
attack or defence in the earlier proceedings, the court is indicating
that the matter is of such a nature and character and bears such a
connection with the controversy in the earlier case that the failure
to raise it in that proceeding would debar the party from agitating
it in the future. The doctrine itself is based on public policy flowing
from the age-old legal maxim interest reipublicae ut sit finis litium
which means that in the interest of the State there should be an
end to litigation and no party ought to be vexed twice in a litigation
for one and the same cause.
141. The Henderson Principle was approvingly referred to and applied by
this Court in State of U.P. v. Nawab Hussain reported in (1997) 2
SCC 806 as the underlying principle for res-judicata and constructive
res-judicata for assuring finality to litigation. The relevant observations
read as under: -
“3. The principle of estoppel per rem judicatam is a rule of
evidence. As has been stated in Marginson v. Blackburn
Borough Council [(1939) 2 KB 426 at p. 437], it may be
said to be “the broader rule of evidence which prohibits
the reassertion of a cause of action”. This doctrine is
based on two theories: (i) the finality and conclusiveness
of judicial decisions for the final termination of disputes in
the general interest of the community as a matter of public
policy, and (ii) the interest of the individual that he should
be protected from multiplication of litigation. It therefore
serves not only a public but also a private purpose by
obstructing the reopening of matters which have once
been adjudicated upon. It is thus not permissible to obtain
a second judgment for the same civil relief on the same
cause of action, for otherwise the spirit of contentiousness
may give rise to conflicting judgments of equal authority,
lead to multiplicity of actions and bring the administration
of justice into disrepute. It is the cause of action which
gives rise to an action, and that is why it is necessary
for the courts to recognise that a cause of action which
results in a judgment must lose its identity and vitality
and merge in the judgment when pronounced. It cannot
therefore survive the judgment, or give rise to another
1700 [2024] 12 S.C.R.

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cause of action on the same facts. This is what is known
as the general principle of res judicata.
4. But it may be that the same set of facts may give rise to
two or more causes of action. If in such a case a person
is allowed to choose and sue upon one cause of action at
one time and to reserve the other for subsequent litigation,
that would aggravate the burden of litigation. Courts have
therefore treated such a course of action as an abuse of
its process and Somervell, L.J., has answered it as follows
in Greenhalgh v. Mallard [(1947) All ER 255 at p. 257] :
“I think that on the authorities to which I will refer it would
be accurate to say that res judicata for this purpose is not
confined to the issues which the court is actually asked
to decide, but that it covers issues or facts which are so
clearly part of the subject-matter of the litigation and so
clearly could have been raised that it would be an abuse
of the process of the court to allow a new proceeding to
be started in respect of them.
This is therefore another and an equally necessary and
efficacious aspect of the same principle, for it helps in
raising the bar of res judicata by suitably construing the
general principle of subduing a cantankerous litigant. That
is why this other rule has some times been referred to as
constructive res judicata which, in reality, is an aspect or
amplification of the general principle.”
(Emphasis supplied)

142. This Court in Devilal Modi v. Sales Tax Officer, Ratlam & Ors.
reported in AIR 1965 SC 1150, held that if the underlying rule of
constructive res judicata is not applied to writ proceedings, it would be
open to the party to take one proceeding after another and urge new
grounds every time, and would be inconsistent with considerations
of public policy. The relevant observations read as under: -
“8. [...] the rule of constructive res judicata which is
pleaded against him in the present appeal is in a sense
a somewhat technical or artificial rule prescribed by the
Code of Civil Procedure. This rule postulates that if a
plea could have been taken by a party in a proceeding
[2024] 12 S.C.R. 1701

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

between him and his opponent, he would not be
permitted to take that plea against the same party in
a subsequent proceeding which is based on the same
cause of action; but basically, even this view is founded
on the same considerations of public policy, because if
the doctrine of constructive res judicata is not applied to
writ proceedings, it would be open to the party to take
one proceeding after another and urge new grounds every
time; and that plainly is inconsistent with considerations
of public policy [...]”
(Emphasis supplied)

143. In Shankara Coop. Housing Society Ltd. v. M. Prabhakar, reported
in (2011) 5 SCC 607, this Court held that the ground of non-compliance
of statutory provision which was very much available to the parties
to raise but did not raise it as one of the grounds, cannot be raised
later on and would be hit by the principles analogous to constructive
res judicata. The relevant observations read as under: -
“89. In the present case, it is admitted fact that when the
contesting respondents filed WP No. 1051 of 1966, the
ground of non-compliance with statutory provision was very
much available to them, but for the reasons best known
to them, they did not raise it as one of the grounds while
challenging the Notification dated 11-12-1952 issued under
the Evacuee Property Act. In the subsequent writ petition
filed in the year 1990, initially, they had not questioned
the legality of the notification, but raised it by filing an
application, which is no doubt true, allowed by the High
Court. In our view, the High Court was not justified in
permitting the petitioners therein to raise that ground and
answer the same since the same is hit by the principles
analogous to constructive res judicata.”
(Emphasis supplied)

144. From the above exposition of law, it is clear that the ‘Henderson
Principle’ is a core component of the broader doctrine of abuse of
process, aimed at enthusing in the parties a sense of sanctity towards
judicial adjudications and determinations. It ensures that litigants
1702 [2024] 12 S.C.R.

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are not subjected to repetitive and vexatious legal challenges. At
its core, the principle stipulates that all claims and issues that could
and should have been raised in an earlier proceeding are barred
from being raised in subsequent litigation, except in exceptional
circumstances. This rule not only supports the finality of judgments
but also underscores the ideals of judicial propriety and fairness.
145. There are, four situations where in second proceedings between
the same parties doctrine res judicata as a corollary of the principle
of abuse of process may be invoked: (i) cause of action estoppel,
where the entirety of a decided cause of action is sought to be
relitigated; (ii) issue estoppel or, “decided issue estoppel,” where an
issue is sought to be relitigated which has been raised and decided
as a fundamental step in arriving at the earlier judicial decision;
(iii) extended or constructive res judicata i.e., “unraised issue
estoppel,” where an issue is sought to be litigated which could, and
should, have been raised in a previous action but was not raised;
(iv) a further extension of the aforesaid to points not raised in relation
to an issue in the earlier decision, as opposed to issues not raised
in relation to the decision itself.
146. As part of the broader rule against abuse of process, the Henderson
principle is rooted in the idea of preventing the judicial process from
being exploited in any manner that tends to undermine its integrity.
This idea of preventing abuse of judicial process is not confined
to specific procedure rules, but rather aligned to a broader purport
of giving quietus to litigation and finality to judicial decisions. The
essence of this rule is that litigation must be conducted in good faith,
and parties should not engage in procedural tactics that fragment
disputes, prolong litigation, or undermine the outcomes of such
litigation. It is not a rigid rule but rather a flexible principle to prevent
oppressive, unfair, or detrimental litigation.
147. We are conscious of the fact, that ordinarily this principle has been
applied to instances where a particular plea or ground was not raised
at any stage of the proceedings, but were later sought to be raised.
However, it must be borne in mind that construing this rule in a hyper-
technical manner or through any strait-jacket formula will amount to
taking a reductive view of this broad and comprehensive principle.
148. Although in the present case, the Borrower had raised the issue of
the validity of the measures taken by the Bank under the SARFAESI
[2024] 12 S.C.R. 1703

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

Act and the legality of the 9th auction conducted it in the earlier stages
albeit in a different proceeding, yet its conduct of having conveniently
abandoned the same in a different proceeding elected by it for the
same cause of action and then later reagitating it in the pretence
that the two proceedings were distinct, is nothing but a textbook
case of abuse of process of law.
149. Piecemeal litigation where issues are deliberately fragmented across
separate proceedings to gain an unfair advantage is in itself a facet
of abuse of process of law and would also fall foul of this principle.
Merely because one proceeding initiated by a party differs in some
aspects from another proceeding or happens to be before a different
forum, will not make the subsequent proceeding distinct in nature
from the former, if the underlying subject matter or the seminal issues
involved remains substantially similar to each other or connected to
the earlier subject matter by a certain degree, then such proceeding
would tantamount to ‘relitigating’ and the Henderson Principle would
be applicable.
150. Parties cannot be allowed to exploit procedural loopholes and different
foras to revisit the same matters they had deliberately chosen not
to pursue earlier. Thus, where a party deliberately withholds certain
claims or issues in one proceeding with the intention to raise them
in a subsequent litigation disguised as a distinct or separate remedy
or proceeding from the initial one, such subsequent litigation will also
fall foul of this principle.
151. Similarly, where a plea or issue was raised in earlier proceedings
but later abandoned it is deemed waived and cannot be relitigated
in subsequent. Allowing such pleas to be resurrected in later cases
would not only undermine the finality of judgments but also incentivize
strategic behaviour, where parties could withdraw claims in one
case with the intention of reintroducing them later. proceedings.
Abandonment signifies acquiescence, barring its reconsideration in
subsequent litigation. This ensures that judicial processes are not
misused for tactical advantage and that litigants are held accountable
for their procedural choices. Parties must litigate diligently and in
good faith, presenting their entire case at the earliest opportunity.
152. The Henderson principle operates on the broader contours of
judicial propriety and fairness, ensuring that the judicial system
remains an instrument of justice rather than a platform for procedural
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manipulation. Judicial propriety demands that courts maintain the
finality and integrity of their decisions, preventing repeated challenges
to settled matters. Once a matter has been adjudicated, it should
not be revisited unless exceptional circumstances warrant such
reconsideration. Repeated litigation of the same issue not only
wastes judicial resources but also subjects the opposing party to
unnecessary expense and harassment. judicial processes are not
merely technical mechanisms but are rooted in principles of equity
and justice.
153. Both logic and principle support the approach that the judicial
determination of an entire cause of action is in fact the determination
of every issue which is fundamental to establishing the entire cause
of action. Thus, the assertion that the determination is only on one of
the issues is flawed as it is nothing but an indirect way of asserting
that the whole judgment is flawed and thereby relitigating the entire
cause of action once more. The effect of a judicial determination on
an entire cause of action is as if the court had made declarations
on each issue fundamental to the ultimate decision.
154. In the present case, the very issue of the validity of the measures
taken by the Bank under the SARFAESI Act and by it the legality
of the 9th auction proceedings was innately and inextricably linked
to the proceedings before this Court in the Main Appeals. We say
so, because: -
(i) The very issue of the cut-off date for exercising the right of
redemption under Section 13 sub-section (8) of the SARFAESI
Act entailed as a natural corollary to it, the issue of validity of
the SARFAESI proceedings, at least in respect of the 9th auction
notice dated 12.06.2023. When the Main Appeals were being
heard by this Court, the Borrower was well aware that the
issue before this Court was whether the right of redemption
extinguishes upon the publication of sale notice or upon the
transfer of the secured asset, and as such if at all such right
were to extinguish upon the publication of the sale notice, it by
default involved the issue whether such notice was valid or non-
est. Being so, the very issue of validity of the 9th auction notice
and the proceedings thereto properly belonged to the subject
of litigation in the Main Appeals before this Court and ought to
have been brought forward as part of the subject in contest.
[2024] 12 S.C.R. 1705

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

(ii) Moreover, since there was virtually no difference between the
prayer sought before the DRT and that before the High Court,
once the Borrower had chosen to espouse the same matter
already sub-judice in DRT before the High Court, it was the
duty of the Borrower to bring within the fold of its case all
issues and grounds in respect of the 9th auction proceedings
in the proceedings arising from the writ petition, by virtue of the
Doctrine of Merger and Election. Since the prayers that were
sought before the DRT had been merged with the prayers before
the High Court, the scope of proceedings of the Main Appeals
encompassed the issue of validity of the Bank’s actions under
the SARFAESI Act and by extension the 9th auction notice dated
12.06.2023 which the Borrower for reasons best known to it,
and such now cannot be permitted to raise these issued when
they ought to have been raised in the Main Appeals. In this
regard we may refer to the decision of this Court in Vodafone
Idea Cellular Ltd. v. Ajay Kumar Agarwal reported in (2022)
6 SCC 496 which held that as per the Doctrine of Election,
once a party has elected to choose remedy under one forum,
again the same cause of action cannot be challenged before
another forum: -
“25. The above position was reiterated in IREO
Grace Realtech (P) Ltd. v. Abhishek Khanna13 by a
three-Judge Bench of this Court, of which one of us
(D.Y. Chandrachud, J.) was a part. Indu Malhotra, J.,
speaking for the Bench invoked the doctrine of
election, which provides that when two remedies
are available for the same relief, the party at whose
disposal such remedies are available, can make
the choice to elect either of the remedies as long
as the ambit and scope of the two remedies is not
essentially different. These observations were made
in the context of an allottee of an apartment having
the choice of initiating proceedings under the 1986
Act or the RERA.”
(Emphasis supplied)

(iii) Furthermore, by virtue of the Doctrine of Election, the Borrower
cannot be permitted to pursue two inconsistent remedies, once
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the Borrower had availed the remedy to redeem its mortgage and
pay the dues sought to be recovered by way of the SARFAESI
proceedings initiated by the Bank and having failed in doing so,
it now cannot be permitted to challenge those very SARFAESI
proceedings. A litigant cannot approbate or reprobate at the same
time. Election is the obligation imposed upon a party by Courts
of equity to choose between two inconsistent or alternative rights
or claims in cases where there is clear intention of the person
from whom he derives one that he should not enjoy both. For
instance, if in a will, X bequeaths property owned by Y to Z while
giving Y a substantial gift. Y must choose to either (i) accept the
gift and let Z retain the property or (ii) reject the gift and assert
ownership of the property, but can certainly not pursue both
the remedies, and as such, the Borrower cannot be permitted
to have its cake and eat it as well. In this regard we may refer
to the decision of this Court in Joint Action Committee of Air
Line Pilots’ Assn. of India (ALPAI) & Ors. v. DGCA reported
in (2011) 5 SCC 435 wherein it was held as under: -
“12. The doctrine of election is based on the rule of
estoppel—the principle that one cannot approbate
and reprobate inheres in it. The doctrine of estoppel
by election is one of the species of estoppels in pais
(or equitable estoppel), which is a rule in equity. By
that law, a person may be precluded by his actions
or conduct or silence when it is his duty to speak,
from asserting a right which he otherwise would have
had. Taking inconsistent pleas by a party makes its
conduct far from satisfactory. Further, the parties
should not blow hot and cold by taking inconsistent
stands and prolong proceedings unnecessarily.”
(Emphasis supplied)

(iv) The premise on which the writ petition came to be filed by the
Borrowers before the High Court is also significant. The Borrower
in the writ petition contended that they have an apprehension
that the DRT may reject their redemption application and the
entire matter would become infructuous as the Bank at that point
of time had already accepted the entire sale consideration for
the auction from the petitioners and as such may likely issue
[2024] 12 S.C.R. 1707

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

the Sale Certificate to the Secured Asset. Thus, the Borrower’s
themselves were under the impression and understanding that
once the Sale Certificate is issued, the sale to the Secured
Asset becomes absolute and would in turn render the entire
matter infructuous. In such circumstances, the contention of
the Borrower as-well as the Subsequent Transferee that the
Sale Certificate that was issued in pursuance of the decision
in the Main Appeals was always subject to the outcome of the
S.A. No. 46 of 2022 pending before the DRT, is nothing but
an after-thought which the Borrower now seeks to espouse
having lost in the Main Appeals and as such the said contention
deserves to be rejected.
(v) Even though the petitioner had specifically prayed for the
issuance of the Sale Certificate to the Secured Asset, not once
did the Borrower dispute the same or assert that such certificate
would be contingent to on the outcome of the DRT proceedings.
The Borrower neither in the Main Appeals nor in the review
thereto raised the issue of validity of the 9th auction notice or
brought to the notice of this court the terms of the auction,
more particularly that such auction was subject to the outcome
of the S.A. No. 46 of 2022. Having admittedly failed to do so,
the espousal of the aforesaid contention by the Borrower now
is nothing but an abuse of process and an attempt to indirectly
circumvent the decision of this Court in the Main Appeals and
collaterally challenge the determination of rights therein.
(vi) Furthermore, the direction of this Court in the Main Appeals for
issuance of Sale Certificate conferred absolute ownership to
the petitioner to the Secured Asset, in view of the fact that: -: -
a. The impugned order passed by the High Court had been
set-aside in toto.
b. It was held that the Borrower could not have redeemed
its mortgage upon publication of the 9th auction notice.
c. The Bank was further directed to refund the amount paid
by the Borrower towards redemption.
d. It was also held that the Bank after having confirmed the
sale under Rule 9(2) of the Rules of 2002 could not have
withhold the sale certificate to the Secured Asset.
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In view of the above, it is clear as a noon day that this Court
never held that the Sale Certificate to be issued to the petitioner
was subject to the outcome of the DRT proceedings. As such,
once the sale of the Secured Asset under Section 13(4) of the
SARFAESI Act ended in issuance of a Sale Certificate as per
Rule 9 (7) of the SARFAESI Rules, such sale was complete
and absolute.
(vii) Lastly, this court in its decision in the Main Appeals by no
means either preserved the right or permitted the Borrower
to continue pursuing the proceedings in S.A. No. 46 of 2022
pending before the DRT. This is in view of the maxim Expressio
Unius Est Exclusio Alterius i.e., the expression of one thing
is the exclusion of another. Where a court consciously and
specifically grants certain reliefs but does not advert to other
reliefs or rights, the relief so expressly provided necessarily
leads to the implied exclusion of the other reliefs and rights.
Thus, when this Court directed the issuance of the Sale
Certificate it necessarily excluded the right to pursue the DRT
proceedings.
(viii) Mere reference to the pendency of the DRT Proceedings in
the judgment by no means could lead to the inference that
this Court had preserved the rights of the Borrower herein to
pursue the same. One cannot assume or infer any right by
referring to a stray sentence here and a stray sentence there
in the judgment. It is trite that judgments of courts are not to
be construed as statutes.

ii. Applicability of Lis Pendens in the absence of any
registration as required under the State Amendment to
Section 52 of the TPA.
155. The term “lis pendens” as explained in the Law Lexicon is as under: -
“Lis means a suit, action controversy, or dispute, and lis
pendens means a pending suit. The doctrine denotes
those principles and rules of law which define and limit
the operation of the common-law maxim pendente lite
nihil innovetur, that is, pending the suit nothing should
be changed.
[2024] 12 S.C.R. 1709

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

A pending suit.
As soon as proceedings are commenced to recover
or charge some specific property [Ex parte Thornton
(1867)2 Ch.p.178] there is “lis pendens” - a pending suit,
the consequence of which is that until the litigation is at
an end neither litigant can deal with the property to the
prejudice of the other.”
156. As per the Doctrine of lis pendens, nothing new can be introduced
during the pendency of a petition and if at all anything new is
introduced, the same would also be subject to the final outcome of
the petition, which would decide the rights and obligations of the
parties.
157. The doctrine of lis pendens is duly recognized in Section 52 of the
TPA which states that during the pendency in any court of any suit
in which any right to immovable property is directly and specifically
in question, the property cannot be transferred or otherwise dealt
with by any party to the suit or proceedings. The explanation to the
provision states that for the purposes of the Section, the pendency
of a suit or proceedings shall be deemed to commence from the
date of the presentation of the plaint or institution of the proceeding
in a Court, and shall continue until the suit or proceeding is disposed
by a “final decree or order” and complete satisfaction of the order is
obtained, unless it has become unobtainable by reason of the expiry
of any period of limitation. The said provision reads as under: -
“52. Transfer of property pending suit relating
thereto. —
During the pendency in any Court having authority
within the limits of India excluding the State of Jammu
and Kashmir or established beyond such limits by the
Central Government of any suit or proceeding which is not
collusive and in which any right to immovable property is
directly and specifically in question, the property cannot
be transferred or otherwise dealt with by any party to the
suit or proceeding so as to affect the rights of any other
party thereto under any decree or order which may be
made therein, except under the authority of the Court and
on such terms as it may impose.
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Explanation.-- For the purposes of this section, the
pendency of a suit or proceeding shall be deemed to
commence from the date of the presentation of the plaint
or the institution of the proceeding in a Court of competent
jurisdiction, and to continue until the suit or proceeding
has been disposed of by a final decree or order and
complete satisfaction or discharge of such decree or
order has been obtained, or has become unobtainable
by reason of the expiration of any period of limitation
prescribed for the execution thereof by any law for the
time being in force.”
158. The following conditions ought to be fulfilled for the doctrine of lis
pendens to apply: -
(i) There must be a pending suit or proceeding;
(ii) The suit or proceeding must be pending in a competent court;
(iii) The suit or proceeding must not be collusive;
(iv) The right to immovable property must be directly and specifically
in question in the suit or proceeding;
(v) The property must be transferred by a party to the litigation; and
(vi) The alienation must affect the rights of any other party to the
dispute.
159. In short, the doctrine of lis pendens, which Section 52 of the TPA
encapsulates, bars the transfer of a suit property during the pendency
of litigation. The only exception to the principle is when it is transferred
under the authority of the court and on terms imposed by it. Where
one of the parties to the suit transfers the suit property (or a part of
it) to a third-party, the latter is bound by the result of the proceedings
even if he did not have notice of the suit or proceeding.
160. In the landmark decision of the English Court of Chancery in Bellamy
v. Sabine reported in (157) 1 De G&J 566, Lord Turner underscored
and explained the rationale of the principle underlying lis pendens
and observed that if any alienation or material change to the subject
matter during the pendency of a proceeding were permitted to
prevail, it would defeat the very course of such proceedings before
the courts. The relevant observations read as under: -
[2024] 12 S.C.R. 1711

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

“It is, as I think, a doctrine common to the courts both
of Law and Equity and rests, as I apprehend, upon this
foundation that it would plainly be impossible that any
action or suit could be brought to a successful termination,
if alienations pendente lite were permitted to prevail. The
plaintiff would be liable in every case to be defeated by
the defendants alienating before the judgment or decree,
and would be driven to commence his proceedings de
novo, subject again to be defeated by the same course
of proceedings.”
(Emphasis supplied)

161. In Jayaram Mudaliar v. Ayyaswami reported in AIR 1973 SC 569
this Court explained that where any proceeding in respect of a
property is pending, the doctrine of lis pendens vests the courts with
the control or dominion over such subject-matter so that no party or
person may remove the subject-matter outside of the power of the
court to deal with it in accordance with law and thereby render the
proceedings infructuous. The relevant observations read as under: -
“14. The background of the provision set out above was
indicated by one of us (Beg, J.,) in Jayaram Mudaliar v.
Ayyaswami [(1972) 2 SCC 200, 217 : AIR 1973 SC 569].
There, the following definition of the lis pendens from
Corpus Juris Secundum (Vol. LIV, p. 570) was cited: “Lis
pendens literally means a pending suit, and the doctrine
of lis pendens has been defined as the jurisdiction, power,
or control which a court acquires over property involved
in a suit pending the continuance of the action, and until
final judgment therein.”
It was observed there: “Expositions of the doctrine
indicate that the need for it arises from the very nature
of the jurisdiction of Courts and their control over the
subject-matter of litigation so that parties litigating before
it may not remove any part of the subject-matter outside
the power of the Court to deal with it and thus make the
proceedings infructuous.”
(Emphasis supplied)
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162. In the present case, it has been canvassed on behalf of the
Subsequent Transferee that it is a bona-fide third party purchaser
of the Secured Asset since it was neither arrayed as a party to
proceedings in the Main Appeals nor issued a notice of the said
proceedings either by the petitioner or by the Bank.
163. In Sanjay Verma v. Manik Roy reported in (2006) 13 SCC 608 this
Court held that the principle of lis pendens enshrined in Section 52
of the TPA is not only based on equity, good conscience and justice
but is also a principle of public policy and as such no party can claim
exemption from the application of this doctrine on the ground of
bona fide or good faith. The relevant observations read as under: -
“12. The principles specified in Section 52 of the TP Act
are in accordance with equity, good conscience or justice
because they rest upon an equitable and just foundation
that it will be impossible to bring an action or suit to a
successful termination if alienations are permitted to prevail.
A transferee pendente lite is bound by the decree just as
much as he was a party to the suit. The principle of lis
pendens embodied in Section 52 of the TP Act being a
principle of public policy, no question of good faith or bona
fide arises. The principle underlying Section 52 is that a
litigating party is exempted from taking notice of a title
acquired during the pendency of the litigation. The mere
pendency of a suit does not prevent one of the parties from
dealing with the property constituting the subject-matter of
the suit. The section only postulates a condition that the
alienation will in no manner affect the rights of the other
party under any decree which may be passed in the suit
unless the property was alienated with the permission of
the court.”
(Emphasis supplied)

164. In another decision of this Court in Guruswamy Nadar v. P. Lakshmi
Ammal reported in (2008) 5 SCC 796 it was held that the principle
of lis pendens incorporated in Section 52 of the TPA will apply
irrespective of whether the subsequent purchaser had bought the
property, which is a subject matter of a pending proceeding, in good
faith or not. The relevant observations read as under: -
[2024] 12 S.C.R. 1713

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

“9. Section 19 of the Specific Relief Act clearly says
subsequent sale can be enforced for good and sufficient
reason but in the present case, there is no difficulty because
the suit was filed on 3-5-1975 for specific performance of
the agreement and the second sale took place on 5-5-1975.
Therefore, it is the admitted position that the second sale
was definitely after the filing of the suit in question. Had
that not been the position then we would have evaluated
the effect of Section 19 of the Specific Relief Act read with
Section 52 of the Transfer of Property Act. But in the present
case it is more than apparent that the suit was filed before
the second sale of the property. Therefore, the principle of
lis pendens will govern the present case and the second
sale cannot have the overriding effect on the first sale.
xxx xxx xxx
15. So far as the present case is concerned, it is apparent
that the appellant who is a subsequent purchaser of the
same property, has purchased in good faith but the principle
of lis pendens will certainly be applicable to the present
case notwithstanding the fact that under Section 19(b)
of the Specific Relief Act his rights could be protected.”
(Emphasis supplied)

165. Similarly in a recent decision of this Court in Chander Bhan (D)
through Lr. Sher Singh v. Mukhtiar Singh & Ors. reported in 2024
INSC 377 it was held that once the transaction in question is found
to be illegal due to the doctrine of lis pendens, any defence of the
subsequent transferee that they are a bona-fide purchaser is liable
to be rejected. The relevant observations read as under: -
“21. Once it has been held that the transactions executed
by the respondents are illegal due to the doctrine of lis
pendens the defence of the respondents 1-2 that they are
bonafide purchasers for valuable consideration and thus,
entitled to protection under Section 41 of the Act of 1882
is liable to be rejected.”
(Emphasis supplied)
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166. Thus, the question to be examined is whether the transfer of the
secured asset in favour of the Subsequent Transferee is hit by lis
pendens or not. It is an undisputed fact that on 25.08.2023 Special
Leave Petition Nos. 19523-19524 of 2023 (later renumbered as Civil
Appeal Nos. 5542-5543 of 2023) came to be filed by the petitioner
challenging the impugned order dated 17.08.2023 passed by the
High Court permitting the Borrower herein to redeem the mortgage
created over the Secured Asset. It is also not in dispute that on
28.08.2023 the Borrower pursuant to the aforesaid order of the High
Court redeemed the mortgage and transferred the said property
to the Subsequent Transferee herein on the very same day by
executing the aforesaid Assignment Agreement. It is also undisputed
that the transfer of the Secured Asset in favour of the Subsequent
Transferee was effected by the Borrower on the strength of its right
of redemption pursuant to the High Court’s impugned order dated
17.08.2023. Thus, admittedly, when the mortgage was redeemed and
the Secured Asset was transferred to the Subsequent Transferee by
way of the Assignment Agreement dated 28.08.2023, Special Leave
Petition Nos. 19523-19524 of 2023 challenging the exercise of such
right of redemption was already filed and pending before this Court.
167. In M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy
& Ors. reported in 2024 INSC 861 this Court held that doctrine of
lis pendens kicks in the moment a proceeding is instituted/filed
irrespective of whether such filing is still defective or notice is yet to
be issued by the court. It further held that any transfer made during
the pendency of such proceeding would be subject to the final result
of the litigation or in other words would be hit by lis pendens under
Section 52 of the TPA. The relevant observations read as under: -
“49. The purpose of lis pendens is to ensure that the
process of the court is not subverted and rendered
infructuous. In the absence of the doctrine of lis pendens, a
defendant could defeat the purpose of the suit by alienating
the suit property. This purpose of the provision is clearly
elucidated in the explanation clause to Section 52 which
defines “pendency”. Amending Act 20 of 1929 substituted
the word “pendency” in place of “active prosecution”. The
Amending Act also included the Explanation defining the
expression “pendency of suit or proceeding”. “Pendency”
is defined to commence from the “date of institution” until
[2024] 12 S.C.R. 1715

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

the “disposal”. The argument of the respondents that
the doctrine of lis pendens does not apply because the
petition for review was lying in the registry in a defective
state cannot be accepted. The review proceedings were
“instituted” within the period of limitation of thirty days. The
doctrine of lis pendens kicks in at the stage of “institution”
and not at the stage when notice is issued by this Court.
Thus, Section 52 of the Transfer of Property Act would apply
to the third-party purchaser once the sale was executed
after the review petition was instituted before this Court.
Any transfer that is made during the pendency is subject
to the final result of the litigation.”
(Emphasis supplied)

168. Since, in the present case the Special Leave Petitions were already
instituted and pending before this Court as on 28.08.2023 i.e., the
date of execution of the Assignment Agreement for the transfer of
the Secured Asset in favour of the Subsequent Transferee, the said
Assignment Agreement dated 28.08.2023 and the transfer thereto
is beyond a shadow of doubt hit by lis pendens.
169. It has been contended by the Subsequent Transferee that Section 52
of the TPA has a modified application in Maharashtra i.e., the area in
which the said property is situated by virtue of the State Amendment
made to Section 52 of the TPA by the Bombay Amendment Act,
1939 (Act XIV of 1939). The relevant provision as amended reads
as under: -
“52. Transfer of property pending suit relating
thereto. —
(1) During the pendency in any court having authority
within the limits of India excluding the State of Jammu
and Kashmir established beyond such limits by the
Central Government, of any suit or proceeding which
is not collusive and in which any right to immovable
property is directly and specifically in question, if a notice
of the pendency of such suit or proceeding is registered
under Section 18 of the Indian Registration Act, 1908,
the property after the notice is so registered cannot be
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transferred or otherwise dealt with by any party to the
suit or proceeding so as to affect the rights of any other
party thereto under any decree or order which may be
made therein, except under the authority of the court and
on such terms as it may impose.
(2) Every notice of pendency of a suit or proceeding
referred to in sub-section (1) shall contain the following
particular, namely:
(a) the name and address of the owner of immovable
property or other person whose right to the immovable
property is in question;
(b) the description of the immovable property the right to
which is in question;
(c) the Court in which the suit or proceeding is pending;
(d) the nature and title of the suit or proceeding; and
(e) the date on which the suit or proceeding was instituted.
Explanation. — For the purposes of this section, the
pendency of a suit or proceeding shall be deemed to
commence from the date of the presentation of the
plaint or the institution of the proceedings in a Court of
competent jurisdiction, and to continue until the suit or
proceeding has been disposed of by a final decree or order
and compete satisfaction or discharge of such decree or
order has been obtained, or has become unobtainable
by reason of the expiration of any period of limitation
prescribed for the execution thereof by any law for the
time being in force.”
(Emphasis supplied)

170. It was submitted on behalf of the Subsequent Transferee that in view
of the aforesaid state amendment to Section 52 of the TPA, in order
to invoke lis pendens under the said provision it is mandatory as per
sub-section (1) that a notice of pendency of a suit or proceeding is
registered in respect of the property which is the subject-matter of
such proceeding in the manner laid down in sub-section (2) and in the
[2024] 12 S.C.R. 1717

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

event no such notice of pendency is registered then lis pendens will
not be applicable. It was further submitted that since in the present
case admittedly there was no registration of notice of pendency
by the petitioner in respect of the Secured Asset, the Assignment
Agreement dated 28.08.2023 and the transfer of the said property
in pursuance thereto is not hit by lis pendens.
171. We have carefully gone through the aforesaid state amendment
made to Section 52 of the TPA. The amended Section 52 sub-
section (1) of the TPA casts upon a party who is claiming any
right to a property which is a subject-matter of any pending suit
or proceeding an additional duty to register a notice of pendency
in respect of such property so as to caution and put to notice any
third-party who might otherwise be unaware of such proceeding or
litigation despite the best of due diligence either due to inadvertence
or deliberate misleading by one of the parties to the lis and as result
might be genuinely considering to purchase or acquire any right in
the subject-matter proceeding. The requirement of registration of
notice of pendency is to prevent any undue or unwarranted hardship
to such third-parties who even after a reasonable due diligence
have bona-fidely purchased the property believing it to be free from
the encumbrances of any pending proceeding only to later face
the adverse consequence of losing their rights by a mechanical
application of lis pendens.
172. This additional requirement of registration of notice of pendency is
for the benefit of the party claiming any right in such subject-matter
property and also for the benefit of any third-party interested in such
subject-matter property by enabling the former to claim the benefit of
lis pendens as an absolute right after having duly taken steps towards
ensuring that the public is well-aware of the impeding litigation in
respect of such property by registering a notice of pendency and to
enable the latter to ascertain the veracity of title of such property by
exercise of its due diligence. Although, the said provision is for the
benefit of the third-party, yet such subsequent purchasers cannot
as a matter of absolute right claim any title to such property solely
on the ground of want of any notice of pendency being registered.
To hold otherwise would undermine the object and purpose of the
doctrine of lis pendens which is based on the principle of equity,
good conscience, and public policy and discourage any thwarting or
1718 [2024] 12 S.C.R.

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frustration of rights of the parties so litigating by unscrupulous and
unanticipated transactions.
173. The vital essence of this additional duty imposed upon the party
claiming a right to a property which is a subject matter of a pending
proceeding, is only to aid a third-party to exercise its due diligence and
obviate the possibility of any dishonesty, misrepresentation or fraud
by a party in order to gain an undue advantage or benefit despite
the pendency of proceedings. However, if the absence of notice
registration were to render the doctrine entirely inapplicable, it would
lead to exploitation of procedural gaps by parties who deliberately
delay or avoid registering such notices to defeat substantive rights of
the parties and undermine the very sanctity of judicial proceedings.
Such an interpretation would lead to a very chilling effect whereby,
third-parties despite being expected to verify the title and status of
the property would simply abdicate their duty to conduct thorough
due diligence in transactions involving immovable properties or
that despite being fully aware of the pendency of such proceedings
would be able to deviously claim absolute rights to such property or
worse, mischievously execute back-dated agreements in collusion
with a party to a lis prior to registration of such notice of pendency
to circumventing the very proceedings and render them infructuous.
174. In Sanjay Verma (supra) this Court cautioned that the doctrine of
lis pendens is a principle of public policy without which it will be
impossible to bring an action or suit to a successful termination if
alienations are permitted to prevail thereby undermining the sanctity
of judicial proceedings and rights of parties so involved therein.
Thus, we are of the considered view that even in the absence of a
registered notice of pendency in terms of the amended Section 52 of
TPA the said provision will not be rendered ipso-facto inapplicable,
at best it would preclude the party seeking benefit of this doctrine
to claim it as a matter of right, but by no stretch would it mean that
the third-party conversely would be able to as matter of absolute
right claim inapplicability of this doctrine. It would be the discretion
of the courts to see keeping in mind the peculiar facts of the case to
ascertain whether such doctrine ought to be applied or not. Where the
courts are satisfied that the third-party had genuinely purchased the
subject-matter property after an exercise of a reasonable degree of
care and caution and that it was otherwise unaware of the pendency
of proceedings, the courts would be circumspect to displace the
[2024] 12 S.C.R. 1719

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

rights of such bona-fide third-party by a mechanical application of
the doctrine of lis pendens. Even otherwise, in view of the peculiar
facts of this case, more particularly the fact that the petitioner could
not have registered the same being only an auction purchaser and
that it was the duty of the Bank to register the notice of pendency
which we are inclined to believe was not reasonably possible in view
of the haste that was shown by the Borrower and the Subsequent
Transferee in redeeming the mortgage and thereafter immediately
transferring the Secured Asset, we are of the opinion that the non-
registration of notice of pendency is not fatal to the application of
the doctrine of lis pendens in the present case.
175. During the course of hearing of the present case, we had inquired from
the Subsequent Transferee whether it was aware of the pendency
of the Main Appeals before this Court at the time of execution of
the Assignment Agreement dated 28.08.2023 and at what point of
time did the Subsequent Transferee and the Borrower entered into
negotiations for the redemption of mortgage and the transfer of the
Secured Asset. Mr. Sibal, the learned Senior Counsel appearing
for the Subsequent Transferee, replied to the aforesaid saying that
the parties started contemplating the possibility of entering such
transaction in June, 2023 and that the Borrower had informed the
Subsequent Transferee about the pendency of the proceedings before
this Court. Thus, it is not as if the Subsequent Transferee was not
aware of what was happening however, when things went wrong,
they now cry foul of not being impleaded as parties and heard by
this Court in the Main Appeals. Even otherwise, assuming that the
petitioner and the Bank herein deliberately chose not to implead the
Subsequent Transferee herein in order to mislead this Court in the
Main Appeals, the same is immaterial as the Subsequent Transferee
too failed to implead itself despite being aware of the pendency of
the proceedings before this Court. If at all they were so concerned
about the transfer of the Secured Asset in their favour, either they
ought to have themselves attempted to implead itself before this Court
or requested the Borrower to do the same. In view of the Doctrine
of Pari Delicto i.e.., ‘in equal fault, the law aids neither party’, the
Subsequent Transferee cannot seek any benefit from the fault of the
petitioner or the Bank when it is itself equally at fault.
176. In view of the aforesaid, we are of the considered view that the
execution of the Assignment Agreement dated 28.08.2023 and the
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transfer of the Secured Asset in pursuance thereto in favour of the
Subsequent Transferee is hit by lis pendens despite the fact that
no notice of pendency was registered in terms of the amended
Section 52 of the TPA.
177. We are aware of the two decisions of this Court one in the case
of Thomson Press (India) Limited v. Nanak Builders and
Investors Private Limited & Ors. reported in (2013) 5 SCC 397 and
T. Ravi & Anr. v. B. Chinna Narasimha & Ors. reported in (2017) 7
SCC 342. In both these decisions, the view taken is that Section 52
of the TPA does not render transfers affected during the pendency of
the suit void but only render such transfers subservient to the rights
as may be eventually determined by the court.
178. In Thomson Press (supra), T.S. Thakur, J. (as he then was) in his
separate judgment while supplementing the judgment authored by
M.Y. Eqbal, J., observed as under: -
“53. There is, therefore, little room for any doubt that the
transfer of the suit property pendente lite is not void ab
initio and that the purchaser of any such property takes the
bargain subject to the rights of the plaintiff in the pending
suit. Although the above decisions do not deal with a fact
situation where the sale deed is executed in breach of an
injunction issued by a competent court, we do not see
any reason why the breach of any such injunction should
render the transfer whether by way of an absolute sale or
otherwise ineffective. The party committing the breach may
doubtless incur the liability to be punished for the breach
committed by it but the sale by itself may remain valid as
between the parties to the transaction subject only to any
directions which the competent court may issue in the suit
against the vendor.”
(Emphasis supplied)

179. The decision in Thomson Press (supra) referred to above has been
relied upon in T. Ravi (supra) for the proposition that the effect of
Section 52 of the Act 1882 is not to render transfers effected during
the pendency of a suit by a party to the suit void; the transfer remains
valid subject, of course, to the result of the suit. The pendente lite
purchaser would be entitled to or suffer the same legal rights and
obligations of his vendor as may be eventually determined by the Court.
[2024] 12 S.C.R. 1721

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

180. Thus, although Section 52 of the Act 1882 does not render a
transfer pendente lite void yet the court while exercising contempt
jurisdiction may be justified to pass directions either for reversal of
the transactions in question by declaring the said transactions to
be void or proceed to pass appropriate directions to the concerned
authorities to ensure that the contumacious conduct on the part of
the contemnor does not continue to enure to the advantage of the
contemnor or anyone claiming under him.
181. Since in the present case, the Assignment Agreement dated
28.08.2023 whereby the Secured Asset was transferred in favour
of Greenscape/the Subsequent Transferee herein was effected by
the Borrower on the strength of its right of redemption pursuant to
the High Court’s impugned order which was ultimately set-aside by
this Court in its judgment and order dated 21.09.2023 in the Main
Appeals, the same rendered Borrower’s right to transfer the Secured
Asset non-est and by extension the Assignment Agreement void.

iii. Whether any contempt is said to have been committed by
the respondents herein?
182. In order to decide whether the appellants are guilty of civil contempt,
it would be apposite to refer to Section 2(b) of the Act, 1971, which
reads as under: -
“2. Definitions.—
In this Act, unless the context otherwise requires,—
xxx xxx xxx
(b) “civil contempt” means wilful disobedience to any
judgment, decree, direction, order, writ or other process of
a court or wilful breach of an undertaking given to a court;”
183. The Black’s Law Dictionary, Sixth Edition, at page 1599, defines
“willful” as hereunder: -
“Proceeding from a conscious motion of the will; voluntary;
knowingly; deliberate. Intending the result which actually
comes to pass; designed; intentional; purposeful; not
accidental or involuntary. Premeditated; malicious; done
with evil intent, or with a bad motive or purpose, or with
indifference to the natural consequences; unlawful; without
legal justification. An act or omission is “willfully” done, if
1722 [2024] 12 S.C.R.

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done voluntarily and intentionally and with the specific
intent to do something the law forbids, or with the specific
intent to fail to do something the law requires to be done;
that is to say, with bad purpose either to disobey or to
disregard the law. It is a word of many meanings, with its
construction often influenced by its context. In civil actions,
the word (willfully) often denotes an act which is intentional,
or knowing, or voluntary, as distinguished from accidental.
But when used in a criminal context it generally means an
act done with a bad purpose; without justifiable excuse;
stubbornly, obstinately, perversely.”
184. In Ashok Paper Kamgar Union v. Dharam Godha and Ors.
reported in (2003) 11 SCC 1, the expression ‘wilful disobedience’
in the context of Section 2(b) of the Act, 1971 was read to mean an
act or omission done voluntarily and intentionally with the specific
intent to do something, which the law forbids or with the specific
intention to fail to do something which the law requires to be done.
Wilfulness signifies deliberate action done with evil intent and bad
motive and purpose. It should not be an act, which requires and is
dependent upon, either wholly or partly, any act or omission by a
third party for compliance.
185. Hence, the expression or word “wilful” means act or omission which
is done voluntarily or intentionally and with the specific intent to do
something which the law forbids or with the specific intent to fail
to do something the law requires to be done, that is to say with
bad purpose either to disobey or to disregard the law. It signifies a
deliberate action done with evil intent or with a bad motive or purpose.
186. Article 129 of the Constitution declares this Court as a “a court of
record” and states that it shall have all the powers of such a court
including the power to punish for contempt of itself. The provisions
of the Act, 1971 and the Rules framed thereunder form a part of
a special statutory jurisdiction that is vested in courts to punish an
offending party for its contemptuous conduct. It needs no emphasis
that the power of contempt ought to be exercised sparingly with
great care and caution. The contemptuous act complained of must
be such that would result in obstruction of justice, adversely affect
the majesty of law and impact the dignity of the courts of law.
187. It must also be understood that contempt proceedings are sui
generis inasmuch as the Law of Evidence and the Code of Criminal
[2024] 12 S.C.R. 1723

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

Procedure, 1973 are not to be strictly applied. At the same time,
the procedure adopted during the contempt proceedings must be
fair and just that is to say the principles governing the Rule of law
must be extended to the party against whom contempt proceedings
have been initiated. The party must have every opportunity to place
its position before the Court. Such a party must not be left unheard
under any circumstances.
188. In Ram Kishan v. Tarun Bajaj & Ors. reported in (2014) 16 SCC
204 it was held that the contempt jurisdiction conferred on to the law
courts power to punish an offender not only for his wilful disobedience
but also for contumacious conduct or obstruction to the majesty of
law. It further observed that such power has been conferred for the
simple reason that the respect and authority commanded by the
courts of law are the greatest guarantee to an ordinary citizen that
his rights shall be protected and the entire democratic fabric of the
society will crumble down if the respect of the judiciary is undermined.
The relevant observations read as under: -
“11. The contempt jurisdiction conferred on to the law courts
power to punish an offender for his wilful disobedience/
contumacious conduct or obstruction to the majesty of
law, for the reason that respect and authority commanded
by the courts of law are the greatest guarantee to an
ordinary citizen that his rights shall be protected and the
entire democratic fabric of the society will crumble down
if the respect of the judiciary is undermined. Undoubtedly,
the contempt jurisdiction is a powerful weapon in the
hands of the courts of law but that by itself operates as
a string of caution and unless, thus, otherwise satisfied
beyond reasonable doubt, it would neither be fair nor
reasonable for the law courts to exercise jurisdiction
under the Act. The proceedings are quasi-criminal in
nature, and therefore, standard of proof required in these
proceedings is beyond all reasonable doubt. It would
rather be hazardous to impose sentence for contempt on
the authorities in exercise of the contempt jurisdiction on
mere probabilities. [...]”
(Emphasis supplied)

189. In Murray & Co. v. Ashok Kr. Newatia & Anr. reported in (2000)
2 SCC 367 this Court held that the purpose of contempt jurisdiction
1724 [2024] 12 S.C.R.

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is to uphold the majesty and dignity of the courts of law since the
image of such a majesty in the minds of the people cannot be led
to be distorted, as any indulgence which can even remotely be
termed to affect the majesty of law would result in the society losing
its confidence and faith in the judiciary and the law courts forfeiting
the trust and confidence of the people in general. The relevant
observations read as under: -
“9 [...] The purpose of contempt jurisdiction is to uphold
the majesty and dignity of the courts of law since the
image of such a majesty in the minds of the people
cannot be led to be distorted. The respect and authority
commanded by courts of law are the greatest guarantee
to an ordinary citizen and the entire democratic fabric
of the society will crumble down if the respect for the
judiciary is undermined. It is true that the judiciary will be
judged by the people for what the judiciary does, but in
the event of any indulgence which can even remotely be
termed to affect the majesty of law, the society is bound
to lose confidence and faith in the judiciary and the law
courts thus, would forfeit the trust and confidence of the
people in general.”
(Emphasis supplied)

190. In Pushpaben & Anr. v. Narandas Badiani & Anr. reported in
(1979) 2 SCC 394, it was held that contempt of court is a special
jurisdiction to be exercised sparingly and with caution whenever an
act adversely affects the administration of justice or which tends to
impede its course or tends to shake public confidence in the judicial
institutions. It further held that this jurisdiction is to be exercised not
for the protection of the dignity of an individual judge but to protect
the administration of justice from being maligned and ensure that the
authority of the courts is neither imperilled nor is the administration of
justice by it interfered with in any manner. The relevant observations
read as under: -
“42. The contempt of court is a special jurisdiction to be
exercised sparingly and with caution whenever an act
adversely affects the administration of justice or which tends
to impede its course or tends to shake public confidence
in the judicial institutions. This jurisdiction may also be
[2024] 12 S.C.R. 1725

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

exercised when the act complained of adversely affects
the majesty of law or dignity of the courts. The purpose of
contempt jurisdiction is to uphold the majesty and dignity
of the courts of law. It is an unusual type of jurisdiction
combining “the jury, the judge and the hangman” and it is
so because the court is not adjudicating upon any claim
between litigating parties. This jurisdiction is not exercised
to protect the dignity of an individual judge but to protect
the administration of justice from being maligned. In the
general interest of the community it is imperative that the
authority of courts should not be imperilled and there should
be no unjustifiable interference in the administration of
justice. It is a matter between the court and the contemner
and third parties cannot intervene. It is exercised in a
summary manner in aid of the administration of justice, the
majesty of law and the dignity of the courts. No such act
can be permitted which may have the tendency to shake
the public confidence in the fairness and impartiality of
the administration of justice.”
(Emphasis supplied)

191. In Reliance Petrochemicals Ltd. v. Proprietors of Indian Express
Newspapers, Bombay Pvt. Ltd. & Ors. reported in (1988) 4 SCC
592 it was observed that the process of due course of administration
of justice must remain unimpaired. Public interest demands that
there should be no interference with judicial process and the effect
of the judicial decision should not be pre-empted or circumvented.
The relevant observations read as under: -
“35. The question of contempt must be judged in a particular
situation. The process of due course of administration of
justice must remain unimpaired. Public interest demands
that there should be no interference with judicial process
and the effect of the judicial decision should not be pre-
empted or circumvented by public agitation or publications.
It has to be remembered that even at turbulent times
through which the developing countries are passing,
contempt of court means interference with the due
administration of justice.”
(Emphasis supplied)
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192. In Rita Markandey v. Surjit Singh Arora reported in (1996) 6
SCC 14, it was observed that even if parties have not filed an
undertaking before the court but if the court was induced to sanction
a particular course of action or inaction on the representation made
by a party and the court ultimately finds that the party never intended
to act on the said representation or such representation was false,
the party would be guilty of committing contempt. The relevant
observations read as under: -
“12. Law is well settled that if any party gives an undertaking
to the court to vacate the premises from which he is liable
to be evicted under the orders of the court and there is
a clear and deliberate breach thereof it amounts to civil
contempt but since, in the present case, the respondent
did not file any undertaking as envisaged in the order of
this Court the question of his being punished for breach
thereof does not arise. However, in our considered view
even in a case where no such undertaking is given, a party
to a litigation may be held liable for such contempt if the
court is induced to sanction a particular course of action or
inaction on the basis of the representation of such a party
and the court ultimately finds that the party never intended
to act on such representation or such representation
was false. In other words, if on the representation of the
respondent herein the Court was persuaded to pass the
order dated 5-10-1995 extending the time for vacation of
the suit premises, he may be held guilty of contempt of
court, notwithstanding non-furnishing of the undertaking,
if it is found that the representation was false and the
respondent never intended to act upon it. [...]”
(Emphasis supplied)

193. The Borrower and the Subsequent Transferee/the alleged contemnors
herein placing reliance on the decision of this Court in Patel Rajnikant
(supra) have contended that in the absence of any disobedience
or wilful breach of a prohibitory order no contempt could be said to
have been committed. It has been further canvased that this Court
in the Main Appeals never issued any specific direction either to the
Borrower or the Subsequent Transferee, & therefore no contempt
could be said to have been committed.
[2024] 12 S.C.R. 1727

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

194. In Patel Rajnikant (supra) this Court upon examining Section 2(b) of
the Act, 1971 held that to hold a person guilty of having committed
contempt, there must be a judgment, order, direction etc. by a court,
there must be disobedience of such judgment, order, direction etc
and that such disobedience must be willful. The relevant provisions
read as under: -
“58. The provisions of the Contempt of Courts Act, 1971
have also been invoked. Section 2 of the Act is a definition
clause. Clause (a) enacts that contempt of court means
“civil contempt or criminal contempt”. Clause (b) defines
“civil contempt” thus:
“2. (b) ‘civil contempt’ means wilful disobedience
to any judgment, decree, direction, order, writ
or other process of a court or wilful breach of
an undertaking given to a court;”
Reading of the above clause makes it clear that the
following conditions must be satisfied before a person can
be held to have committed a civil contempt:
(i) there must be a judgment, decree, direction, order,
writ or other process of a court (or an undertaking given
to a court);
(ii) there must be disobedience to such judgment, decree,
direction, order, writ or other process of a court (or breach
of undertaking given to a court); and
(iii) such disobedience of judgment, decree, direction, order,
writ or other process of a court (or breach of undertaking)
must be wilful.”
195. However, the subsequent observations made by this Court in Patel
Rajnikant (supra) are significant. It observed that the court should
not hesitate in wielding the potent weapon of contempt, it is for the
proper administration of justice and to ensure due compliance with
the orders passed by it in order to uphold and maintain the dignity of
courts and majesty of law. The relevant observations read as under: -
“70. From the above decisions, it is clear that punishing a
person for contempt of court is indeed a drastic step and
normally such action should not be taken. At the same time,
however, it is not only the power but the duty of the court
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to uphold and maintain the dignity of courts and majesty
of law which may call for such extreme step. If for proper
administration of justice and to ensure due compliance
with the orders passed by a court, it is required to take
strict view under the Act, it should not hesitate in wielding
the potent weapon of contempt.”
(Emphasis supplied)

196. What can be discerned from the above exposition of law is that any
act of disobedience, defiance, or any attempt to malign the authority
of the court would amount to contempt because they undermine the
respect and trust that the public reposes in judicial institutions. The
judicial process relies on the confidence of society, and any act that
disrupts or disrespects this process threatens to erode the foundation
of justice and order.
197. Contempt jurisdiction exists to preserve the majesty and sanctity of
the law. Courts are the guardians of justice, and their decisions must
command respect and compliance to ensure the proper functioning of
society. When individuals or entities challenge the authority of courts
through wilful disobedience or obstructive behaviour, they undermine
the rule of law and create the risk of anarchy. Contempt serves as a
mechanism to protect the integrity of the courts, ensuring that they
remain a symbol of fairness, impartiality, and accountability.
198. When judicial orders are openly flouted or court proceedings are
disrespected, it sends a signal that the rule of law is ineffective,
leading to a loss of trust in the system. Judicial decisions must
remain unimpaired, free from external pressures, manipulation, or
circumvention. Acts that attempt to mislead the court, obstruct its
functioning or frustrate its decisions distort the process of justice
and would amount to contempt.
199. The contempt jurisdiction of this court cannot be construed by any
formulaic or rigid approach. Merely because there is no prohibitory
order or no specific direction issued the same would not mean
that the parties cannot be held guilty of contempt. The Contempt
jurisdiction of the court extends beyond the mere direct disobedience
of explicit orders or prohibitory directions issued by the court. Even
in the absence of such specific mandates, the deliberate conduct of
parties aimed at frustrating court proceedings or circumventing its
[2024] 12 S.C.R. 1729

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

eventual decision may amount to contempt. This is because such
actions strike at the heart of the judicial process, undermining its
authority and obstructing its ability to deliver justice effectively. The
authority of courts must be respected not only in the letter of their
orders but also in the broader spirit of the proceedings before them.
200. Any contumacious conduct of the parties to bypass or nullify
the decision of the court or render it ineffective, or to frustrate
the proceedings of the court, or to enure any undue advantage
therefrom would amount to contempt. Attempts to sidestep the court’s
jurisdiction or manipulate the course of litigation through dishonest
or obstructive conduct or malign or distort the decision of the courts
would inevitably tantamount to contempt sans any prohibitory order
or direction to such effect.
201. Thus, the mere conduct of parties aimed at frustrating the court
proceedings or circumventing its decisions, even without an explicit
prohibitory order, constitutes contempt. Such actions interfere with
the administration of justice, undermine the respect and authority of
the judiciary, and threaten the rule of law.
202. However, at the same time, the power of contempt ought to be
exercised sparingly and with caution and care. It operates with a
string of caution and unless otherwise satisfied beyond doubt, it
would neither be fair nor reasonable for the courts to resort to such
powers. The standard of proof required before a person is held guilty
of committing contempt of court must be beyond all reasonable doubt.
203. The courts while exercising its contempt jurisdiction must remain
circumspect, more particularly, where there exists a possibility of the
order being amenable to more than one interpretation. In Jhareshwar
Prasad Paul v. Tarak Nath Ganguly reported in (2002) 5 SCC 352
it was held that if an order does not contain any specific direction
regarding a matter or if there is any ambiguity in the directions issued
therein then it would be appropriate to direct the parties to approach
the court which disposed of the matter for necessary clarification of the
order instead of the court exercising its contempt jurisdiction thereby
taking upon itself the power to decide the original proceeding in a
manner not dealt with by the court passing the judgment or order.
The relevant observations read as under: -
“The contempt jurisdiction should be confined to
the question whether there has been any deliberate
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disobedience of the order of the court and if the conduct
of the party who is alleged to have committed such
disobedience is contumacious. The court exercising
contempt jurisdiction is not entitled to enter into
questions which have not been dealt with and decided
in the judgment or order... The court has to consider
the direction issued in the judgment or order and not to
consider the question as to what the judgment or order
should have contained. At the cost of repetition, be it
stated here that the court exercising contempt jurisdiction
is primarily concerned with the question of contumacious
conduct of the party, which is alleged to have committed
deliberate default in complying with the directions in the
judgment or order. If the judgment or order does not
contain any specific direction regarding a matter or if
there is any ambiguity in the directions issued therein
then it will be better to direct the parties to approach
the court which disposed of the matter for clarification
of the order instead of the court exercising contempt
jurisdiction taking upon itself the power to decide the
original proceeding in a manner not dealt with by the
court passing the judgment or order.”
(Emphasis supplied)

204. It is true that this Court in its decision rendered in the Main Appeals
had not issued any specific direction either to the Borrower or the
Subsequent Transferee as regards the handing over of physical
possession and the original title deed to the Secured Asset, or the
proceedings pending before the DRT in S.A. No. 46 of 2022. However,
the same would not mean that the decision of this Court in the Main
Appeal was bereft of any direction as to the outcome of its findings.
This Court in the operative portion of the Main Appeals stated in
unequivocal terms that the confirmation of the sale by Bank under
Rule 9(2) of the SARFAESI Rules had vested the petitioner herein
with a right to obtain the certificate of sale of the Secured Asset. It
further held categorically that the Borrower herein could not have
redeemed the mortgage upon publication of the 9th auction notice.
Furthermore, this Court explicitly directed the Bank to not only issue
the Sale Certificate to the petitioner herein in accordance with Rule
9(6) of the SARFAESI Rules but also directed the refund of the amount
[2024] 12 S.C.R. 1731

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

of Rs. 129 crore paid by the Borrower. Moreover, the impugned order
of the High Court had been set-aside by this Court in toto. As already
discussed in paragraph 154, the natural corollary to the aforesaid was
that the judgment and order dated 21.09.2023 of this Court in Civil
Appeals Nos. 5542-5543 of 2023 had held as under: -
(i) The auction proceedings and the sale conducted thereto in
favour of the petitioner herein pursuant to the 9th auction notice
dated 12.06.2023 had been categorically affirmed and upheld.
(ii) After having directed the issuance of the Sale Certificate in
terms of Rule 9(6) of the SARFAESI Rules, nothing remained
thereafter, as issuance of sale certificate is absolute and as such
the proceedings before the DRT had been rendered infructuous.
(iii) Having directed not only the issuance of the Sale Certificate to
the Secured Asset but also the refund of the amount paid by the
Borrower, towards redemption of mortgage, necessarily entailed
that the Borrower was duty bound to return the possession and
title deeds of the secured asset to the Bank for the purpose of
handing the same over to the petitioner.
(iv) Having set aside the impugned order passed by the High Court in
toto rendered any and all acts done pursuant thereto as null and
void, and the Borrower and the Subsequent Transferee herein
were required to get the Release Deed and the Assignment
Agreement dated 28.08.2023 cancelled.
(v) Having expressly directed the issuance of the Sale Certificate it
necessarily excluded all other inconsistent and contrary rights
and reliefs including the right to pursue the DRT proceedings
in view of the maxim Expressio Unius Est Exclusio Alterius.
205. Where a decision is rendered and the impugned order is set-aside, it
behoves any logic that an express direction to act must be given in
respect of every aspect of the decision. The parties are duty bound
to act in accordance with common sense. It is axiomatic that a party
should obey both the letter and the spirit of a court order, and it is
neither open for the parties to adopt a myopic and blinkered view
of such decision nor any such interpretation or view that sub-serves
their own interests. It is ultimately the purpose for which the order
was granted that will be the lodestar in guiding the parties as to the
true effect of the order and determination of the court.
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206. If at all the parties are in doubts over the judgment and order of a
court, the correct approach is to prefer a miscellaneous application for
seeking clarification rather than proceeding to presume a self-serving
interpretation of the decision. At this stage, we may also explain the
correct approach to be adopted by the other courts and forums where
a party seeks to espouse a cause based on its own understanding or
interpretation of a decision of an higher authority. In such situations,
the courts or forums should neither aid the parties in their attempt
to reinterpret the decision of a higher court nor should they embark
on an inquisitorial exercise of their own in order to derive the scope
or intent of the order in question. The courts and tribunals should
not conflate a decision of a higher court that declares a law with a
decision that declares the inter-se rights of a parties, the former only
operates as a precedent and thus, it is open for the lower courts to
apply their minds to assess whether the same is applicable to the
issues before it or what law has been laid down therein. However,
the latter not only has precedential value but also carries with it the
weight of determination of the issues directly involved between the
very parties before it, the subject-matter itself and by extension the
entire cause of action. Since such decisions have directly decided or
given a finding on the inter-se rights and issues of the same parties
that are before it and as such has to a certain extent a direct and
palpable effect on the cause of action before it, in such circumstances,
the courts and tribunals should refrain from interpreting or examining
the scope or effect of such decisions on their own as the same would
amount to relitigating the very same issues and rather should relegate
the parties to seek clarification from the court that passed the order
and adjourn further proceedings sine die.
207. We further take note of the fact that both the Borrower and the
Subsequent Transferee made several attempts to prevent the effective
implementation of the judgement and order dated 21.09.2023 passed
by this Court and thereby thwart the attempts of the Bank to hand
over the physical possession and the original title deeds of the
Secured Asset to the petitioner.
(i) First, both the Borrower and the Subsequent Transferee addressed
a letter to the MIDC in whose industrial area the Secured Asset
was situated asking them not to entertain any request from the
Bank or the petitioner regarding the transfer of the leasehold
rights of the Secured Asset in favour of the petitioner.
[2024] 12 S.C.R. 1733

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

(ii) Secondly, the Subsequent Transferee vide its letter dated
05.10.2023 even asked the Sub-Registrar Office, Nerul Thane
not to entertain any request of the petitioner regarding the
transfer of the Secured Asset.
(iii) The self-serving stance of the Borrower to initially contend that
it no longer had any role or authority over the secured asset
in view of its transfer and thus, cannot handover the physical
possession and the original title deeds to the same, yet in the
same breath filing an application seeking stay of the notice for
obtaining physical possession of the Secured Asset.
(iv) The police complaint lodged by the Subsequent Transferee
against the Bank by distorting the decision of this Court in the
Main Appeals and to thwart the attempts for its implementation.
(v) The patently false contention of the Subsequent Transferee
that it instituted the suit to prevent its unlawful dispossession
of the Secured Asset due to the alleged illegal attempts of
the petitioner to take the same forcefully yet, in the said suit
instead of seeking permanent injunction, the Subsequent
Transferee not only sought the relief of declaration of title in its
favour but also the invalidation of the Sale Certificate issued
to the petitioner, contrary to the decision of this Court in the
Main Appeals.
208. In the facts of the case, we are convinced that both the Borrower
and the Subsequent Transferee have committed contempt of this
Court’s judgment and order dated 21.09.2023 in the Main Appeals.
The aforementioned acts of the contemnors are nothing more than
a gamble on their part to circumvent and undermine the findings
and directions passed by this Court in the Main Appeals. Similarly,
the lame excuses offered by them for explaining their conduct are
also nothing more than a calculated attempt in the hope that they
would get away with legitimizing the illegal Assignment Agreement
even after the decision of this Court, and is equally contemptuous.
209. However, on an overall conspectus of the facts of the present case,
while the initial acts of the Borrower and the Subsequent Transferee
are in violation of this Court’s judgment and order dated 21.09.2023,
yet the efforts on their part to take steps and make amends by
withdrawing the Special Civil Suit No. 5 of 2024 along with their
belated unconditional undertaking to comply with any further order
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that this Court may deem fit and proper to pass, demonstrates their
effort and willingness to purge themselves of their contemptuous
conducts. Thus, we are inclined to provide one last opportunity to
the Borrower herein and the Subsequent Transferee to abide by the
judgement and order dated 21.09.2023 passed by this Court and
further comply with the directions issued in the present contempt
petition, and thus, deem it fit not to hold them guilty of contempt for
the present moment.

iv. Circumstances when a sale of property by auction or other
means under the SARFAESI Act may be set-aside after its
confirmation.
210. We must also address one very important aspect as regards when
the sale of secured asset either by auction or any other method
under the SARFAESI Act may be challenged or set-aside after its
confirmation.
211. In B. Arvind Kumar v. Govt of India & Ors. reported in (2007)
5 SCC 745 this Court whilst dealing with a plea to set-aside the
sale of the property therein by way of public auction by the official
receiver, it was held that when the sale is confirmed by the court, the
sale becomes absolute and therefrom the title vests in the auction
purchaser. The relevant observations read as under: -
“12. [...] When a property is sold by public auction in
pursuance of an order of the court and the bid is accepted
and the sale is confirmed by the court in favour of the
purchaser, the sale becomes absolute and the title
vests in the purchaser. A sale certificate is issued to the
purchaser only when the sale becomes absolute. The
sale certificate is merely the evidence of such title. It
is well settled that when an auction-purchaser derives
title on confirmation of sale in his favour, and a sale
certificate is issued evidencing such sale and title, no
further deed of transfer from the court is contemplated
or required. In this case, the sale certificate itself was
registered, though such a sale certificate issued by a court
or an officer authorised by the court, does not require
registration. Section 17(2)(xii) of the Registration Act, 1908
specifically provides that a certificate of sale granted to
any purchaser of any property sold by a public auction
[2024] 12 S.C.R. 1735

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

by a Civil or Revenue Officer does not fall under the
category of non-testamentary documents which require
registration under sub-sections (b) and (c) of Section
17(1) of the said Act. We therefore hold that the High
Court committed a serious error in holding that the sale
certificate did not convey any right, title or interest to
plaintiff’s father for want of a registered deed of transfer.”
(Emphasis supplied)

212. In LICA (P) Ltd. v. Official Liquidator reported in (1996) 85 Comp
Cas 788 (SC) this Court held that the purpose of an open auction is
to get the most remunerative price with the highest possible public
participation, and as such the courts shall exercise their discretion
to interfere where the auction suffers from any fraud or inadequate
pricing or underbidding that too with circumspection, keeping in view
the facts of each case. The relevant observations read as under: -
“The purpose of an open auction is to get the most
remunerative price and it is the duty of the court to keep
openness of the auction so that the intending bidders
would be free to participate and offer higher value. If that
path is cut down or closed the possibility of fraud or to
secure inadequate price or underbidding would loom large.
The court would, therefore, have to exercise its discretion
wisely and with circumspection and keeping in view the
facts and circumstances in each case.”
(Emphasis supplied)

213. This Court in Valji Khimji (supra) held that once an auction is
confirmed the objections to the same should not ordinarily be allowed,
except on very limited grounds like fraud as otherwise no auction
would ever be complete. The relevant observations read as under: -
“11. It may be noted that the auction-sale was done after
adequate publicity in well-known newspapers. Hence, if
any one wanted to make a bid in the auction he should
have participated in the said auction and made his bid.
Moreover, even after the auction the sale was confirmed
by the High Court only on 30-7-2003, and any objection to
the sale could have been filed prior to that date. However,
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in our opinion, entertaining objections after the sale is
confirmed should not ordinarily be allowed, except on very
limited grounds like fraud, otherwise no auction-sale will
ever be complete.
xxx xxx xxx
29. [...] It may be mentioned that auctions are of two
types – (1) where the auction is not subject to subsequent
confirmation, and (2) where the auction is subject to
subsequent confirmation by some authority after the
auction is held. 30. In the first case mentioned above,
i.e. where the auction is not subject to confirmation
by any authority, the auction is complete on the fall of
the hammer, and certain rights accrue in favour of the
auction-purchaser. However, where the auction is subject
to subsequent confirmation by some authority (under a
statute or terms of the auction) the auction is not complete
and no rights accrue until the sale is confirmed by the said
authority. Once, however, the sale is confirmed by that
authority, certain rights accrue in favour of the auction-
purchaser, and these rights cannot be extinguished except
in exceptional cases such as fraud.”
(Emphasis supplied)

214. In Ram Kishun & Ors. v. State of Uttar Pradesh & Ors. reported in
(2012) 11 SCC 511 this Court although held that where public money
is to be recovered such recovery should be done expeditiously, yet
the same must be done strictly in accordance with the procedure
prescribed by law. However, this Court after examining a plethora of
other decisions further held that once the sale has been confirmed
it cannot be set aside unless a fundamental procedural error has
occurred or sale certificate had been obtained by misrepresentation
or fraud. The relevant observations read as under: -
“13. Undoubtedly, public money should be recovered and
recovery should be made expeditiously. But it does not
mean that the financial institutions which are concerned
only with the recovery of their loans, may be permitted
to behave like property dealers and be permitted further
to dispose of the secured assets in any unreasonable
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Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

or arbitrary manner in flagrant violation of the statutory
provisions.
xxx xxx xxx
28. In view of the above, the law can be summarised to the
effect that the recovery of the public dues must be made
strictly in accordance with the procedure prescribed by
law. The liability of a surety is coextensive with that of the
principal debtor. In case there are more than one surety
the liability is to be divided equally among the sureties for
unpaid amount of loan. Once the sale has been confirmed
it cannot be set aside unless a fundamental procedural
error has occurred or sale certificate had been obtained
by misrepresentation or fraud.”
(Emphasis supplied)

215. In PHR Invent Educational Society v. UCO Bank reported in (2024)
6 SCC 579 it was again reiterated that an auction-sale which stands
confirmed can only be interfered with when there was any fraud or
collusion, and entertaining of issues regarding the validity of such
auction would amount to reopening issues which have achieved
finality. The relevant observations read as under: -
“34. In our view, the High Court ought to have taken
into consideration that the confirmed auction-sale could
have been interfered with only when there was a fraud
or collusion. The present case was not a case of fraud or
collusion. The effect of the order of the High Court would
be again reopening the issues which have achieved finality.”
216. In V.S. Palanivel v. P. Sriram reported in 2024 INSC 659 this Court
again reiterated unless there are some serious flaws in the conduct
of the auction as for example perpetration of a fraud/collusion,
grave irregularities that go to the root of such an auction, courts
must ordinarily refrain from setting them aside keeping in mind the
domino effect such an order would have. The relevant observations
read as under: -
“36.14. This Court must underscore the well settled legal
position that once an auction is confirmed, it ought to be
interfered with on fairly limited grounds. (Refer: Valji Khimji
1738 [2024] 12 S.C.R.

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and Co. v. Hindustan Nitro Product (Gujarat) Ltd. (Official
Liquidator) MANU/SC/3408/2008 : 2008 : INSC:925
: (2008) 9 SCC 299 and Celir LLP v. Bafna Motors
(Mumbai) Private Limited and Ors. MANU/SC/1042/2023 :
2023:INSC:838 : (2024) 2 SCC 1). Repeated interferences
in public auction also results in causing uncertainty and
frustrates the very purpose of holding auctions. (Refer : K.
Kumara Gupta v. Sri Markendaya and Sri Omkareswara
Swamy Temple and Ors. MANU/SC/0213/2022 : 2022 :
INSC : 207 : (2022) 5 SCC 710). Unless there are some
serious flaws in the conduct of the auction as for example
perpetration of a fraud/collusion, grave irregularities that
go to the root of such an auction, courts must ordinarily
refrain from setting them aside keeping in mind the
domino effect such an order would have. Given the facts
noted above, we shall refrain from cancelling the sale or
declaring the Sale Deed as void. Instead, it is deemed
appropriate to balance the equities by directing the Auction
Purchaser to pay an additional amount in respect of the
subject property.”
(Emphasis supplied)

217. In the present lis, it is not the case of the Borrower herein that the
9th auction conducted by the Bank was a result of any collusion or
fraud either at the behest of the Bank or the Successful Auction
Purchaser herein. Aside from the lack of any 15-days gap between
the notice of sale and the notice of auction, no other illegality has
been imputed to the aforesaid auction proceedings. It is also not
the case of the Borrower that due to the absence of the aforesaid
statutory period, any prejudice was caused or that it was prevented
from effectively exercising its rights due to such procedural infirmity.
Despite a total of eight auctions being conducted by the Bank from
April, 2022 to June, 2023, not once did the Borrower express its
desire to redeem the mortgage. Even when the auction notice
came to be issued on 12.06.2023, the Borrower never intimated
that it was in process of redeeming the mortgage with the aid
of the Subsequent Transferee and that the auction be delayed
even though, as per the parties own submissions, they started
exploring the possibility of redeeming the mortgage and thereafter
transferring in June, 2023 itself. In such circumstances, given the
[2024] 12 S.C.R. 1739

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

fact that although the S.A. No. 46 of 2022 was still pending, yet
since there was nothing before this Court to doubt the validity of
the 9th auction, this Court in the Main Appeals confirmed the sale in
favour of the petitioner and brought the auction proceedings to its
logical conclusion by directing the issuance of the sale certificate.
The Borrower never raised the issue of the validity of the 9th auction
notice despite having sufficient opportunities to do so even after
the pronouncement of the decision in the Main Appeals, and that
such pleas are being raised only after the auction was confirmed
in favour of the petitioner, we find no good reason to interfere with
the 9th auction conducted by the Bank.
218. Any sale by auction or other public procurement methods once
already confirmed or concluded ought not to be set-aside or
interfered with lightly except on grounds that go to the core of
such sale process, such as either being collusive, fraudulent or
vitiated by inadequate pricing or underbidding. Mere irregularity
or deviation from a rule which does not have any fundamental
procedural error does not take away the foundation of authority
for such proceeding. In such cases, courts in particular should
be mindful to refrain entertaining any ground for challenging an
auction which either could have been taken earlier before the sale
was conducted and confirmed or where no substantial injury has
been caused on account of such irregularity.
219. In the present lis, apart from the want of statutory notice period,
no other challenge has been laid to the 9th auction proceedings
on the ground of it being either collusive, fraudulent or vitiated by
inadequate pricing or underbidding, thus, the auction cannot be
said to suffer from any fundamental procedural error, and as such
does not warrant the interference of this Court, particularly when
the plea sought to be raised to challenge the same could have
been raised earlier.
220. The aforesaid may be looked at from one another angle. Even if
the 9th auction were to be held illegal and bad in law by virtue of the
aforesaid S.A. No. 46 of 2022, it would not mean that the auction
purchaser would by virtue of such finding lose all its rights to the
secured asset, even after having the sale confirmed in its favour.
In this regard we may refer to the decision of this Court in Janak
Raj v. Gurdilal Singh & Ors. reported in AIR 1967 SC 608 wherein
it was held that even if a decree pursuant to which auction was
1740 [2024] 12 S.C.R.

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previously conducted was later set-aside, the successful auction
purchaser’s rights will remain unaffected and he would still be entitled
to confirmation of sale in its favour. The relevant observations read
as under: -
“27. For the reasons already given and the decisions
noticed, it must be held that the appellant-auction purchaser
was entitled to a confirmation of the sale notwithstanding
the fact that after the holding of the sale the decree had
been set aside. The policy of the Legislature seems to
be that unless a stranger auction-purchaser is protected
against the vicissitudes of the fortunes of the suit, sales
in execution would not attract customers and it would
be to the detriment of the interest of the borrower and
the creditor alike if sales were allowed to be impugned
merely because the decree was ultimately set aside or
modified. The Code of Civil Procedure of 1908 makes
ample provision for the protection of the interest of the
judgment-debtor who feels that the decree ought not to
have been passed against him. On the facts of this case,
it is difficult to see why the judgment-debtor did not take
resort to the provisions of O. XXI r. 89. The decree was
for a small amount and he could have easily deposited
the decretal amount besides 5 per cent of the purchase
money and thus have the sale set aside. For reasons
which are not known to us he did not do so.”
(Emphasis supplied)

E. FINAL ORDER
221. Before we close this judgment, we may address yet another
submission canvassed on behalf of the respondents herein. It was
contended by the Borrower and the Subsequent Transferee that the
petitioner herein having not prayed for the relief of physical possession
in the original proceedings cannot be permitted to expand the scope
of the said proceedings and now seek the relief which it previously
did not. In this regard, we may only refer to the decision of this Court
in Baranagore Jute Factory Plc. Mazdoor v. Baranagore Jute
Factory Plc. reported in AIR ONLINE 2017 SC 410 wherein it was
held the court not only has a duty to issue appropriate directions
[2024] 12 S.C.R. 1741

Celir LLP v. Mr. Sumati Prasad Bafna & Ors.

for remedying or rectifying the things done in violation of its orders
but also the power to take restitutive measures at any stage of the
proceedings. The relevant observations read as under: -
“... As held by this Court in Delhi Development Authority v.
Skipper Construction Co. (P) Ltd. and another, and going
a step further, the Court has a duty to issue appropriate
directions for remedying or rectifying the things done in
violation of the orders. In that regard, the Court may even
take restitutive measures at any stage of the proceedings.
[...]”
(Emphasis supplied)

222. Similarly, a Three-Judge Bench of this Court in the case of State
Bank of India & Ors. v. Dr. Vijay Mallya reported in 2022 SCC
Online SC 826, in clear terms said that apart from punishing the
contemnor for his contumacious conduct, the majesty of law may
demand that appropriate directions be issued by the Court so that
any advantage secured as a result of such contumacious conduct
is completely nullified. The approach may require the Court to
issue directions either for reversal of the transactions in question
by declaring said transactions to be void or passing appropriate
directions to the concerned authorities to see that the contumacious
conduct on the part of the contemnor does not continue to enure
to the advantage of the contemnor or anyone claiming under him.
223. In view of the aforesaid, we pass the following orders and directions: -
(i) The legality and validity of the 9th auction proceedings conducted
pursuant to the notice of sale dated 12.06.2022 is upheld. The
sale of the Secured Asset to the petitioner is hereby confirmed
and the title conferred through the Sale Certificate dated
27.09.2023 is declared to be absolute.
(ii) The Borrower and the Bank shall immediately take steps for
the cancellation of the Release Deed dated 28.08.2023 within
a period of one week from the date of pronouncement.
(iii) The Borrower shall also unconditionally withdraw the S.A. No.
46 of 2022 pending before the DRT within a period of one week
from the date of pronouncement.
1742 [2024] 12 S.C.R.

Supreme Court Reports

(iv) The Assignment Agreement dated 28.08.2023 is hit by lis
pendens and hereby declared void. The Subsequent Transferee
shall hand over the peaceful physical possession of the
Secured Asset along with its original title deeds to the Bank
within a period of one week from the date of pronouncement
of this judgment. In the event of any further hinderance or
any obstruction that may be caused by the Borrower or the
Subsequent Transferee while taking over the possession of
the property then in such circumstances the Bank shall take
the assistance of police.
(v) The Subsequent Transferee shall also withdraw the police
complaint dated 17.01.2024 lodged by it within a period of one
week from the date of pronouncement of this judgment.
(vi) We clarify that the Subsequent Transferee is not entitled to
recover the amount paid by it towards redeeming the second
charge over the Secured Asset or any other dues or amount
paid in respect of the same from the petitioner herein.
(vii) The Bank shall refund the amount of Rs. 129 crore paid by
the Borrower towards the redemption of mortgage without any
interest only after the aforesaid directions have been complied
to the letter and spirit.
(viii) The Subsequent Transferee is at liberty to recover the amount
paid by it towards the Assignment Agreement dated 28.08.2023
and any other amount from the Borrower by availing appropriate
legal remedy as may be available under the law.
224. Let this matter be notified once again before this Bench after a period
of two weeks to report compliance of the aforesaid directions.
225. There shall be no order as to costs.

Result of the case: Directions issued.

†
Headnotes prepared by: Bibhuti Bhushan Bose