A SARFAESI sale is complete upon full payment and issuance of the Sale Certificate; registration is not essential.

The Appellant had obtained loan facilities of ₹15 crores and ₹10 crores from Respondent No. 1, secured by properties at Padegaon and Divanshi, Aurangabad. The loan accounts were classified as NPAs, followed by demand and possession notices under Sections 13(2) and 13(4) of the SARFAESI Act and an auction notice under the Security Interest (Enforcement) Rules, 2002 (“Rules”).

The DRT initially stayed the auction subject to a ₹1 crore deposit, and the Appellant thereafter submitted various OTS proposals.

In 2025, Respondent No. 1 issued a fresh sale notice and initiated insolvency proceedings against the Appellant. During the writ proceedings, the Single Judge recorded Respondent No. 1’s willingness, subject to approval by its competent authority, to settle the dues for ₹15 crores. The Appellant handed over a cheque for ₹9.92 crores and was directed to pay the balance ₹4.08 crores.

Respondent No. 1 subsequently issued a Letter of Approval dated 22.09.2025, but the cheque was dishonoured for insufficient funds when presented.

The DRT later permitted Respondent No. 1 to proceed with the sale but directed that the Sale Certificate should not be registered without its permission. Respondent No. 1 accepted a bid of ₹9.09 crores for the Padegaon property and issued a Sale Certificate dated 06.04.2026 in favour of the Auction Purchaser.

The Appellant thereafter made another ₹15 crore OTS proposal, which Respondent No. 1 rejected.

The Single Judge dismissed the writ petition, holding that the Appellant had misled the Court by tendering a cheque that was dishonoured, and granted Respondent No. 1 liberty to pursue damages. The contempt petition was disposed of after the Appellant tendered an unconditional and unqualified apology.

The Court applied Sections 13(2), 13(4) and 17 of the SARFAESI Act, under which a secured creditor may enforce security interests and the borrower may challenge such measures before the DRT.

Rule 9(4) of the Rules requires payment of the balance sale consideration within the prescribed period; where the entire consideration is timely deposited and the Sale Certificate is issued, the sale is not rendered incomplete merely because the certificate has not yet been registered.

Relying on E. Muthurathinasabathy v. Sri International, (2026) 6 SCC 749, the Court recognised that the borrower’s right of redemption may survive where the sale is not completed within the statutory framework, but distinguished that principle where the auction purchaser has timely paid the entire consideration.

The Court also relied on Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd., (2024) 2 SCC 1, which protects the rights accrued to an auction purchaser after compliance with the statutory sale requirements.

A conditional OTS does not become enforceable where its conditions are not fulfilled and the agreed consideration is not paid.

The Court held that E. Muthurathinasabathy was factually distinguishable because, in that case, only 25% of the sale consideration had initially been paid and the balance was deposited substantially later, whereas here the Auction Purchaser had deposited the entire ₹9.09 crore within the period prescribed by Rule 9(4), after which the Sale Certificate was issued.

The DRT’s direction requiring permission only for registration of the Sale Certificate did not restrain Respondent No. 1 from completing the sale or accepting the consideration; the sale remained subject to the outcome of the pending securitisation proceedings, but was not thereby incomplete.

The earlier OTS was conditional upon competent-authority approval and payment by the Appellant. Although a Letter of Approval was issued, the cheque handed over under the arrangement was dishonoured and the agreed OTS amount was not paid.

The subsequent OTS proposal was expressly rejected, so the Appellant could not claim that an OTS continued to govern the parties when the sale occurred.

The Court further found that the Appellant’s failure to produce or tender a demand draft for the amount allegedly payable undermined its asserted bona fides and that the dishonoured cheque justified the Single Judge’s finding that the Court had been misled.

The validity of the SARFAESI sale itself remained open for adjudication by the DRT and was not prejudiced by the appellate judgment.

It further held that the timely payment of the entire sale consideration by the Auction Purchaser and issuance of the Sale Certificate completed the sale for purposes of the present appeal; the pending registration did not preserve an automatic right of redemption or justify unsettling the sale.

The Court upheld the Single Judge’s acceptance of the Appellant’s apology in the contempt proceedings and the liberty granted to Respondent No. 1 to pursue appropriate proceedings, including a damages claim.

The judgment was clarified not to prejudice the pending S.A. No. 80/2021 or any other proceedings, which were to be decided independently on their merits.

No order as to costs was made.