What is the length of right of redemption to a mortgagor under Sarfaesi Act?
Right of Redemption is a specific right guaranteed to a person who mortgages his property to another. In this right the mortgagor(one who mortgages property to another), may redeem his mortgaged property by paying off the entire mortgage money to the mortgagee(person to whom the property is mortgaged). The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'Sarfaesi Act' or 'the Act') is a special statute created mainly to protect the interests of financial institutions. The borrower/guarantor/third party may deposit the entire dues of the borrower and can avail the right of redemption. But the right of redemption arises only before the mortgaged property is transferred by the secured creditor. The process of Sarfaesi Act by which the secured creditor realises the liability is detailed in Section 13(4). If the borrower fails to discharge his liability in full within the time limit granted to him by way of a specific notice, the secured creditor may take possession of the secured assets including the right to transfer the same. It is implied in this provision that the secured creditor can transfer the assets to another. In Rule 8 of the Security Interest Enforcement Rules, 2002 it is stated that the secured creditor shall give a notice of thirty days in case of sale of properties. So the date of sale will be notified as per the notice.
As per Section 13(8) of the Sarfaesi Act the secured creditor shall not sell or transfer the secured asset if the entire dues have been paid to him at any time before the date fixed for sale or transfer. This means that the right of redemption of mortgage is clearly available to the secured debtor upto the date fixed for sale or transfer.
Various courts have taken the view that the right of the mortgagor to redeem his property is available until the purchaser obtains documents of title. Merely depositing the sale proceeds will not defeat the mortgagor's right of redemption. As per Sarfaesi rules, the secured creditor has to issue a sale certificate in favour of the purchaser in case of sale confirmation. Until the time this sale certificate is issued the borrower/mortgagor definitely gets the right to redeem his property.