Harshness of Consequences not a Ground to Read-Down a Provision: Supreme Court

Introduction:

The Hon’ble Supreme Court in Authorised Officer, Central Bank of India v. Shanmugavelu[1]adjudicated, inter alia, upon (i) whether the forfeiture of the earnest-money deposit under Rule 9(5)[2] of the SARFAESI Security Interest (Enforcement) Rules (“SARFAESI Rules”) can be only to the extent of loss or damages incurred by the Bank/secured creditor, in consonance with the underlying ethos of Sections 73 and 74 of the Indian Contract Act, 1872 (“Contract Act”)? In other words, whether, the forfeiture of the entire earnest money deposit under the SARFAESI Rules amounts to unjust enrichment?; and (ii) whether the principle of “reading down” of a provision should be employed even in situations where the provision, in its plain meaning, is unambiguous and valid, but results in an allegedly ‘harsh’ consequence.Continue Reading Harshness of Consequences not a Ground to Read-Down a Provision: Supreme Court

Introduction:

A division bench of the Hon’ble Supreme Court, comprising Hon’ble Chief Justice D.Y. Chandrachud and Justice J. B. Pardiwala in Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. and Ors[1] on September 21, 2023, held that a borrower only has right of mortgage redemption till the publication of auction notice under Section 13(8) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (“SARFAESI Act”). The Hon’ble Supreme Court analysed orders passed by various Hon’ble High Courts in interpreting the provisions of Section 13(8) of the SARFEASI Act, post the amendment in 2016 (“Amendment”) and the intent of the Amendment.Continue Reading Section 13(8) of SARFAESI Act: SC settles conundrum on right of redemption of borrower