Can the borrower pay the loan and get the property back after the auction?

Generally no. Under s.13(8), as amended in 2016, the right to redeem ends on publication of a valid sale notice (Celir LLP v. Bafna Motors, 2023; M. Rajendran v. KPK Oils, 2025). The borrower can still challenge the sale at the DRT, and if the sale is set aside, a court may allow redemption again.

What is the time limit to challenge a SARFAESI auction at the DRT?

45 days from the date of the measure complained of (s.17(1)). The DRT should decide within 60 days, extendable to four months in all (s.17(5)).

Is my deposit safe if the DRT stays the sale?

The deposit stays with the bank while the stay operates; most sale notices say it is held without interest and the sale certificate will not issue until the stay ends. If the sale is finally set aside, the remedy is a refund.

Can a confirmed bank auction be cancelled?

Yes, if the process was legally defective. In 2026 the Supreme Court set aside a confirmed sale where the balance was paid after the fifteenth day without a written extension, holding Rule 9 mandatory (M.R. Vasumathi, 2026), and held in another case that confirmation alone does not put a sale beyond scrutiny (E. Muthurathinasabathy, 2026).

Does a borrower have to deposit money to appeal to the DRAT?

Yes. A borrower appellant must deposit 50% of the debt claimed or determined, whichever is less; the DRAT may reduce it to not less than 25% (s.18(1), provisos).

What happens to an auction if the borrower company goes into insolvency?

If the insolvency process begins before the buyer has paid in full and received the sale certificate, the moratorium can stop the bank from completing the sale (IBC s.14(1)(c); Indian Overseas Bank v. RCM Infrastructure, 2022).

The law and the process

The Borrower’s Right to Redeem, and What a Challenge Can Still Do

Auction Dunia · Law and portal facts checked as of 19 October 2026 · 9 min read

The short answer

Under the SARFAESI Act, the borrower can stop a sale by paying the full dues only until a valid sale notice is published; after that the right to redeem ends (s.13(8), as amended in 2016; Celir LLP v. Bafna Motors, Supreme Court, 2023). What remains is a challenge to how the bank ran the process, made to the Debts Recovery Tribunal under s.17, and a successful challenge can still undo a sale — even after confirmation.

Key points

Redemption ends on publication of a valid sale notice, not on the auction day or on confirmation (s.13(8); Celir LLP v. Bafna Motors, SC, 2023; M. Rajendran v. KPK Oils, SC, 2025).
“Valid” matters: the notice must be served and published as the Rules require, and the 30 days run from whichever of those steps was done last (Rule 9(1); Rajendran, 2025). A defective notice is what a challenge attacks.
Any person aggrieved — the borrower, a guarantor, a tenant, a co-owner — can apply to the DRT within 45 days of the measure complained of (s.17(1)).
Rule 9 deadlines after the auction are mandatory. In 2026 the Supreme Court set aside a sale where the balance came late without a written extension (M.R. Vasumathi, 2026), and another confirmed long after the auction (E. Muthurathinasabathy, 2026).
If a sale is set aside, the buyer’s remedy is a refund. Whether interest is added, and at what rate, is for the court to decide in each case.

What the right to redeem is

To redeem a mortgaged property is to pay off what is owed and free the property from the bank’s claim. Under the SARFAESI Act, if the borrower tenders the full dues, with the bank’s costs and charges, in time, the bank may not transfer the property and may take no further step to sell it (s.13(8)).

The question for a buyer is when “in time” ends. Before 2016, the section allowed the dues to be tendered at any time before the date fixed for the sale or transfer. The amended s.13(8), in force from 1 September 2016, ties it to an earlier point: the date of publication of the notice for public auction, quotations, tender or private treaty.

When the right ends: a valid sale notice

The Supreme Court has held that the borrower’s right of redemption is extinguished once the auction notice is published under Rule 9(1) (Celir LLP v. Bafna Motors, Supreme Court, 2023). In that case the borrower offered the dues after the auction, and the Court held the offer came too late.

In 2025 the Court added two refinements (M. Rajendran v. KPK Oils, Supreme Court, 2025). First, “publication” means a valid notice of sale: served on the borrower, published, affixed and uploaded as the Rules require, with the 30 days counted from whichever of those steps was done last. Second, the amended rule applies to loans taken before September 2016, where the claim was still alive and the auction notice was issued after the amendment.

Why this guide does not name an exact day

The Court itself noted a mismatch between s.13(8) and the Rules and asked the government to amend them. Pending any amendment, the safe statement is: the right ends on publication of a valid sale notice. Whether a particular notice was valid is exactly what a challenge tests.

So when a buyer asks whether the borrower can pay and take the property back after the auction, the answer is generally no — that right ended when the notice was published. What the borrower can do is challenge the sale at the DRT, and the usual grounds are procedural.

What a challenge at the DRT can still do

The Debts Recovery Tribunal (DRT) is the specialist tribunal that hears disputes about SARFAESI measures. Section 17 sets the route.

Who can apply: “any person (including borrower)” aggrieved by a measure under s.13(4) — taking possession, a sale, a lease. Guarantors, tenants and co-owners use it too (s.17(1)).
When: within 45 days from the date the measure was taken (s.17(1)).
What the DRT checks: whether the bank complied with the Act and the Rules (s.17(2)).
What it can order: declare the measures invalid, restore possession to the borrower or other applicant, and give other directions; or, if the bank complied, let it proceed (s.17(3), (4)).
How long: the DRT should decide within 60 days, extendable for recorded reasons to no more than four months in all; after that, a party may ask the Appellate Tribunal to direct a quicker decision (s.17(5), (6)).

The common grounds are procedural — a notice not served on every borrower, a sale notice published short of 30 days, a valuation or reserve price not fixed as Rule 8 requires. Some are substantive: the property is agricultural land, which the Act does not reach (s.31(i)), or an occupant claims a tenancy (s.17(4A)).

A borrower who goes straight to the High Court will usually be sent back to the DRT, because s.17 is an adequate alternative remedy (Celir LLP v. Bafna Motors, 2023).

A confirmed sale is not beyond question

Confirmation does not close the file. In 2026 the Supreme Court held that Rule 9 is mandatory and set aside an auction sale where the balance was paid after the fifteenth day without a written extension (M.R. Vasumathi v. Authorised Officer, 2026). The bank’s acceptance of the late payment did not cure it, and the guarantor’s heirs, who had challenged the sale, were allowed to redeem by paying the dues the Court fixed. In a second case, a sale confirmed long after the auction, while the borrowers had meanwhile cleared the dues, was also set aside; the Court held that confirmation alone does not put a sale beyond scrutiny, and the borrowers kept their property (E. Muthurathinasabathy v. Sri International, 2026, as reported).

The practical lesson is for the buyer’s own conduct after the win: pay the 25% (your EMD counts towards it) by the next working day, pay the balance by the fifteenth day of confirmation, and if more time is needed, get the extension in writing from the bank before day fifteen (Rule 9(3), 9(4)). The Rules allow up to three months only by written agreement; it is the bank’s decision, not an entitlement.

Stays, appeals and the money in between

A DRT can stay a sale, its confirmation or the issue of the sale certificate while it hears the application. Sale notices commonly say what happens then: no sale certificate issues while a stay operates, the deposit is held in a non-interest-bearing account, and no part of it is returned on request. Read the notice’s terms on this before bidding; they vary by bank.

How long a stay lasts varies with the tribunal, the case and any appeal; the four-month limit in s.17(5) is for the DRT’s decision, and an appeal can follow it. Either side may appeal to the Debts Recovery Appellate Tribunal (DRAT) within 30 days of receiving the DRT’s order (s.18(1)). A borrower who appeals must first deposit 50% of the debt claimed by the bank or determined by the DRT, whichever is less; the DRAT may reduce this, for recorded reasons, to not less than 25% (provisos to s.18(1)).

When the borrower enters insolvency

If the borrower or a mortgagor is a company and an insolvency process is admitted against it, a moratorium bars any action to enforce a security interest, including under SARFAESI (Insolvency and Bankruptcy Code s.14(1)(c)). A SARFAESI sale is complete only on full payment and the sale certificate (Indian Overseas Bank v. RCM Infrastructure, Supreme Court, 2022). In that case the insolvency began between confirmation and the final payment, and the bank could not complete the sale.

A personal guarantor to a company can trigger a similar interim moratorium by filing for insolvency (IBC s.96; those provisions are in force only for personal guarantors to companies), which matters where such a guarantor is also a mortgagor. This is why the litigation check before EMD includes the NCLT, not only the DRT and the civil courts.

If a sale is set aside

When a court or tribunal sets aside a sale for a defect in the bank’s procedure, the buyer’s remedy is a refund of what was paid. Whether interest is added, from when and at what rate, is at the court’s discretion in each case; it is not a fixed entitlement, and the property itself does not stay with the buyer.

A buyer cannot control how the bank ran the process before the auction, but can read it. A procedural audit before EMD — every notice, its service, its dates and the Rule 8 and 9 steps — tells you how exposed a sale is to challenge before your money is committed.

What the auction route cannot promise

A sale can be challenged at the DRT, and a stay can land after you have won; while it operates, the sale certificate typically waits and the deposit earns no interest under most notices’ terms.
A confirmed sale can still be set aside for a procedural defect, including a late balance without a written extension; the remedy is a refund, not the property.
Interest on a refund is at the court’s discretion; no rate can be assumed.
An insolvency moratorium against the borrower or a mortgagor before full payment can stop the bank from completing the sale.

Questions buyers ask

Sources

Statutes, rules and judgments first. Checked as of 19 October 2026; the law and portal practice change, so confirm against the source before relying on a detail.

This guide explains the law and the process in general terms. It is not advice on any specific property; that belongs in a due diligence report on the property itself.

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