In Brief
Bank of Baroda granted loans to Karwa Trading Company secured by mortgaged properties. After the borrower defaulted, the bank initiated foreclosure proceedings under the SARFAESI Act, 2002, and put the residential property up for public auction with a reserve price of Rs. 48.65 lakhs. The borrower applied to the debt recovery tribunal to stop the auction, and after deposit of that reserve price, was granted interim relief directing return of possession and title deeds. The High Court upheld this order. The Supreme Court held that under Section 13(8) of SARFAESI Act, mortgaged property cannot be released unless the borrower pays the entire outstanding dues (over Rs. 1.85 crores in this case) plus all costs and charges. Payment of reserve price or auction bids does not discharge the full debt. The Court allowed the bank's appeal, quashed the High Court order, restored the single judge's decision, and permitted the auction to proceed, while preserving the borrower's appeal before the debt recovery tribunal.
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