Pending Registration Of Sale Certificate Does Not Mean SARFAESI Sale Is Incomplete: Delhi High Court

On 3 September, the Delhi High Court held that the mere pendency of registration of a Sale Certificate does not by itself render a sale under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) incomplete.

A Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia dismissed an appeal filed by Patil Constructions against the Single Judge's order dated 23 July 2026, which had dismissed its writ petition after finding that the company had misled the Court by tendering a cheque that was later dishonoured. The judges held:

“We are, therefore, of the view that the mere pendency of registration of the Sale Certificate does not, by itself, render the Impugned Sale incomplete, nor can it be treated as equivalent to non-completion of the sale.”

The dispute arose from loan facilities of Rs. 25 crore availed by Patil Constructions from IFCI Venture Capital Funds against mortgaged properties. The loans were classified as non-performing assets on 31 July 2019, following which IFCI issued a demand notice for Rs. 14.28 crore.

After possession and auction notices were issued, Patil Constructions pursued one time settlement proposals, including a settlement of Rs. 15 crore. Pursuant to a Court order, the company issued a cheque for Rs. 9.92 crore, which was later dishonoured for insufficient funds.

On 13 March 2026, the Debt Recovery Tribunal permitted IFCI to proceed with the sale but directed that the Sale Certificate should not be registered without its permission. The secured asset was subsequently sold for Rs. 9.09 crore, and the Sale Certificate was issued on 6 April 2026.

The High Court held that the Debt Recovery Tribunal's order only restricted registration of the Sale Certificate and did not restrain IFCI from completing the sale or accepting the sale consideration. It noted that the entire sale consideration had been deposited within the statutory period prescribed under Rule 9(4) of the Security Interest (Enforcement) Rules, 2002.

The Bench also upheld the finding that Patil Constructions had misled the Single Judge by tendering the dishonoured cheque. However, it found no infirmity in the Single Judge's decision to adopt a lenient approach after the company tendered an unconditional and unqualified apology. It observed:

“However, having regard to the unconditional and unqualified apology tendered on behalf of the Appellant, the learned Single Judge adopted a lenient view by taking the apology on record and cautioning the Appellant against repeating such conduct in future. We find no infirmity in the said approach.”

Accordingly, the High Court dismissed the appeal without costs, describing it as a “gross abuse of the process of law.”

For Appellant: Jayant Mehta, Sr. Adv. with Mr. Sidhika Nagrath, Mr. Jaivardhan Jeph, and Mr. Kishore Bhandari, Advs.

For Respondents: Nitin Dahiya & Mr. Muzammil Ahmed, Advs. Mr. Samar Bansal, Sr. Adv with Mr. Pushkar K. Sinha, Mr. Rajat Mahi, Ms. Anshuka Saxsena and M. Vedant Kapur, Advs.