Supreme Court: The Division Bench comprising of M.R. Shah and B.V. Nagarathna, JJ., directed the Indian Bank to refund the 25% auction consideration forfeited by the bank after cancelling the proposed auction. The Bench stated that since no loss had been accrued by the bank in the subsequent auction, it cannot wrongly deny the release of disputed amount.
The Property in question had been auctioned by the respondent Bank under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Rules made thereunder. The petitioner being successful highest bidder had deposited 25% of auction sale consideration and was required to deposit the remaining 75% of the bid within the time stipulated in the auction notice. The petitioner despite the repeated reminders and relaxation of Covid-19 Pandemic failed to comply the terms and conditions accepted by her, which led the Bank to cancel the sale and forfeit the amount deposited.
Alleging high handedness of the respondent Bank in cancelling the sale and forfeiture of the amount deposited, the petitioner had approached the High Court of the judicature at M.P. seeking refund of the forfeited amount. However, noticing that the petitioner was given proper reminders and Covid 19 extension for the payment of remaining 75% amount of the bid, the High Court had dismissed the petition.
Considering the fact that though initially the appellant deposited 25% of the auction sale consideration, however, subsequently she could not deposit balance 75% due to COVID-19 pandemic, the Bench opined that the High Court ought to have allowed the refund of the amount deposited being 25% of the auction sale consideration.
Further, noticing that subsequently the fresh auction had taken place, the property had been sold and it was not the case of the respondent-bank that in the subsequent sale, lesser amount was received; the Bench opined that no loss was caused to the respondent-bank.
Accordingly, the appeal was allowed and the order of forfeiture of 25% of the amount of auction sale consideration was set aside. The Bench directed the respondent-bank to refund/return the amount earlier deposited by the appellant as the part auction sale consideration (minus 50,000/- towards the expenditure which were required to be incurred by the respondent Bank for conducting the fresh auction) within a period of four weeks.
[Alisha Khan v. Indian Bank (Allahabad Bank), C.A. No. 007680 – 007681 of 2021, decided on 13-12-2021]
Kamini Sharma, Editorial Assistant has put this report together
For the Appellant: Mithan Lal Gupta, Advocate, Vipin Gupta, Advocate and Mohan Lal Sharma, AOR
For Respondent(s): Ashish Rana, AOR