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ABHAY S. OKA, UJJAL BHUYAN
Salil R. Uchil – Appellant
Versus
Vishu Kumar – Respondent
JUDGMENT
ABHAY S. OKA, J.
1. Leave granted.
FACTUAL ASPECT
2. The 4th respondent is a Co-operative Bank. The 1st, 2nd, 5th and 6th respondents had taken a business loan of Rs.25,00,000/- from the 4th respondent. 7th to 9th respondents guaranteed re-payment of the said loan.
3. As the 1st, 2nd, 5th and 6th respondents committed defaults in payment of instalments, the 4th respondent bank filed a dispute before the 3rd respondent for recovery of the loan amount with interest. The 3rd respondent is the Assistant Registrar of Co-operative Societies and Recovery Officer. The dispute was allowed. The 4th respondent was held entitled to a sum of Rs.21,92,942/- with further interest and costs from the borrowers. In recovery proceedings, on 10th June 2019, a sale proclamation was issued by the 3rd respondent for the sale of property held by the 1st and 2nd respondents. The value of the property subject matter of auction was fixed at Rs.80,67,500/- . The sale proclamation of the auction sale fixed on 22nd July 2019 was published in the local newspapers on 4th July 2019. In the auction sale, the highest bid of Rs.81,20,000/- offered by the appellant was accepted. A sale confirmation certificate was
The court established that an auction purchaser is entitled to interest on the auction amount when delayed refunds occur due to no fault of their own.
Interest on delayed payment is not a penalty but an equitable right, and should be calculated from the date of rejection of the writ petition.
Court upheld the validity of bank's actions under cooperative law, ruling that delayed challenges based on fraud were insufficient; commercial agreements should be honored.
Once auction sale is set aside, all consequent developments will have to be undone.
The High Court cannot entertain a writ petition under Article 226 when an effective alternative remedy exists under the SARFAESI Act, emphasizing the need for exhaustion of statutory remedies.
Borrower must be informed about date of auction of secured asset.
The court affirmed that procedural infractions in auction proceedings under the SARFAESI Act do not invalidate the auction unless they result in injustice.
The bank cannot negotiate a sale with the second highest bidder without conducting a fresh auction if the highest bidder fails to comply with auction conditions.
The appellate authority must provide a reasoned decision and consider all relevant materials presented in cases regarding loan recovery under cooperative societies' laws.
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