The main legal point established in the judgment is that under Rule 9 of the Security Interest (Enforcement) Rules, 2002, the bank's confirmation of the sale to the petitioner and notice of successful bid were necessary to establish default. Additionally, the court applied principles of equity and compensation to grant interest at a reasonable rate of 12% p.a. despite the absence of a specific provision for interest in the Act, Rules, or auction notice.

ORDER :

D.V.S.S.Somayajulu, J

This Writ Petition is filed for the following relief, as per the amendment permitted in I.A.No.1 of 2019 by order dated 25.07.2019:

“….to pass an order or orders or direction more particularly one in the nature of a writ of Mandamus declaring the action of respondent bank in not refunding the amount of Rs.98,07,650/- along with interest of 24% per annum deposited by the petitioner pursuant to the e-auction notices dated 12.07.2014, 19.07.2014 and 20.08.2014 as being arbitrary, illegal and in violation of the principles of natural justice and Article 14 and Article 21 of the Constitution of India and consequently direct the respondent Bank to refund the amount of Rs.98,07,650/- along with interest of 24% per annum and pass such other order or orders as this Hon’ble court may deem fit and proper in the circumstances of the case and interest of justice.”

2. The writ petitioner is seeking refund of the amounts deposited by him with the respondent bank. Respondent bank advertised for sale of certain immovable and movable properties. As the sale did not fructify for various reasons the petitioner is seeking refund of the amounts with interest.

3. This Court has heard Sri Challa Gunaranjan, learned counsel for the petitioner and Sri C. Subodh, learned counsel appearing for the respondents.

4. Learned counsel for the petitioner submits that e-auction was conducted for Item No.1, which is a house property bearing Door No.21/31, situated at Balaji Nagar, Kukatpally, Hyderabad; for Item No.2, which is a rice mill situated in Nadimpalem village, Prattipadu Mandal, Guntur District. For Item No.3 movable property (four pickup vans and three delivery vans) a separate auction notice was issued.

5. Learned counsel points out that as far as house property bearing Plot No.31 (Old D.No.21/31) is concerned a sum of Rs.57,88,900/- was paid by the writ petitioner. As the sale did not fructify this amount was returned only in January, 2019. Therefore, the writ petitioner seeks interest on this amount which is refunded. For Item No.2 rice mill learned counsel submits that e-auction notice was published on 19.07.2014 and the auction as held on 21.08.2014. Petitioner paid a sum of Rs.39,10,000/- on 21.08.2014. The respondent did not confirm the sale in favour of the petitioner as mandated in the rules and the e-auction terms. Therefore, further action could not be taken for payment of the balance. This sale also did not fructify and the petitioner is seeking refund of the amount with interest. As far as the movable properties are concerned a separate auction notice was published on 20.08.2014 for sale of the vans. The petitioner paid a sum of Rs.1,08,750/- but Sale certificate was not issued to the writ petitioner. Therefore, he is seeking refund of this amount also. It is also pointed out that the original borrower had resorted to litigation and also certain transfers with regard to item No.1 viz., the house Plot No.31. The Debt Recovery Tribunal, Hyderabad, has also issued direction to defer the issuance of the sale certificate. The borrower also gifted the property to his son, who in turn mortgaged the same to another party. This also complicated the issue according to the learned counsel thereby driving the petitioner to Court by filing this writ petition seeking refund of the amount with interest etc.

6. Respondent bank filed its counter and the learned counsel argued in line with what is stated in his counter. It is agreed that pursuant to the orders of this court money was refunded in so far as item No.1 is concerned. As far as Item No.2-rice mill is concerned it is argued that since the bidder-writ petitioner failed to pay the balance sale consideration as warranted under the rules, the amount deposited was forfeited. Even with regard to movables viz., the vans, it is contended that despite the sale confirmation being communicated the writ petitioner failed to pay the balance amount. Therefore, the amount paid by the writ