The court affirmed that banks must comply with statutory requirements and not engage in arbitrary actions against successful auction bidders, protecting rights under Article 14.

JUDGMENT :

A.V. SESHA SAI, J.

1. The present writ petition under Article 226 of the Constitution of India is filed challenging the E-auction Sale Notice, dated 27.10.2023, issued by the 1st respondent under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (for short 'the Rules'), proposing to sell the mortgaged scheduled properties on 16.11.2023. The present writ petition is concerned only with Item Nos.2 and 3 of the impugned notification.

2. The respondent-Bank issued E-auction notice, proposing to conduct public auction for the subject properties on 12.09.2023. In the said auction, for Item Nos.2 and 3 of the notification, the petitioner herein emerged as the successful bidder and he paid 25% of the bid amount out of the total sum of Rs.1,50,32,000/- on 12.09.2023 and 13.09.2023. Vide letter, dated 13.09.2023, respondent-bank issued confirmation order and instructed the petitioner to pay the balance 75% on or before 27.09.2023. By way of representation, dated 27.09.2023, the petitioner herein requested the respondent-bank to grant extension of time by 45 days for depositing balance of 75% of bid amount. According to the petitioner, the respondents did not give any response to the said representation though the said representation was acknowledged. It is also stated that subsequently also a representation, dated 27.10.2023 was made with a request to grant time to deposit the balance amount. Vide letter, dated 31.10.2023, the respondent-bank cancelled the bid and forfeited 25% of the bid amount paid by the petitioner stating that as per the auction notice, the successful bidder ought to pay 75% of the bid amount within 15 days from the date of auction and despite 30 days extension i.e., till 31.10.2023, the petitioner herein did not pay the said 75% of the bid amount. Thereafter, the respondent-Bank issued impugned E-auction notice, dated 27.10.2023, proposing to auction the properties on 16.11.2023. In the above background, assailing the said E-auction Notice, dated 27.10.2023, the present writ petition came to be filed.

3. Resisting the writ petition, a counter-affidavit has been filed by the 1st respondent-Bank.

4. Heard Sri K. Satyanarayana Murthy, learned Counsel for the petitioner and Smt. V. Dyumani, learned Standing Counsel for the respondent-Bank, apart from perusing the material available on record.

5. It is contended by Sri K. Satyanarayana Murty, learned Counsel for the petitioner that the action impugned in the present writ petition is highly illegal, arbitrary, violative of Article 14 of the Constitution of India and opposed to the very spirit and object of the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 (for short 'the Act') and the Rules framed thereunder. In elaboration, it is further contended by the learned Counsel that the questioned action is also contrary to Rule 9 of the Rules and despite the fact that the petitioner herein made representations on 27.09.2023 and 27.10.2023 with a request to extend the period for depositing 75% of the bid amount, the respondent-bank authorities did not respond and on 31.10.2023, the petitioner was informed about the cancellation of the bid and forfeiture of 25% of the amount deposited by the petitioner.

6. According to the learned Counsel for the petitioner, the said intimation letter, dated 31.10.2023 is illegal, arbitrary and unreasonable. In support of his submissions and contentions, learned Counsel for the petitioner places reliance on the judgment of the Hon'ble Supreme Court in the case of Celir LLP v. Bafna Motors (Mumba