Point of Law : Rule 8 of the Security Interest (Enforcement) Rules, 2002 provides for the manner of holding sale of immovable secured assets.

ORDER :

Calling in question the action of respondent No.1 in forfeiting a sum of Rs.24.10 lakhs deposited by him, petitioner is seeking direction to refund the same with interest thereon at 18% p.a., in this writ petition.

2. It is the case of the petitioner that one Sri.Jignesh N. Patel was the owner of immovable property bearing No.9/1, Old No.5, Khatha No.30/A of Nayandahalli, Mysore Road, Bengaluru. He obtained loan from respondent No.1-State Bank of Mysore (which has now been merged with State Bank of India) for his business purposes and by way of security he created mortgage on the aforementioned property at Nayandahalli, Mysore Road, Bengaluru. The loan having remained outstanding, respondent No.1 initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘SARFAESI Act’) and took over possession of the mortgaged property. The property was brought to sale for the recovery of outstanding loan and respondent No.1 issued a newspaper publication dated 15.10.2010 (as per Annexure-A). The petitioner having noticed the same, deposited the EMD of Rs.5,63,500/-in terms of Annexure-A and submitted his sealed tender. Same was accepted as per the communication of respondent No.1 dated 15.11.2010 for a sum of Rs.56,40,000/-. Accordingly, petitioner was directed to deposit 25% of the amount on the same date, which was inclusive of EMD amount already deposited by him. Thus, in all petitioner deposited a sum of Rs.24,10,000/-before respondent No.1.

3. Further as per the communication of respondent No.1 dated 15.11.2010 (Annexure-B) petitioner was required to deposit the balance amount of Rs.42,30,000/-by 30.11.2010. When he made enquiries in the Office of jurisdictional Sub-Registrar, he came to know that borrower had even before the sale notification dated 15.10.2010 alienated the property concerned in favour of his wife Smt.Naina J. Patel by executing a registered gift deed. Therefore, petitioner made a representation to respondent No.1 to get the gift deed executed by the borrower Sri.Jignesh N. Patel in favour of his wife annulled so as to avoid any dispute regarding the title of property which was going to be transferred to the petitioner as a successful bidder in the sale held by respondent No.1. However, respondent No.1 refused to do so and insisted on the petitioner to make full payment and subsequently forfeited the amount of Rs.24,10,000/-deposited by the petitioner. Aggrieved by the same petitioner has filed this writ petition seeking reliefs as aforesaid.

4. In support of his prayer petitioner advances the following contentions:

-Respondent No.1 has suppressed the fact in the sale notification (Annexure-A) that borrower was not having title over the property as mentioned therein and in fact it was Smt.Naina J. Patel, who was the owner of property as on the date sale notification was issued.

-Respondent No.1 was aware of the same in view of Smt.Naina J. Patel filing a writ petition in W.P.No.122/2008 against respondent No.1 in this writ petition and others.

-The liability of borrower to respondent No.1 was settled between them by means of One Time Settlement (OTS) and borrower has paid the same and the account was closed.

-Respondent No.1 has admitted the same in the affidavit dated 26.03.2022.

-Respondent No.1 has not suffered any loss or damage on account of non deposit of balance amount by the petitioner and therefore, respondent No.1 was not entitled to forfeit the sum of Rs.24,10,000/-deposited by the petitioner.

5. In support of above grounds the petitioner places reliance on the following decisions:

(1) W.P.No.15546/2011 -DD 01.06.2015 [E.Ali vs. Syndicate Bank and others]

(2) AIR 2010 SC 338 [Haryana Financial Corporation & Another vs. Rajesh Gupta]

(3) W.P.No.6354/2010 – DD 07.10.2010 – Madras High Court [Chemstar Chemicals & Intermediates (P) Ltd vs. The Commercial Tax Officer]

(4) W.P.No.27079/2009 – DD 12.07.2010 – Madras High Court [Jai Logis