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N. V. ANJARIA, K. V. ARAVIND
Canara Bank, ARM-1 Branch, Represented by Its Senior Manager, Mr. B. Raviprasad – Appellant
Versus
Subramanya Rao K. , S/o. Late K. Narayana Rao – Respondent
JUDGMENT :
N.V. Anjaria, C.J.
Heard learned Advocate Mr. Shetty Vignesh Shivaram for the appellant, learned Senior Advocate Mr. Aditya Sondhi with learned Advocate Mr. A.S. Ravikumar for respondent Nos.1 and 2 appearing on caveat, at length.
2. The appellant herein is the Canara Bank-original respondent No.1 in the writ petition filed by the respondents herein. The appellant-Bank has challenged the judgment and order dated 12th January 2024 passed by learned Single Judge.
2.1 Allowing the petition in part, a mandamus came to be issued to the respondent-appellant Bank to refund the amount of Rs.3.25 crores to the petitioner. It was directed to pay the interest on the said amount if the Bank fails to provide the details of second auction and confirmation of sale in favour of the auction purchasers, to the petitioner.
3. The facts in the back drop may be noticed in a nutshell. The appellant Bank conducted e-auction on 29th November 2021 of the property described as No.19, 11th Cross, Wilson Garden, Bengaluru. The auction was conducted by the appellant Bank under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, seeking t
Rule 9(5) of the SARFAESI Act mandates forfeiture of earnest money for non-payment of the balance auction price, overriding general contract law principles.
Rule 9(5) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is directory in nature, and forfeiture is justified only to compensate for the pa....
The excess amount paid by the petitioner, beyond 25% of the bid amount, could not be considered as a deposit under Rule 9, and any retention of amount by the respondent without authority of law would....
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.
The SARFAESI Act mandates strict adherence to auction payment timelines, allowing forfeiture of deposits for non-compliance.
Forfeiture of EMD under Rule 9 of SARFAESI Rules is impermissible during a binding judicial stay, as it violates natural justice and can lead to unjust enrichment.
Borrower must be informed about date of auction of secured asset.
The main legal point established in the judgment is that the confirmation of sale by the secured creditor is essential, and in the absence of such confirmation, no default can be attributed to the bi....
(1) Auction sale of secured asset – Forfeiture of earnest money deposit – Consequence of forfeiture of 25% of deposit under Rule 9(5) of SARFAESI Rules is a legal consequence that has been statutoril....
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