The court upheld the forfeiture of a deposit by a bank as permissible under Rule 9(5) of Security Interest (Enforcement) Rules, due to the petitioner's default in timely payment.

ORDER :

1. The petitioner filed this writ petition seeking a writ of certiorari quashing the order at Annexure-A dated 30.09.2025 forfeiting the deposit amount of Rs.10,10,000/- deposited by the petitioner, and also sought a mandamus directing the respondent to consider the request of the petitioner and to execute a registered sale deed in favour of the petitioner.

2. Brief facts, leading rise to the filing of this writ petition are as follows:

The respondent-Bank has tendered ‘E’ auction notification. The petitioner participated in ‘E’ auction conducted by the respondent-Bank on 26.06.2025 and the petitioner was the successful bidder and petitioner deposited earnest money of Rs.4,00,000/- at the time of e-auction and deposited Rs.6,10,000/- being the 25% of the bid amount, totally the petitioner has deposited Rs.10,10,000/-. The respondent-Bank issued a confirmation letter of sale to the petitioner on 27.06.2025. The petitioner requested the respondent-Bank to extend the time for payment of remaining balance consideration amount. The respondent-Bank issued an impugned endorsement vide Annexure-A forfeiting the deposited amount of Rs.10,10,000/- without considering the request of the petitioner. Hence, this writ petition.

3. Heard the learned counsel for the petitioner and also the learned counsel for the respondent-Bank.

4. Learned counsel for the petitioner submits that pursuant to the e-auction notification, the petitioner participated in the e-auction and he was the successful bidder and he has deposited 25% of the bid amount. The petitioner could not deposit the balance amount within time. He submits that the petitioner submitted an application for extension of time to deposit the balance consideration amount. He submits that the respondent-Bank issued an impugned endorsement forfeiting the deposited amount. He submits that the action of the respondent-Bank in forfeiting the amount is arbitrary and erroneous. Hence, on these grounds, he prays to allow the writ petition.

5. Per contra, learned counsel for the respondent-Bank submits that the petitioner was supposed to deposit the balance consideration amount within 15 days from confirmation of sale of immovable property or such extended period. He submits that the petitioner has not deposited the amount within 15 days from the date of confirmation of sale. Hence, the respondent-Bank has rightly forfeited the deposited amount. The auction of the respondent-Bank is in accordance with the Security Interest (Enforcement) Rules, 2002 (for short ‘the Rules’). Hence, on these grounds, he prays to dismiss the writ petition.

6. Perused the records and considered the submissions of the learned counsel for the parties.

7. Is it is an undisputed fact that the respondent-Bank has put the property in auction, and issued a paper publication fixing the date for auction of the property in person on 26.06.2025. The petitioner participated in the auction proceedings and he was the highest bidder, and his bid was accepted. Accordingly, the petitioner has deposited earned EMD amount of Rs.4,00,000/-and at the time of e-auction, deposited Rs.6,10,000/-. Thus, in all, the petitioner deposited Rs.10,10,000/-. The Bank has issued a confirmation letter of sale vide letter dated 27.06.2025. The petitioner ought to have deposited the balance amount within 15 days from the date of confirmation of sale. In the default, the bank has got a right to forfeit the said amount.

8. To consider the case on hand, it is necessary to examine Rule 9 of the Security Interest (Enforcement) Rules, 2002, which reads as follows:

“9. Time of s