The court ruled that a bank must deliver possession after auction payment and is liable to pay interest for undue delay, emphasizing legal and equitable obligations.

JUDGMENT :
Alok Kumar Sinha, J.

Heard the parties.

2. The appellant in the L.P.A. has prayed for following relief:

“(i) For directing the respondents, particularly the bank to pay interest on the principal amount of Rs.1,87,75,000/- (Rupees One Crore Eighty-Seven Lakhs Seventy-Five Thousand only) deposited by the appellant till the date of handing over the possession i.e., 19.06.2024 to 11.02.2025.”

3. The brief facts leading to the filing of the present Letters Patent Appeal are that the appellant herein, who was the writ petitioner before the Learned Single Judge, had participated in an e-auction conducted by the respondent Bank for sale of a mortgaged property. The appellant emerged as the highest bidder and accordingly deposited the entire sale consideration amounting to Rs.1,87,75,000/- (Rupees One Crore Eighty-Seven Lakhs Seventy-Five Thousand only) on 19.06.2024 in favour of the respondent Bank. The learned counsel for the appellant submits that despite payment of the entire sale consideration, the respondent Bank failed to hand over the physical possession of the property or execute the sale deed in favour of the appellant within a reasonable period of time, thereby depriving him of both possession and ownership rights for several months.

4. It is submitted by the learned counsel for the appellant that only pursuant to the interim order dated 05.02.2025 passed by this Hon’ble Court in CWJC No. 16777 of 2024, the Bank ultimately handed over the physical possession of the flat in question to the appellant on 11.02.2025. Thus, from 19.06.2024 till 11.02.2025, for a period of nearly eight months, the appellant was deprived of possession of the property despite having paid the entire sale amount. It is further contended that during this entire period, the respondent Bank continued to hold and utilize the substantial sum of Rs.1,87,75,000/- belonging to the appellant, without paying any interest thereon, which is wholly unjustified and arbitrary.

5. The learned counsel for the appellant submits that the Hon’ble Single Judge, while disposing of the writ petition, was pleased to direct the respondent Bank to execute the sale deed in favour of the appellant, which direction has since been complied with. However, the Learned Single Judge erred in rejecting the appellant’s legitimate claim for interest on the amount deposited, which had remained with the Bank for an unduly long period. The appellant’s grievance is confined solely to this part of the impugned order dated 29.04.2025 passed in CWJC No. 16777 of 2024.

6. It is contended by the learned counsel for the appellant that the Hon’ble Single Judge failed to properly appreciate that the Bank, after receiving the full bid amount, was under a legal and equitable obligation to hand over the possession and execute the sale deed without unnecessary delay. The failure to do so amounts to arbitrary and unreasonable conduct, causing financial loss and mental distress to the appellant. The counsel further submits that the appellant, having acted in good faith and deposited the full consideration under the bona fide belief that he would be handed over peaceful possession along with title transfer, has been wrongfully deprived of the use and enjoyment of both the property and his own funds for a considerable time.

7. It is further urged that the rejection of the claim for interest on the ground that the appellant had participated in the auction process is misconceived and contrary to settled principles of equity and justice. The learned counsel emphasizes that the Bank had enjoyed the benefit of the appellant’s funds for several months