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TAPABRATA CHAKRABORTY, PARTHA SARATHI CHATTERJEE
S. L. Ispat Private Limited – Appellant
Versus
Punjab National Bank – Respondent
JUDGMENT :
(Tapabrata Chakraborty, J.)
1. S.L. Ispat Private Limited (in short, Ispat) and its Managing Director, the appellants herein preferred a writ petition being WP 31344 (W) of 2014 challenging a notice/e-mail dated 7th October, 2017 by which the Authorized Officer (in short, AO) of Punjab National Bank (in short, the bank) forfeited an amount of Rs.1,70,80,250/- (Rs.99,18,000.00 + Rs.71,62,250.00) being 25% of the total bid amount as deposited by the appellants upon emerging to be successful in the e-auction conducted on 6th September, 2017 pertaining to the properties detailed under serial nos.5 and 6 of the public notice for e-auction dated 29th July, 2017. The said writ petition was dismissed by an order dated 4th January, 2018, which has been impugned in the present appeal.
2. The appellants’ case is that the AO of the bank published a public notice dated 29th July, 2017 inviting bids for sale of properties. The appellant no.2 visited the premises on 10th August, 2017 when he was informed by the security guards that the entire land including plant and machineries are the assets as detailed under serial nos.5 and 6 of the said notice and such fact was also confirmed and rei
Forfeiture of 25% bid amount under SARFAESI Rules 9(5) is mandatory on default, unaffected by higher subsequent sale or absence of loss; equity cannot override statutory provision. (28 words)
Bank cannot forfeit auction bidder's deposit for premature sale confirmation despite DRT stay; DRT orders require reasons.
A bank cannot proceed with auction proceedings after issuing a one-time settlement proposal unless it has revoked the proposal and the acceptance period has expired.
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.
A bank's misrepresentation of property details in an auction can invalidate the sale, and forfeiture of the deposit is unjustified if the sale is characterized by a lack of fair disclosure.
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.
The borrower's right to redeem the mortgage continues until the sale certificate is issued, and the OTS Policy applies retroactively, preventing the bank from proceeding with the sale.
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