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YASHWANT VARMA
Palwinder Kumar Kwatra – Appellant
Versus
Canara Bank – Respondent
JUDGMENT :
Yashwant Varma, J.
1. This petition has been preferred challenging the orders of 22 April and 10 June 2021 passed by the respondent Financial Institution, [FI]. By the order of 22 April 2021, the respondent FI had proceeded to apprise the petitioner here that consequent to a failure on its part to pay the balance 15% of the reserve sale price in accordance with the timelines fixed under Rule 9(3) of the Security Interest (Enforcement) Rules, 2002, [2002 Rules], it had taken a decision to cancel the sale of the mortgaged property and to forfeit the earnest money deposited by the petitioner amounting to Rs.41.80 lakhs. The communication further sets out the decision of the respondent to refund the amount of Rs.62.75 lakhs which had been additionally deposited. The 10 June 2021 order which is assailed, is in substance, a sale notice which had come to be issued in respect of the mortgaged property for which the petitioner had submitted a bid. For the purposes of disposal of the present writ petition the following essential facts would merit being noted.
2. The proceedings for the sale of the mortgaged property commenced pursuant to a notice issued on 26 February 2021. The reser
Point of Law : Court while it is true that the statute does mandate and envisage the deposit being made in accordance with the provisions made in sub-rule (3), this Court cannot shut its eyes to the ....
Court while it is true that the statute does mandate and envisage the deposit being made in accordance with the provisions made in sub rule (3), this Court cannot shut its eyes to the unprecedented s....
The SARFAESI Act mandates strict adherence to auction payment timelines, allowing forfeiture of deposits for non-compliance.
The extension of the time limit for depositing the remaining sale amount and the forfeiture of the deposit are governed by the agreement between the purchaser and the secured creditor, and judicial r....
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.
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.
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.
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