The court reaffirmed that failure to pay the balance purchase price within the specified time results in automatic forfeiture of the deposit, as mandated by the applicable rules.

JUDGMENT :

Muralee Krishna, J.

This writ appeal is filed under Section 5(i) of the KERALA HIGH COURT ACT ,1958, by the respondent in W.P.(C) No.20391 of 2023, challenging the judgment dated 18.12.2023 passed in that writ petition.

2. The respondents participated in the auction sale of the immovable property of M/s.Pushpa Diams, conducted by the appellant, invoking the provisions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ in short). They successfully bid at the auction for a sum of Rs.1,11,10,000/- and as stipulated deposited Rs.28,10,000/-, which is inclusive of the EMD, being 25% of the purchase price. The balance sale consideration of Rs.83,00,000/- has to be remitted by the respondents on or before 19.12.2021, i.e., within 15 days from the date of the sale confirmation. But the respondents could not remit the balance sale price within the stipulated time of 15 days. On 28.02.2022, the respondents requested the appellant to grant two months more time for payment of the balance sale price. But, by the letter dated 05.04.2022, the appellant informed the respondents that the e- auction sale held on 04.12.2021 in their favour is cancelled.

Thereafter, the respondents deposited the balance sale consideration on 13.05.2022, which was not accepted by the appellant. The respondents then filed W.P.(C)No.13868 of 2022 before this Court seeking a direction to confirm the sale in their favour after accepting the balance sale price. By Ext.P1 judgment dated 15.06.2022, this Court disposed of the writ petition directing the appellant to confirm the sale proceedings in favour of the respondents and issue and register the sale certificate. In pursuance to the said direction, the appellant issued Ext.P2 sale certificate in favour of the respondents. However, challenging Ext.P1 judgment, the borrowers filed writ appeal No.1045 of 2022 before the Division Bench of this Court and by Ext.P3 judgment dated 02.09.2022, the Division Bench allowed the writ appeal and set aside Ext.P1 judgment, declaring that all the consequential actions taken in pursuant to the Ext.P1 judgment are void. Thereafter, the respondents filed SLP (C) No.39363 of 2022 before the Apex Court, which was dismissed by Ext.P4 order dated 21.02.2023. The respondents then filed Ext.P5 representation dated 08.03.2023 before the appellant seeking release of the amount of Rs.1,11,10,000/- deposited by them. Complaining inaction on the part of the appellant in releasing that amount, the respondents filed W.P.(C)No.20391 of 2023 before this Court. By the impugned judgment dated 18.12.2023, passed along with some other writ petitions filed by the respondents, the learned Single Judge directed the appellant to refund the purchase price paid by the respondents within a period of two weeks. Being aggrieved, the appellant is now before this Court.

3. Heard the learned counsel for the appellant and the learned counsel for the respondents.

4. The learned counsel for the appellant would argue that as per the provisions under Rule 9 of the Security Interest (Enforcement) Rules, 2002, (‘the Rules, 2002’ in short), the purchaser of an immovable property shall deposit 25% of the sale price, which is inclusive of the earnest money deposit if any, to the authorised officer immediately after the sale. The balance purchase price shall be paid on or before the 15 days of confirmation of the sale or within the extended period as may be agreed upon in writing between the purchaser and the secured creditor, which shall in no case exceed three months. In case of default in paying the balance purchase price, within the period, the secured creditor is entitled to forfeit the deposit. In this case, since the respondents failed to pay the balance purchase price within time, the appellant is entitled to forfeit the 25% of the purchase price deposited by the respondents. This fact is made clear in Ext.P3 judgment of the Division Bench