The duty of the secured creditor to disclose encumbrances and other material factors in the sale notice to enable intending purchasers to make informed decisions.

1. On consent, the writ petition is taken up for final hearing.

2. The relief sought for in this writ petition is for issuing appropriate direction to the second respondent/State Bank of Mysore to refund the sale advance of Rs.25,20,000/- paid to the schedule mentioned property on 11.3.2010.

3. The brief facts which are relevant for consideration herein are as follows:

The third respondent borrowed money from the second respondent bank and the property belonging to the third respondent was mortgaged in favour of the bank as security for repayment of the amount. The third respondent defaulted in discharge of its liability resulting in bringing the property for sale and tender cum auction sale notice was issued in the newspaper on 27.1.2010. The petitioner herein participated in the bid and was declared as the successful bidder for an offer of Rs.1,00,95,000/-. Pursuant to the same, the petitioner has paid a sum of Rs.17,18,352/-towards 25% of the sale consideration and the time was given to the petitioner for paying the balance sale consideration of Rs.75,75,000/- on or before 26.3.2010. In the mean while, the petitioner applied for encumbrance certificate in respect of the property on 18.3.2010 and the encumbrance certificate was obtained on the same date, which reveals the subsistence of order of attachment upon the property by sales tax authorities for the tax arrears due from the third respondent which compelled the petitioner to apply to the authorised officer of the second respondent bank on 26.3.2010 seeking further time to clear the doubts arising due to the order of attachment regarding the validity of auction sale. The second respondent bank on receipt of the representation dated 26.3.2010 replied the petitioner on 27.3.2010 in and under which, the petitioner was advised to remit the balance amount immediately. The petitioner has instead of making further payment, come forward with this writ petition for the relief as stated supra.

4. The writ petition was filed on 29.3.2010 for the refund of sale advance along with M.P.No.1 of 2010 seeking an order of ad-interim injunction. This court on 30.3.2010 in M.P.No.1 of 2010 ordered status quo as on date to be maintained.

5. According to the learned senior counsel for the petitioner, the petitioner came to know about the encumbrance by way of order of attachment upon the property and the same is only after he was declared as successful bidder and after he having paid advance amount of Rs.25,20,000/-and the second respondent bank ought to have disclosed the encumbrance upon the property which was within the knowledge of the respondent bank on the date of issuance of tender cum auction sale notice and on the date of sale, the second respondent ought to have made the copy of encumbrance in respect of the property in question available so as to enable the participants to know about the same. It is but necessary for them to decide to participate in the auction. The failure of the second respondent to disclose the same in the auction or to make available relevant documents relating to the order of attachment on the date of inspection of the documents in the office of the second respondent bank, has made the petitioner to participate in the auction and to part with huge amount of advance. Had the petitioner been aware of the encumbrance upon the property on the date of inspection, he would not have participated in the bid and he is hence entitled to get refund of his advance money.

6. Per contra, the learned counsel for the second respondent bank would seriously oppose the alleged claim of the petitioner both in law and on facts. The legal objection raised by the learned counsel for the second respondent is against the maintainability of this writ petition. It is contended by the learned counsel for the second respondent that the statutory remedy available to the petitioner is to approach the Debt Recovery Tribunal under the relevant provision of SARFAESI Act and the w