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IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.DHANABAL
A.Raja – Appellant
Versus
Indian Bank Represented By Its Manager – Respondent
JUDGMENT :
P. Dhanabal, J.
This Suit has been filed by the Plaintiff for the relief of recovery of money to the tune of Rs.1,59,77,500/- with interest @ 24% per annum and for costs.
2. The brief averments of the Plaint and reply Statement are as follows:-
The defendant is the bank, which lent loan to one M/s. Arun Agencies and the property in Plot No.45 and 46 measuring 49.412 cents in Old No.128/2 part, 128/3 part, Patta No.396, New S. No.128/2A1C and 128/2A1D of Kazhipattur Village, Kanchceepuram District now Chengalpattu District with a building admeasuring about 3500 sq. ft. belonged to M/s. Arun Agencies and two others has been mortgaged for the loan. The said loan availed by the borrower M/s. Arun Agencies has become ‘Non-Performing Asset [NPA]’ and thereby, the bank initiated proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act [SARFAESI Act] and brought the said property for sale through an auction on 03.03.2023. The Plaintiff had participated in the E-auction and he was a successful bidder for a sale consideration of Rs.3,79,10,000/- and paid a sum of Rs.94,77,500/- and the remaining amount is payable on or before 31.
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)
The excess amount paid by the petitioner, beyond 25% of the bid amount, could not be considered as a deposit under Rule 9, and any retention of amount by the respondent without authority of law would....
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.
Bank cannot forfeit auction bidder's deposit for premature sale confirmation despite DRT stay; DRT orders require reasons.
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.
(1) Auction sale of secured asset – Forfeiture of earnest money deposit – Consequence of forfeiture of 25% of deposit under Rule 9(5) of SARFAESI Rules is a legal consequence that has been statutoril....
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