IMPORTANT POINT
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 review should only intervene in exceptional cases with genuine grounds for extension.

JUDGMENT :

1. The instant petition is directed against a communication dated 13.02.2024 issued by the Chief Manager, Punjab National Bank to the petitioner stating that 25% of the sale price i.e., Rs.30.03 lakh deposited by him, has been forfeited, as he had failed to deposit the remaining 75% of the sale price within fifteen days i.e., by 11. 01.2024 from the date of confirmation of sale.

2. The facts necessary for disposal of the instant petition are as follows:

M/s Laxmi Food Products, a proprietorship concern of father of the petitioner had taken loan from the respondent-Bank. As there was default in re-payment of the loan, the respondent-Bank had proceeded to auction the mortgaged property. E-auction was held on 27.12.2023 in which the petitioner was the highest bidder for an amount of Rs.120.10 lakh. As per terms and conditions of e-auction, the petitioner deposited 25% of the bid amount (inclusive of earnest-money) on the next date i.e., 28.12.2023 whereupon the sale was confirmed by order dated 28.12.2023. The order confirming the sale specifically mentioned that the petitioner would be required to pay the remaining 75% of the sale price within fifteen days. The petitioner filed an application before the respondent-Bank on 11.01.2024 seeking seventy five days' further time to deposit the remaining 75% of the sale price. He stated in his application that he had applied to a Bank for a home loan. Since there was no approved building plan of the land, which was subject matter of auction nor any declaration under Section 143 of U.P. ZA and LR Act, therefore, delay had occurred in approval of the loan. He should, therefore, be granted further time so that he gets the loan sanctioned and would then be in position to deposit the remaining amount.

3. The aforesaid prayer of the petitioner was turned down by the Bank by sending him an e-mail. A copy of the said communication has been placed before us by learned counsel for the respondent-Bank and with regard to which, there is no dispute between the parties. The said communication is reproduced below:

“From: Circle Sastra Bijnore

Sent: 11 January 2024 07:14 PM

To: NISHANT KUMAR; nks01180@gmail.com

Cc: Circle Sastra Bijnore

Subject: RE: Your letter dt. 10.01.2024 for extension of time to deposit remaining sale amount

Attachments: Nishant_0001.pdf

4. Learned counsel for the petitioner submits that the Bank had the power to extend the time up to ninety days. The petitioner had applied for a loan and since it was not sanctioned, therefore, delay had occurred. It is submitted that in such circumstances, the decision of the Bank to forfeit 25% of the amount deposited by the petitioner is wholly illegal. He places reliance on Rule 9 of the Security Interest (Enforcement) Rules, 2002 framed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the Act’) in support of his contention.

5. On the other hand, learned counsel for the respondent-Bank submits that the time permissible for depositing the remaining amount was fifteen days from the date of confirmation of the sale. The said period was extendable at the discretion of the Bank provided there was justifiable ground and material to the said effect. It is urged that in the facts of the instant case, the Bank did not find any justifiable ground to extend the time limit.

6. Sub-rule (3), (4) and (5) of Rule 9, which are relevant, are extracted below:

“(3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again.

(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmatio