Fraudulent actions by the borrower and GPA holder rendered the sale deed executed after the auction sale illegal and a nullity.

ORDER :

UJJAL BHUYAN, J.

Heard Mr. N. Ramappa, learned counsel for the petitioner; Mr. P. Hari Prasad, learned counsel for respondent No.1; Mr. G. Dinesh Patil, learned counsel for respondent No.4; and Mr. V. Madhusudhan Reddy, learned Government Pleader for Revenue for respondent No.6.

2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks a direction to the first respondent i.e., Life Insurance Corporation Housing Finance Limited to take steps for cancellation of registered General Power of Attorney (GPA) document No.5168 of 2014 dated 27.11.2014 and subsequent registered sale deed document No.3693 of 2020 dated 18.03.2020.

3. Case of the petitioner is that an auction sale notice was issued by the first respondent for sale of the schedule property by way of auction sale which was proposed on 27.02.2020. The sale notice was published in two daily news papers, one in Telugu i.e., “Eenadu” and the other in English “The Hindu” on 25.01.2020. Auction sale was proposed by the first respondent because of failure of the borrower to repay the loan amount. Details of the schedule property put up for auction sale are as follows:

“a semi finished house on plot No.21 part (south side), admeasuring 116 sq. Yards or 96.97 Sq.Meters in Sy.No.5/1, including with plinth area 1276 Sq. Fts. (R.C.C), situated at Cheeryal Village and Grampanchayat, Keesera Mandal, Medchal Malkajgiri District erstwhile Ranga Reddy District, Telangana State”.

4. Accordingly, the auction was conducted on 27.02.2020 in which the petitioner participated. Petitioner’s bid amount of Rs.13,10,005.00 was found to be the highest and accordingly petitioner was declared as the successful bidder by respondent No.1 vide letter dated 02.03.2020. It may be mentioned that petitioner had deposited 25% of the bid amount as earnest money deposit (EMD) prior to the auction sale which was Rs.3,31,005.00. Thereafter, petitioner deposited the balance 75% being Rs.9,79,000.00. Thus, petitioner paid the entire sale price of the auctioned property.

5. Though petitioner had affixed the sale confirmation letter dated 02.03.2020 at a conspicuous place of the schedule property on 05.03.2020, the same was found removed on the very next day i.e., on 06.03.2020.

6. On 16.03.2020 sale certificate was issued by respondent No.1 in favour of the petitioner. It is stated that on the advice of respondent No.1, petitioner had prepared a draft sale deed which was forwarded to the respondent No.1 but, the same was not registered.

7. On a visit to the site of the purchased property, petitioner found some unknown persons overseeing construction work there in. On being approached, they declared that they are the owners of the said property. In this connection, petitioner submitted complaints before respondent Nos.5 and 6.

8. Later on, after obtaining relevant documents in respect of the purchased property petitioner came to know that the said property was registered in favour of respondent No.4 through sale deed document No.3693 of 2020 dated 18.03.2020 executed by respondent No.3 as the GPA holder of respondent No.2. The sale deed was executed two days after issuance of the sale certificate on 16.03.2020 by the first respondent in favour of the petitioner. By it stated that respondent No.2 is the defaulting borrower for whose default the schedule property which was mortgaged by him with respondent No.1 had to be auction sold by respondent No.1 in which petitioner became the successful bidder.

9. On 28.05.2020 petitioner represented before respondent No.1 to take steps for cancellation of the registered sale deed and to get the draft sale deed registered in favour of the petitioner and thereafter to hand over the peaceful vacant possession of the property to him. Respondent No.1 in its reply dated 09.06.2020 while accepting payment of total sale consideration by the petitioner and issuance of sale certificate, however expressed its inability to register the sale deed in favour of th