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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
A. Rajashekar Reddy, T. Vinod Kumar, JJ.
Rayalapuram Raja Reddy, S/o R. Narsimha Reddy – Petitioner
Versus
State Bank of India, Stressed Assets Management Branch II – Respondent
Writ Petition No.2990 OF 2020
Decided On : 29-01-2021
Debt, Financial and Monetary Laws - Securities Interest Act, 2002 - Security Interest (Enforcement) Rules, 2002 - Rule 9(3) - Enforcement Rules - Rule 9(4) and 9(5) – Constitution of India, 1950 - Article 226 - Bank – Bid – E-Auction - Time of sate, issues of sale certificate and delivery of possession, etc – Seeks to issue a writ of Mandamus declaring notice in forfeiting amount received from petitioner by not finalizing e-auction having received a sum of Rs.63,00,000/- by not receiving balance amount of Rs.47,00,000/- out of total bid amount and issuing Sale Certificate for property being non-agricultural land, as illegal and arbitrary and alternatively direct respondent to pay amount deposited by petitioner with interest - Petitioner had taken part in e-auction conducted by respondent bank in respect of non-agricultural land and was declared as a successful bidder - Whether petitioner has complied with terms and conditions of e-auction held - Whether adhoc payments made by petitioner beyond time specified in sale confirmation advice can be considered as valid payment and is in accordance with Rule 9(4) of Enforcement Rules - Whether action of respondent bank in forfeiting payment made by petitioner due to failure to make balance payment within period stipulated is valid ?
Finding of the court: Absence of respondent bank agreeing to extend period for making payment of 75% of bid amount up to three months in writing as stipulated in Rule 9(4) of enforcement rules, payment made by petitioner itself cannot be considered as payment towards bid amount, being made after expiry of 15 days period specified in sale conformation advice date - Further, upon such default by petitioner in making balance payment within time prescribed, respondent bank is free to bring the subject property for resale again under Rule 9(5) of Enforcement Rules and even amount of 25% paid by petitioner had become liable for forfeiture at hands of respondent bank - action of respondent bank in issuing notice forfeiting amount deposited by petitioner cannot be found fault with - Payments made by petitioner are concerned, respondent bank is liable to refund same to petitioner - Since, petitioner had remitted same into respondent bank EMD general pool account on his own accord and respondent bank had retained such amounts with out remitting back same to petitioner immediately, thereby depriving petitioner of making use of said funds, respondent bank is liable to refund same to petitioner along with interest at rate of 8% per annum from date of respective payment, till amount is refunded to petitioner by way of credit to his account or by issuing a demand draft/ banker's cheque to petitioner.
Result: Writ petition is disposed of.
ORDER :
T. Vinod Kumar, J
This writ petition under Article 226 of the Constitution of India is filed with the following prayer:
2. Heard learned counsel for the petitioner and learned counsel appearing for the respondent – bank. Perused the record.
3. The fulcrum of the petitioner’s case is that, the petitioner had taken part in the e-auction conducted by the respondent bank on 17.08.2018, in respect of non-agricultural land admeasuring Ac.0.11 gts in Sy.No.124, situated at Athvelly Village, Medchal Mandal, Medchal-Malkajgiri, Ranga Reddy District, and was declared as a successful bidder. Though, the petitioner had made substantial payment towards the bid amount, and is willing to perform his part of obligation by making balance payment, the respondent bank is not willing to accept the same and execute the sale certificate in his favour. On the contrary the respondent bank is now seeking to forfeit the amounts remitted by the petitioner, under the pretext of not making the balance payment.
4. The brief facts of the case of the petitioner is that the respondent bank had brought to auction the subject property mortgaged in its favour for extending financial facilities to one M/s. B.S. Ltd., and the borrower having committed default in repayment of the financial facilities extended to it. It is the case of the petitioner that in the e-auction held on 17.08.2018, though the reserve price of the subject property was fixed at Rs. 26,00,000/-, the petitioner bid for the same in a sum of Rs.1,10,00,000/- was the highest and was thus declared as successful bidder. It is also submitted that, in order to participate in the said e-auction, the petitioner had initially on 14.08.2018 paid an amount of Rs.2,60,000/- being 10% of the reserve price as earnest money deposit (EMD). As the petitioner became the successful bidder in respect of the above property, the petitioner made further payment of Rs. 24,90,000/- on the following day viz., 18.08.2018, in all totaling to Rs. 27,50,000/- being the 25% of the bid amount as per the terms and conditions and in compliance of Rule 9(3) of the Security Interest (Enforcement) Rules, 2002 (in short “Enforcement Rules”). The main grievance of the petitioner is that though the petitioner paid 25% of the bid amount and is ready and willing to perform his part of the obligation, the respondent bank is not ready to issue sale certificate and deliver physical possession of the subject property by accepting the remaining 75% of the bid amount.
5. It is also submitted further remittances of Rs.15,50,000/- on 24.09.2018 and a sum of Rs.20,00,000/- on 18.01.2019 by way of RTGS and under a cheque, respectively were made by the petitioner towards the bid amount. Thus, it is claimed that, in all, the petitioner paid a sum of Rs.63,00,000/-in respect of the e-auction conducted and the respondent bank is only required to receive the balance sum of Rs.47,00,000/-, only, from out of the bid amount of the petitioner. Learned counsel would further submit that though the petitioner is willing to remit the balance amount of Rs.47,00,000/- to the respondent bank in respect of the auction of the scheduled property, even today, the respondent bank is not willing to come forward to accept the said payment by confirming the sale and i
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Bidders in a tender process must adhere to the terms and conditions outlined in the auction documents; failure to comply justifies cancellation of bids and forfeiture of earnest money.
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