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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
APARESH KUMAR SINGH, G.M.MOHIUDDIN
K.P. Sai Pavan – Appellant
Versus
Union Bank Of India – Respondent
ORDER :
Heard Sri Anil Kumar, learned Senior Counsel appearing for Sri Mohammed Aameruddin, learned counsel for the petitioner and Sri B.S.Prasad, learned Senior Counsel appearing for M/s.Pearl Law Associates for the respondent-bank and perused the record.
2. This writ petition is filed under Article 226 of the Constitution of India, with the following prayer:-
“……….to issue an appropriate writ, order or direction, more particularly a writ in the nature of mandamus declaring Sub- Rule (4) and (5) of Rule 9 of the Security Interest (Enforcement) Rules, 2002 to the extent of automatic forfeiture of the 25% amount paid towards EMD by the Auction Purchaser as illegal, arbitrary, against the principle of nature justice and violative of the fundamental rights of the petitioner under Article 14, 19(1)(g) and 300 (A) of the Constitution of India and pass such other order or orders as this Hon'ble court may deem fit and proper in the interest of Justice.
Or
On the alternative read down the forfeiture fault attributable to the Auction purchaser and consequentially set-aside notice/email correspondence dated 21.02.2023 forfeiting the 25% EMD paid by the Petitioner for the schedule property i.e. Re
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.
The SARFAESI Act mandates strict adherence to auction payment timelines, allowing forfeiture of deposits for non-compliance.
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.
Rule 9(5) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is directory in nature, and forfeiture is justified only to compensate for the pa....
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....
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
The court held that when a statute provides specific remedies, writ jurisdiction under Article 226 should not be exercised, affirming the precedence of statutory procedures over equitable remedies.
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