A bank as a secured creditor has a statutory and fiduciary duty to ensure the accuracy of the property extent in auction notices and must act with transparency; 'as is where is' clauses do not shield it from refunding proportionate bid amounts for deficient land extents caused by its own lack of due diligence.

The Court made the following order: (Per Hon’ble Sri Justice Ninala Jayasurya)

Karur Vysya Bank (herein after referred to as ‘the Bank’) issued E-Auction Sale Notice dated 24.11.2021 in respect of Commercial Factory Land and Building admeasuring Ac.1.10 cents in R.S.Nos.205/2A, 204/5 and 203 situated at Kodurupadu Village of Bapulapudu Mandal, Krishna District of M/s.Ramdev Industries Limited and Ac.1.95 cents in R.S.No.205/2A, 204/5 and 203 of Kodurupadu Village, Bapulapudu Mandal, Krishna District of M/s.Balakishan Bhararia. Out of the said total extent of Ac.3.05 cents, existing total site area for sale was notified as Ac.2.47 cents. The reserve price for Ac.2.47 cents was fixed at Rs.2,25,23,000/-.

2. The petitioner offered 56% higher price as against the reserve price Rs.2,25,23,000/- and was declared as a highest bidder. It deposited entire sale price amount of Rs.4,03,48,000/- and a Sale Certificate dated 25.01.2022 for an extent of Ac.2.47 cents was issued. However, on 28.03.2022 the Sale Certificate was registered for an extent of Ac.2.13 cents as against Ac.2.47 cents notified in the E-Auction Notice.

3. The petitioner vide Notice dated 16.04.2022 (Ex.P7) followed by a Legal Notice dated 30.05.2022 (Ex.P8), while pointing out the difference in the area which is actually proposed in the Auction Notice and the Registered Sale Certificate i.e., Ac.0.34 cents (Ac.2.47 cents – Ac.2.13 cents) requested the bank to refund the proportionate sale price of Rs.55,53,976/- together with interest @ 18% p.a., from the date of payment. The Bank refused to refund the said amount. Therefore, present writ petition was filed aggrieved by the said refusal and for a direction to deliver physical possession of an extent of Ac.0.34 cents or in the alternative, to refund the proportionate bid price of Rs.55,53,976/- for Ac.0.34 cents with interest.

4. Heard learned counsel for the petitioner. Also heard learned counsel for the respondent-Bank.

5. Perused the material on record.

6. The main contention of learned counsel for auction purchaser / petitioner is that though property admeasuring Ac.2.47 cents was notified by the Bank at Rs.4,03,48,000/-, however admittedly only an extent of Ac.2.13 cents was registered as Ac.0.34 cents was acquired for road widening by the National High Way Authority even prior to the mortgage of the properties in question in favour of the Bank. She submits that Bank was at fault, since no proper verification with due diligence of the availability of the property offered as security, was done. She submits that the petitioner cannot be made to suffer for lapses on the part of the Bank and rejection of the request of the petitioner for refund of the proportionate bid price of Rs.55,53,976/- on the premise that property in question was sold on “as is where is” and “as is what is” and “whatever there is” is not just and in fact it is the bounden duty of the Bank to notify and offer the property which is physically available, to enable the prospective auction purchasers to take a decision before offering their bids.

7. Drawing the attention of this Court to Ex.P6 i.e., Certificate dated 14.03.2022 of the Tahsildar, Bapulapadu as also the latest Certificate dated 10.03.2026 issued by him and the relevant Land Acquisition Awards Dated 14.11.2013 and 31.12.2015, she submits that the said material / documents clearly establish that even prior to the Auction Notice dated 24.11.2021, an extent of about 1,332 sq.meters (Ac.0.33