Bank cannot forfeit auction bidder's deposit for premature sale confirmation despite DRT stay; DRT orders require reasons.

JUDGMENT : 17* April 2026 THE APPELLATE TRIBUNAL:

1. Instant appeal has arisen against the order and Judgment dated 9.6.2025 passed by Learned DRT-I, Hyderabad om S.A. 03 of 2023 (Raj Purohit Sogaram & Another -vs- Indian Overseas Bank & Others) whereby Learned DRT partly allowed the S.A. by setting aside the letter dated 1.9.2022 for forfeiture the 25% of the bid amount deposited by the Appellants with a further direction to the Bank to refund the Rs.23,27,500.00 deposited by the Appellants towards 25% of the bid amount.

2. Facts, in brief, are that a Securitisation Application under Section 17 of the SARFAESI Act, 2002 (hereinafter referred to as the ‘Act’) was filed by the Appellants, who are the Bidders in the auction conducted by Respondent No. 1, Indian Overseas Bank, by challenging notice dated 1.9.2022 issued by the Bank for a direction to the Bank to accept the remaining 75% of the balance bid amount and to register the deed in favour of the Defendant and in alternative to refund of the 25% of the bid amount paid by them pursuant to the auction conducted on 30 September, 2019.

3. As per pleadings of the parties, Respondents No. 2 and 3, M/s. Hardens Steel Industries and Kusuma Satyanarayana, availed the loan facility from the Respondent No. 1, Indian Overseas Bank, and committed default in repayment. Subsequently, e-Auction Sale Proceedings were conducted. Appellants participated in the e-Auction conducted on 30% September, 2019 in pursuance to the Sale Notice dated 12.9.2019. Appellants became successful bidders for a sum of Rs.93.00 lac. A sum of Rs.23.00 lac, being the 25% of the bid amount was deposited. Sale was confirmed in favour of the Appellants vide letter dated 30 September, 2019. Remaining 75% of the bid amount was to be deposited within thirty days extendable upto 90 days.

4. It was informed by the Bank that S.A. 271 of 2019 is filed by the Borrowers, Respondents No. 2 and 3, challenging the Sale Notice dated 12.9.2019 and obtained the stay order from the DRT. Appellants waited for the outcome of the S.A. for payment of the remaining 75% of the bid amount. In January, 2022 they were informed that the S.A. was dismissed on 04.10.2021.

5. Letter dated 01.9.2022 was issued by the Bank communicating that a Writ Petition No. 28115 of 2021 was filed by the Respondents No. 3 and 4 herein against the order of dismissal of S.A. which was also dismissed on 02.8.2022. As Appellants have not paid the balance 75% of the bid amount on or before 29% December, 2019, amount paid by the Appellants was forfeited by the Bank.

6. Appellants herein filed S.A. 03 of 2023 under Section 17 of the Act challenging the letter dated 1.9.2022 on the ground that they were never informed about the order passed by the Learned DRT, Hyderabad. Respondent Bank filed their opposition stating the facts as narrated in the Section 17 petition wherein it is admitted that the Appellants are successful bidders for sale consideration of Rs.93.00 lac. 25% of the bid amount, Rs.23,27,500.00 was paid by the Appellants and the sale was confirmed in their favour. Balance 75% of the bid amount was to be deposited within thirty days. S.A. 271 of 2019 was filed by the Borrowers challenging the Auction Sale Notice dated 12.9.2019 wherein an interim order was granted by the Learned DRT to proceed with the auction but not to confirm the sale. S.A. was dismissed on 4.10.2021. Thereafter, a writ petition was filed before the Hon’ble High Court by the Borrower which too was dismissed.

7. Appellants never made any attempt to deposit 75% of the bid amou