Legal heirs can seek return of the auction deposit under SARFAESI Act provisions if proceedings are delayed.

JUDGMENT

(Dated this the 20^th day of November 2025)

Petitioners are the legal heirs of one Vinod M A, who was the successful bidder in the e-auction conducted on 11.4.2018 in respect of the mortgaged property, towards a loan taken by respondent Nos.3 and 4 . The auction was confirmed in the name of Vinod for an amount of ₹36,02,000/-. Accordingly, 25% of the bid amount coming to ₹9,00,500/- was remitted, and the sale was confirmed. Thereafter, the balance 75% was sought to be remitted and respondent Nos.1 and 2 informed that against the sale, respondent Nos.3 and R4 have filed S.A.No.157 of 2018 before the DRT – 1, Ernakulam. Therefore, the balance 75% cannot be accepted and will have to wait till the outcome of the said S.A. So, a request was made by the auction purchaser to convert the bid amount into a fixed deposit for an year. The bank accepted the request, and it was converted to a term deposit as evidenced by Ext.P2.

2. The auction purchaser passed away on 7.3.2025 leaving behind the petitioners as legal heirs. Since there was a delay in finalisation of the S.A., the petitioners submitted Ext.P6 representation to release the amount deposited as 25%, as they were in dire need of money. Through Ext.P7, it was informed that earnest efforts have been taken by the bank to dispose of the S.A. and so, the authorised officer cannot refund the amount already in deposit. Hence, the petitioners seek a writ of mandamus directing respondent Nos.1 and 2 to release the amount of ₹9,00,500/- deposited by the bidder to the petitioners being legal heirs within a time frame.

3. Along with I.A.No.1 of 2025 filed for receiving additional documents, petitioners have produced Ext.P8 petition for impleading them as additional defendant Nos.3 to 5 in the S.A.

The petitioners relied on judgment of the hon’ble apex court in Mohammed Shariq v. Punjab National Bank and others [ 2023 (16) SCC 341 ]. It was a case in which an auction was conducted in respect of the secured assets and the highest bidder deposited 25% of the bid amount on the date of auction itself. The appellant was the bidder therein, but he was unaware of the interim order passed by the DRT in a petition filed by the borrower that the bank is at liberty to proceed with the auction, but the confirmation of sale would be kept in abeyance pending further orders from the DRT. The appellant was informed of the same for the first time on 18.10.2013, wherein he was asked to pay the balance amount as the interim relief has been rejected by the DRT. The respondent stated that he would pay the balance amount once the DRT decides the issue. The bank informed that if he fails to remit the amount, the earnest money would be forfeited. The hon’ble apex court finally held that once there is no dispute as to the facts on record, the High Court is well within its power under Article 226 of the Constitution of India, to resolve the issue and not to relegate the parties to the statutory authority.

4. The counsel for the respondent bank submits that the authorised officer is bound to follow the provisions of the Act and Rules. He cannot act, in any manner, outside the purview of the Act. The petitioners’ predecessor was informed of the pendency of the Securitisation application immediately after auction, and the auction purchaser, through his letter dated 2.8.2018 informed that the earnest money shall be kept in a term deposit. So, it is not a case in which the petitioners’ predecessor was kept in dark about the auction. On the other hand, he was du