The bank must disclose encumbrances in public auction notices as part of fair procedure under SARFAESI Act; failure to do so entitles the bidder to a refund of the earnest money deposit.

1. The petitioner has come forward with the present Writ Petition for issuance of a Writ of Certiorarified Mandamus calling for the records of the respondent in connection with the impugned order passed in proceedings NIL dated 06.10.2015 and to quash the same and further direct the respondent to refund the amount paid by the petitioner viz., Rs.1,21,37,500/- (Rupees One crore twenty one lakh and thirty seven thousand and five hundred only) with interest.

2. The case of the petitioner is that the respondent issued a notification on 05.06.2015 and invited applications for tender - cum - e - auction sale, in respect of the property in respect of the property of land and building measuring an extent of 3274 sq.ft. at Door No.65, New No.132 Sengalaneer Pilliar Kovil Street, New Street, Mannadi, Muthialpet, Chennai, Fort - Tondiarpet Taluk, Chennai District, in O.S.No.1826, R.S.No.3060 and C.C.No.447, which was taken possession by the Bank under S.13(4) of SARFAESI Act, 2002 , to recover a sum of Rs.3,99,33,842.86 with further interest and other charges thereon; and in the e - auction notice, the reserve price for the property was fixed at Rs.3,25,00,000/-. The further case of the petitioner is that he submitted his application and participated in the e - auction that was held on 10.07.2015 in which, the petitioner quoted a sum of Rs.3,25,00,000/- and the respondent bank declared the petitioner as the highest and successful bidder. Immediately, as per the condition of the bid, as a successful bidder, the petitioner deposited 25% of the bid amount, viz., Rs.81,37,500/- to the respondent as per the respondent's direction on the same day and the sale confirmation letter was issued by the respondent on 20.07.2015 and the petitioner was directed to pay the remaining 75% of the sale amount within the period of 15 days from the date of receipt of the letter. It is also the case of the petitioner that on the receipt of the said sale confirmation letter, he went to the schedule mentioned property and found that there were number of persons residing in the schedule mentioned premises and the petitioner informed the same to the respondent, by way of his representation dated 03.08.2015, which was acknowledged by the respondent on the same day. In his letter dated 03.08.2015, the petitioner has brought to the knowledge of the respondent that the physical possession of the said auctioned property has not been taken, despite the bank having invoked S.14 proceedings before Chief Metropolitan Magistrate, Chennai, to take possession, which was also pending. However, the respondent, despite receiving the said letter dated 03.08.2015 sent a reply on 31.08.2015 by referring to it's letter dated 04.08.2015 and informed the petitioner to make the balance payment within the mandatory period of 15 days of receiving the sale confirmation letter as per the terms of tender - cum - eauction sale. The petitioner has further averred that he made another representation on 27.09.2015, about the pendency of Civil Suits filed by the tenants, who are occupying the auctioned property. The petitioner in the representation dated 27.09.2015 further contended that on the assurance and surety given by the bank orally, he has further paid a payment of Rs.40,00,000/- totalling Rs.1,21,37,500/-. By the said representation, the petitioner also informed the respondent bank that he is always ready and willing to pay the balance amount of sale consideration and requested the bank to clear encumbrance and fix a date to hand over the vacant possession of the property to him enabling him to pay the remaining payment on the same date, failing which the bank should refund the entire amount of Rs.1,21,37,500/- paid by him with interest and damages. However, instead of receiving the same, the respondent bank issued a letter dated 06.10.2015 forfeiting the entire amount of Rs.121.37 lakh paid by the petitioner, which is now under challenge in the Writ Petition.

3. On the other hand, the r