Forfeiture of 25% bid amount under SARFAESI Rules 9(5) is mandatory on default, unaffected by higher subsequent sale or absence of loss; equity cannot override statutory provision. (28 words)

JUDGMENT :

P. Dhanabal, J.

This Suit has been filed by the Plaintiff for the relief of recovery of money to the tune of Rs.1,59,77,500/- with interest @ 24% per annum and for costs.

2. The brief averments of the Plaint and reply Statement are as follows:-

The defendant is the bank, which lent loan to one M/s. Arun Agencies and the property in Plot No.45 and 46 measuring 49.412 cents in Old No.128/2 part, 128/3 part, Patta No.396, New S. No.128/2A1C and 128/2A1D of Kazhipattur Village, Kanchceepuram District now Chengalpattu District with a building admeasuring about 3500 sq. ft. belonged to M/s. Arun Agencies and two others has been mortgaged for the loan. The said loan availed by the borrower M/s. Arun Agencies has become ‘Non-Performing Asset [NPA]’ and thereby, the bank initiated proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act [SARFAESI Act] and brought the said property for sale through an auction on 03.03.2023. The Plaintiff had participated in the E-auction and he was a successful bidder for a sale consideration of Rs.3,79,10,000/- and paid a sum of Rs.94,77,500/- and the remaining amount is payable on or before 31.03.2023. However, the defendant had orally permitted and granted extension of time by 90 days. The Plaintiff effected payment on 06.06.2023 and last payment was made by him on 08.06.2023 and paid a total sum of Rs.1,56,77,500/- and the balance amount of Rs.2,19,32,500/- has to be remitted on or before 30.06.2023. Considering the oral extension and payments received till 08.06.2023, the Plaintiff requested the defendant for extension of time till 30.06.2023 for payment of balance sale consideration. However, the defendant bank refused to extend the time and accepted the payment of third parties offered to buy the property for higher consideration. When the Plaintiff approached the defendant on several times for refund of the amount of Rs.1,59,77,500/-, the defendant bank intimated the Plaintiff through a letter dated 21.06.2023 that the bank had cancelled the sale and forfeited the entire deposit amount of Rs.1,59,77,500/-. Thereafter, the defendant asked the Plaintiff to participate in the fresh auction to be held on 28.07.2023 and stated that if the Plaintiff becomes a successful bidder, the amount already deposited would be adjusted towards the bid amount.

2.1. Accordingly, the Plaintiff also participated in the fresh sale auction after remitting a sum of Rs.37,90,000/- on 27.07.2023. But the schedule property was sold to one Mrs. Parameswari for a sum of Rs.5,06,00,000/- which is higher than the previous sale price. Thereafter, the defendant refunded the 10% bid amount of Rs.37,90,000/- on 03.08.2023. The amount of Rs.37,90,000/- deposited by the Plaintiff to participate has been wrongly mentioned as Rs.3,79,100- in the legal notice dated 28.10.2023. Thereafter, the Plaintiff requested the defendant to refund the amount in the previous auction to the tune of Rs.1,59,77,500/-. The defendant has not incurred any loss. The Plaintiff was asked to participate in the fresh auction and the defendant assured that if the Plaintiff is successful in the re-auction, the amount paid by the Plaintiff in the previous auction would be adjusted. Therefore, there is no forfeiture when the defendant legally agreed to adjust / refund the entire amount paid by the Plaintiff. The defendant, by a letter dated 04.10.2023 offered to pay a sum of Rs.65,00,000/- only after forfeiture of a sum of Rs.94,77,500/- being 25% of the bid amount. Therefore, the Plaintiff issued a notice dated 28.10.2023 calling upon the defendant to refund the amount of Rs.1,59,77,500/- and the defendant issued a reply notice dated 16.12.2023 with false averments. Thereafter, on 08.02.2024, the defendant credited a sum of Rs.65 lakhs in the Plaintiff’s account. The defendant is liable to pay a sum of Rs.1,59,77,500/- with interest @ 24% from 30.10.2023, i.e., the date of receipt of legal notice. The