Auction sales by banks must ensure full disclosure of property status to avoid invalidation.

ORDER:

Heard Mr.S.Laxmikanth, the learned counsel appearing on behalf of the petitioners and Mrs.V.Dyumani, learned counsel appearing on behalf of the respondents.

2. PRAYER:

The petitioners approached the court seeking prayer as under:

“To issue Writ, order, or direction more particularly in the nature of writ of mandamus, declaring the action of the respondents in auctioning the Flat No.1 and 2, situated at Sri Sai Baba Ashirwad Sadan, Saraswati Nagar Colony, Lothukunta, Secunderabad-500 015 without disclosing the fact that the flats are constructed on the stilt floor meant for parking which was subsequently declared as unauthorized constriction by the cantonment board by issuing notice under Section 248 of the Cantonment Act 2006 dated 13.02.2014 and which were sealed by the Cantonment Board in exercise of this power under Section 249 of the Cantonment Act 2006 on 18.02.2013 as illegal, arbitrary, violative of fundamental rights guaranteed under Article 14 and 19(1) (g) of the Constitution of India , violation of constitutional guarantee under Article 300-A of the Constitution of India , amounted to cheating in terms of Section 420 of IPC and direct the respondents to refund back the entire sale consideration of Rs.12,40,000/and stamp duty, registration charges and legal expenditure incurred by the petitioners with interest at the rate of 24% per annum from the date of payment till the date of refund of the amount.”

3. PERUSED THE RECORD.

a) Sale/ Auction Notice dated 12.08.2012 reads as under:

“In continuation of our notices dated 18.01.2010 with regard to Sy.No.1 and 2 in Andhra Prabha and The Financial Express News papers, the said properties are again brought to sale with the terms and conditions as under:

Tenders are invited in sealed covers with bankers cheque/demand draft for the EMD, to reach the under signed on or before 2 pm on 15.09.2012 for the following proposals on “AS IS WHERE IS’ and AS IS WHAT IS” basis towards the recovery of Bank’s secured debts.

Terms and conditions of Auction:

1. That the auction is on “ As is w here is” and “ As is w hat is” and “ w hatever there is” basis.

2. That the earnest money shall be paid by way of Demand Draft, Payorder of any Nationalised Bank and should be drawn in favour of Senior Branch Manager, Bank of India, VASAVINAGAR Branch, payable at HYDERABAD. No interest shall be paid on the EMD refunded to the unsuccessful bidders.

3. (If the auction is conducted by inviting bids) “That the bide shall be opened in presence of bidders attending the auction sale. The property will be sold to the highest bidder. However, the Authorized Officer reserves the absolute discretion to allow inter se bidding if deemed necessary among the bidders present, which will take place at the place, date and time of auction as mentioned in this Notice. The amount by which the bidding is to be increased shall be determined by the Authorised Officer conducting the sale. Any bidder interest to increase his offer should remain present on the said date. Failure to remain present will debar to increase their offer subsequently after completion of auction sale”.

4. That the statutory encumbrances such as dues of Excise Department, Property Tax or