THE HON’BLE SRI JUSTICE SANJAY KUMAR AND THE HON’BLE SRI JUSTICE P.KESHAVA RAO WRIT PETITION NO.21587 OF 2017

O R D E R

(Per Sri Justice Sanjay Kumar)

The petitioners, being auction purchasers, assail the action of the UCO Bank (hereinafter, ‘the bank’) in not returning the sum of Rs.1,02,31,000/- paid by them towards the sale consideration along with interest.

Facts necessary for adjudicating this dispute are as under: The petitioners participated in the mega e-auction sale of secured assets held by the bank on 27.05.2016 under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity, ‘the SARFAESI Act’). They emerged the highest bidders for the property mentioned at Item No.7 of the bank’s sale notice dated 23.04.2016. This item of property comprised the residential three-storied building bearing House No.14-1-219, in an extent of 200 square yards, in Survey Nos.31, 32, 34 and 37 of Allapur Village, Kukatpally, Balanagar Mandal, Ranga Reddy District. The reserve price fixed for this item of property was Rs.96,56,000/- while the petitioners bid the highest price of Rs.1,02,31,000/-. They deposited Rs.9,65,000/- towards the earnest money deposit on 26.05.2016. On the date of the auction itself, they deposited Rs.15,92,500/- towards the balance of 25% of the sale consideration. They paid Rs.76,72,900/- towards the remaining 75% of the sale consideration on 13.06.2016. Their grievance is that the bank did not deliver possession of the property purchased by them. They alleged that the bank had proceeded to put the subject property to sale without even securing possession thereof and misled them into believing that they could purchase the property with clear title and possession. They also alleged that the bank had failed to disclose that as on the date of the auction sale, the borrower had approached the Debts Recovery Tribunal, Hyderabad, in S.A.No.585 of 2015 and that the matter was sub judice. They stated that they had to avail a loan from Yes Bank so as to pay the sale consideration. Despite their entreaties to return the amount paid by them, the bank remained unmoved. Hence, the writ petition.

The bank filed a counter through its Manager-cum-authorized signatory. Therein, it stated that M/s.Shanmukha Sai Agencies, a partnership firm, availed loan facilities from it and mortgaged the subject property as security therefor. Default having been committed in repayment, the loan account was classified as a non-performing asset and recovery proceedings were initiated under the SARFAESI Act. In pursuance thereof, the sale notice dated 23.04.2016 was published fixing the date of the auction as 27.05.2016. Therein, the petitioners became the purchasers of the subject property. The bank filed Crl.M.P.No.654 of 2016 before the learned Chief Metropolitan Magistrate, Cyberabad at L.B.Nagar, for securing possession of the subject property under Section 14 of the SARFAESI Act. The Advocate Commissioner, appointed pursuant to the order passed therein, issued notices to the occupants of the subject property. The occupants of the first and second floors vacated the premises and physical possession of the same was handed over to the bank. The partners of the borrower firm however failed to vacate the remaining portions on the ground floor and requested more time to do so. On 05.11.2016, the Advocate Commissioner, along with the Authorized Officer and other personnel of the bank, took the assistance of the police and secured actual physical possession of the remaining two portions on the ground floor of the subject property. However, on the same day evening, the partners of the borrower firm took law into their own hands and broke open the locks affixed on the western side of the portion in the ground floor and grabbed illegal possession thereof. A complaint was given by the bank to the Station House Officer, Sanathnagar Police Station, in this regard and an FIR was regi