Back
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
APARESH KUMAR SINGH, G.M.MOHIUDDIN
K.P. Sai Pavan – Appellant
Versus
Union Bank Of India – Respondent
| Table of Content |
|---|
| 1. nature of the auction process and forfeiture. (Para 2 , 4 , 5 , 7 , 8 , 9) |
| 2. impact of drt's stay order on auction completion. (Para 6 , 12) |
| 3. petitioner challenges legality of forfeiture. (Para 13) |
| 4. respondent's defense on statutory compliance. (Para 14) |
| 5. judicial review of forfeiture and statutory interpretation. (Para 15 , 16 , 17) |
| 6. court's ruling on the legality of forfeiture. (Para 19 , 20) |
ORDER :
Heard Sri Anil Kumar, learned Senior Counsel appearing for Sri Mohammed Aameruddin, learned counsel for the petitioner and Sri B.S.Prasad, learned Senior Counsel appearing for M/s.Pearl Law Associates for the respondent-bank and perused the record.
2. This writ petition is filed under Article 226 of the Constitution of India, with the following prayer:-
“……….to issue an appropriate writ, order or direction, more particularly a writ in the nature of mandamus declaring Sub- Rule (4) and (5) of Rule 9 of the Security Interest (Enforcement) Rules, 2002 to the extent of automatic forfeiture of the 25% amount paid towards EMD by the Auction Purchaser as illegal, arbitrary, against the principle of nature justice and violative of the fundamental rights of the petitioner u
Forfeiture of EMD under Rule 9 of SARFAESI Rules is impermissible during a binding judicial stay, as it violates natural justice and can lead to unjust enrichment.
The court affirmed that banks must comply with statutory requirements and not engage in arbitrary actions against successful auction bidders, protecting rights under Article 14.
The SARFAESI Act mandates strict adherence to auction payment timelines, allowing forfeiture of deposits for non-compliance.
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)
Rule 9(5) of the SARFAESI Act mandates forfeiture of earnest money for non-payment of the balance auction price, overriding general contract law principles.
Rule 9(5) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is directory in nature, and forfeiture is justified only to compensate for the pa....
The excess amount paid by the petitioner, beyond 25% of the bid amount, could not be considered as a deposit under Rule 9, and any retention of amount by the respondent without authority of law would....
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
The court held that when a statute provides specific remedies, writ jurisdiction under Article 226 should not be exercised, affirming the precedence of statutory procedures over equitable remedies.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
