Disposed

Sanjay Singh v. Indian Bank and 3 Ors.

DRAT22 Apr 2025MISC APPLICATION/74/2023

Case brief

AI extract

What is this about?

This appellate tribunal disposed of an application by a highest bidder who failed to deposit the remaining 75% of the auction amount within the stipulated time. The court held the bank entitled to charge interest on the delayed period under RBI guidelines and upheld the forfeiture of the initial 25% deposit due to the default. The application was dismissed.

What the court decided

AI extract

Sanjay Singh versus Indian Bank and 3 Ors. — Service and Employment | DRAT (2025)

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Misc. Application No. 74/2023 In Appeal Dy. No. 435/2022

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Sanjai Singh Vs. Indian Bank & 3 Ors.

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Present: Shri Alok Rai, counsel for the applicant, Shri A. K. Srivastava, counsel for the respondent-Bank, None for the other respondents,

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ORDER

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Date : 22.04.2025

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Learned counsel for the appellant submitted that there is no provision in the SARFAESI Act, 2002 to charge the interest on the auction amount, therefore, the Bank may be directed to accept the remaining auction amount without any interest, otherwise refund the amount with interest.

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Learned counsel for the respondent-Bank submitted that as per the circular of the Reserve Bank of India, the appellant is liable to pay the interest for the delayed period on the auction amount and 25% of the auction amount has already been forfeited on the ground that the remaining 75% of the bid amount was not deposited by the appellant. Accordingly, the order impugned was passed, which is under challenge in the present appeal. It was contended that the appeal has already been decided by this Appellate Tribunal vide order dated 17.05.2023 and the present application has been filed by the appellant under Rule of 22 of the Debts Recovery Appellate Tribunal (Procedure) Rules, 1994.

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Having heard the learned counsels for the parties and considering the material available on record, admittedly, the property in question was auctioned on 25.11.2020, in which the appellant was found to be highest bidder and 25% of the sale amount was deposited, but the remaining 75% of the said amount was not deposited, therefore, 25% of the auction amount was forfeited by the respondent-Bank. Further, the appellant filed an application No. 12 of 2021 for impleadment, but the same was not allowed by the Tribunal below observing that there is nothing, for which opportunity of hearing to the

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auction purchaser is necessary and the S.A. filed by the borrower was dismissed. Against the forfeiture of 25% of the sale amount, the appellant had filed an Appeal Dy. 435/2022, which was disposed off vide order dated 17.05.2023 with the condition that the appellant could approach the Bank with revalidated Bank draft within two days and thereafter the respondent-Bank shall consider and decide the same within two weeks thereafter. Accordingly, the appellant approached with the Bank, but the Bank demanded the interest for the delayed period vide letter dated 15.06.2023, against which the present application has been filed praying that the respondent Nos.1 & 2 may be directed to refund the auction amount with interest or to issue sale certificate and hand over the possession of the auctioned property to the appellant.

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The main controversy involved in the present case is, as to whether the respondent-Bank is entitled for the interest on the auction amount for the delayed period or not?

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It transpires that the auction sale was held on 25.11.2020, in which the appellant was found to be highest bidder and as per the sale notice, he has deposited 25% of the auction amount as per Rule 9(3) of the Security Interest (Enforcement) Rules, 2002, but the remaining 75% of the auction amount was not deposited within 15 days from the date of confirmation of the auction sale as required under Rule 9(4) of the said Rules, 2002. As per order dated 20.05.2023 of this Appellate Tribunal, the appellant approached the respondent-Bank with a demand draft of Rs. 56,65,000/- on 20.05.2023. Thus, it is clear that the said amount has been attempted to be deposited after more than 2.5 years. If the said amount was deposited within time as per the said Rule, the same would have definitely earned interest. The admitted fact is that the said amount was lying with the appellant for the said period and has been used either for the purpose the earning of interest or

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otherwise. Suppose, the appellant had deposited the said amount in time with the Bank and the same is now being returned due to some reason, the appellant himself would have asked for the interest. In the present case, on the one hand the appellant has demanded the interest on the amount deposited with the Bank and on the other hand, he has stated that the Bank cannot demand the interest on the remaining auction amount for the delayed period, which is not acceptable in law because no one can be permitted to pick and choose in its own way.

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In order to decide the question of entitlement of the Bank to charge the interest on the auction amount for the delayed period, the annexure no.3 to the reply of the Bank is relevant, which is copy of Circular No. 21691 dated 15.04.2023 issued by the Reserve Bank of India, because the Banks and financial institutions run in accordance with the guidelines issued by it. The para 21 of the said Circular says that “In addition to fixation of reserve price SEC is empowered to defer SARFAESI action, extension of time for payment of bid amount on the recommendation of AO (Time limit of 15 days may be extended to three months i.e. inclusive of 15 days if agreed as per the Act) along with delayed period interest as stipulated in the case of interest payable as in the case of OTS as per this NPA Management Policy”. It is thus clear that the Bank may charge the interest for the delayed period. Hence, the Bank has rightly demanded the interest from the appellant.

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The contention of the appellant that the Bank had to accept the remaining 75% of the amount of Rs. 56,65,000/- and issue the sale certificate and hand over the possession as the order impugned is incorrect, as the said order was passed on the

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consensus of both the parties, wherein it was only for the Bank to consider and decide the matter.

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So far as the contention of the appellant with regard to the refund of entire auction amount with interest is concerned, it is to be seen that the respondent-Bank vide letter dated 24.12.2020 confirmed the auction sale dated 25.11.2020 after receipt of 25% of the bid amount from the appellant-auction purchaser and requested to deposit balance 75% of the bid amount within 15 days from the date of the order of the said letter, failing which 25% amount deposited by auction purchaser would be forfeited. Further the respondent–Bank issued letter dated 31.12.2020 to the appellant requesting therein that the remaining amount be deposited within 15 days from confirmation of sale. It is admitted by the appellant in para 5.8 of his memo of appeal that both the letters dated 24.12.2020 and 31.12.2020 were received by him, but inspite of it, no amount was deposited by the appellant with the Bank and also the appellant has not given any cogent/convincing reason for not depositing the remaining bid amount in time, which may entitle the appellant to get back the forfeited 25% of the bid amount. Thus, the respondent-Bank has rightly forfeited the 25% of the bid amount for want of non-deposit of remaining 75% of the auction sale amount in view of Rule 5 of the Rules, 2002.

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With regard to the remaining amount, it is stated that if the same is deposited and appropriated by the Bank in view of the order dated 17.05.2023 of this Appellate Tribunal, the appellant is entitled to get back the same with interest applicable to the FDR. In case of non-appropriation of the same, the Bank is not liable to pay any interest on the same.

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In view of the above, the application filed by the appellant stands disposed off.

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A copy of this order be supplied to the parties as well as to the DRT concerned and be also uploaded on the e-DRT portal.

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Justice R. D. Khare Chairperson

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VN Giri

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Sanjay Singh v. Indian Bank and 3 Ors.

Case brief

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What the court decided

Sanjay Singh v. Indian Bank and 3 Ors.

Case brief

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What the court decided

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