Allowed

Mr Anwar Ali Jiwani v. Union Bank of India

DRT16 Oct 2023SA/236/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal held that the bank could not forfeit the bid deposit because it discriminated between the bidders and the borrower, failing to disclose that a stay application was filed by the borrower just prior to the auction. The bank was directed to refund the amounts with interest.

What did the court decide?

The applicant's application was allowed; the bank's forfeiture letter was declared illegal, and they were directed to refund the 25% bid deposit with interest.

Mr Anwar Ali Jiwani versus Union Bank of India — Contract and Commercial Disputes | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL - I AT HYDERABAD

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DATED THIS THE 1 6TH DAY OF OCTOBER, 2023

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.236/2022

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Mr. Anwar Ali Jiwani, Male, aged major,

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S/o. Ameen Jiwani, Occ: Business,

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H.No.5-8-49-58, Bhagawati Enclave,

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Flat No.202, Opp. Sangeeta Apartment,

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Fateh Sultan Lane, Nampally, I-lyderabad- 1.

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Mr. Karnali Samnani,

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Male, aged: 72 years, S/o. Ali Bhai Samnani, Occ: Business,

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H.No.5-8 -49 -58, Bhagawati Enclave, Flat No.202, Opp. Sangeeta Apartment, Fateh Sultan Lane, Nampally, I{yderabad- 1.

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Applicants.

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Versus

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Union Bank of India, (Erstwhile Andhra Bank) Specialized Asset Recovery Management Branch, 3'd Floor, Andhra Bank Building, Sultan l3azar, Hyderabad - 500 095. Rep. by its Authorized Officer.

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Respondent.

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Counsel for the Applicants

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Counsel for the Responderut

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Si G.K. Deshpande. Sri V. Raghu.

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.:ORDER:.

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filed by the Applicants u/ s. 17 of the SARFAESI Act, the letter dt.25.06.2O2O, issued by the Respondent Applicants about the forfeiture of 25o/o of the bid bp ihe Applicants and also the auction conducted by the 1 6"TfT?baaid Respondent ' Ba#k on 18.03.2020 and Sale Confirmation letter _Q^.Yir ,2&$#"^{illegal and consequently} direct the Respondent Bank ef'ffft?'ZSoh of bid amount deposited by the Applicants with . ::' from the date of deposit of the said amount.

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SA.No.236/2022

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The averments made in the application, in brief, are as under,-

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i) The Respondent Bank has notified the e-auction of the property bearing H.No.1-76lA(old), H.No.2-39lA(new), plot No.58, Sy.No.61, admeasuring l2O sq. yds., Srirama Colony, Guttalabegumpet, Ranga Reddy District, Telangana State (hereinafter referred to as 'subject property), vide e-Auction Notification dr.ll.O2.2O2O, proposing to sell the subject property on 18.03.2020. The Applicants participated in the said auction and became the successful bidders for Rs. 1 ,88,80,000/ -. On 19.O3.2O2O, the Respondent Bank gave a letter to the Applicants informing that they became the successful bidders for Rs. 1,88,80,000/- and that they already paid 2S%o of the bid amount and called upon the Applicants to pay balance Z So/o of the bid amount within 15 days. For the first time, the Respondent Bank informed the Applicants that sale of the subject property shall be subject to outcome ol SA.No.S9/2O2O. The Applicants also came to know that the Respondent Bank has not taken physical possession of the subject property prior to auction. Due to lockdown imposed by virtue of COVID- 19 pandemic, the Applicants addressed a letter dt.26.O3.2O2O, seeking time for depositing of balance 7 5o/o of the bid amount and the Respondent Bank vide letter dt.03.04.2020, extended time till 06.06.2020. On 26.05.2020, another representation to the Respondent Bank was submitted by the Applicants seeking time and also about physical possession of the subject property and also the details of SA. But, no details were furnished by the Respondent Bank. After the frloek{pwn^was ffied^{in June, 2O2O,the Applicants verifiedthe} tribunat and came to know that, two days prior to k&*'Nhe Buction!<sup>on 16.03.2020, this Tribunal passed order in ''Sn.No.so73!o, Il1ed by the borrower, permitting the Respondent 1 5 Wm to ge [i..a with auction but not to conlirm the sale in . l:rvor-r r ol-i highest bidder and the said order was passed in the .. ,^). prescltcc o the Counsel for the Respondent Bank.

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SA.No.236/2022

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ii) Even though the Respondent Bank is having full knowledge about the pendency ol SA.No.59/2O2O filed by rhe borrower challenging the proceedings initiated by the Respondent Bank in respect of the subject property, the Respondent Bank did not notify the same to the intending bidders and moreover the subject property was put to auction without taking physical possession, on "As is where is", "As is what is, and^,,Whatever there is" basis. It is the duty of the Respondent Bank to inform the bidders about the encumbrances, if any, so that the bidders can make their own arrangements for participating in the auction. So, on 1 1.06.2020, the Applicants gave a letter to the Respondent Bank explaining all the above aspects and requested for refund of 25o/o bid amount along with interest. But, the Respondent Bank vide letter dt.25.06.2O2O, falsely contended that they had informed the Applicants about pendency of the SA before the Tribunal and reiterated that the subject property was sold on "As is where is", "As is what is" and^.Whatever there is,, basis and so amount cannot be refunded. Hence, the SA.

¶28

The Respondent Bank filed its Reply Statement admitting that, in the auction of the subject property conducted on 18.03.2020, the Applicants became successful bidders for Rs. 1,83,80,000/- and they paid 25o/o of the said bid amount and that the Respondent Bank vide letter dt. 19.03.2020, informed the Applicants that the sale o[ the subject property is subject to the outcome of SA.No.59 l2O2O and that the sale was conducted on the basis of "As is where is",^,,As is what is,, is" basis and that the Applicants were called ce 7 5o/o of the bid amount within 15 days from communication or else the amount already paid would be n . Since the Applicants submitted letter l0affiE.&zozo, time for deposit of balance 7 Sok of the bid amount, nded till 06.06.2020. As per the provisions of e ity Interest (Enforcement) Rules, 2OO2, if the haser unable to pay the total bid amount, 25ok of the

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SA.No.236/2022

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bid amount paid by the auction purchaser will be forfeited. The Appiicants are aware of the order dt. 16.03.2020, passed by the Tribunal in SA.No.S9/2020 and also about the non-compliance of the said orders by the parties in the said SA. Lodging of SA.No.59/2020 two days prior to the auction is not within the knowledge of the Respondent Bank and there was no scope to change the auction website, except for indicating to the auction purchasers prior to auction, so also at the time of payment of 21oh of the bid amount. Forfeiture of the amount is guided by Rule 9(5) of the Security Interest (Enforcement) Ruies, 2OO2, and 25o/o of the bid amount cannot be refunded to the Applicants. Subsequently, the borrower paid amount under OTS and closed the loan account and thereupon the SA.No.59/2020 was closed as withdrawn.

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Heard arguments of both Counsels. Ld. Counsel for the Applicants filed his written arguments.

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Now, the points that arise for consideration are,-

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Whether the Applicants are entitled for refund of 25o/o of the bid amount deposited by them with the Respondent Bank, along with interest?

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ii) To what relieP

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Point No.li)r

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Ld. Counsel for th-e ffilicants argued that, in pursuance of the e- ,@fuN{Eation^{dBf'r.02.2020,issued by the Respondent Bank,} participated in the auction of the subject property 6l^cond .2O2O and became successful bidders for an amount of Rs.1.8* ,000/-^and that out of the said bid amount, 257o $,8 8ff0@,i.t licants and subsequently, the Applicants were pendency oi SA.No.59/2020 filed by the borrower and the said fact was suppressed by the

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SA.No.236/2022

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Respondent Bank before conducting ol auction ol the subject property and subsequently, the Respondent Bank and the borrower compromised the matter and said SA was withdrawn and so there is clear collusion between the borrower and the Respondent Bank and so the Respondent Bank is not entitled to forfeit 2SVo of the bid amount deposited by the Applicants. He further argued that, before conducting of auction, the Respondent Bank is expected to take physical possession of the subject property but no such measures were taken. He lurther argued that, the order dt. 16.03.2020, was passed by the Tribunal in SA.No.S9/ 2O2O in rhe prescnce of the Counsel for the Respondent Bank and so the Respondent Bank is quite aware about the said order but, same was not informed to the Applicants and so the Applicants are entitled for refund of 2S%o of the bid amount deposited by them along with interest @ l8%o p.a. In support of his contentions, Ld. Counsel for the Applicants placed his reliance on a judgment of the Hon'b1e High Court of Andhra pradesh in WP.No.39O84 of 2077 - "Mondaua Krishna Chaitanga Vs. \JCO Bank, Asset Management Branch', decided on 21 .O2.2078, whereunder, it is held as under:-

¶39

"Further, the concept o/ as is uhere is' and^,as is what is' basis has losl ifs significance in the current commercial milieu and the principle of caueat uenditor is more on the rise as compared to the outdated principte of caueat emptor. The Transfer of Property Act, iBB2, requires the seller to own up to certain duties and it is not open to a responsible bank to take an innocent auction purchaser for a ide by selling to him a tainted propertA and thereafter claim protection under the principles of 'buyer beutare'. The counter-afJidauit fiIed by the bank clearly demonstrates that the bank undertook no exercise to , ueif11 and ascertain as to tthat brances attached to the subject propertll at anA o details are forlhcoming of ang efforts hauing by the bank, be it before the registration ou or ang other authoitg at any stage. Nou_t, it has come to that the propertA in question is tainted on y#:x' than one. It falls u,tithin the full tank leuel of surprisingly, if is also treated as a ceiling . That apart, fhe possession of the propertA be handed ouer bg the bank to the petitioner

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SA.No.236/2022

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as the sale uas effected without the bank secuing actual physical possession thereof and the bank does iot deny the factum of lease hauing been created. bg the borrower in relation thereto. The bank therefore cannot complg with the statutory mandate of deliuering actual possisiion of the property sold under the sale certifi.cate. The decisions of uaious Courts rekned to supra would come to the aid of tte petitioner in this regard. That apar| the registration authoities alreadg indicated to the petitioner that the subject land is noted as a ceiling surplus land. Therefore, euen if theg do entertain the sale certificate issued bg the bank for registration, it tuould be subject to this cloud and utould not amount to clear conueAance of title. It is therefore manifest that the bank mad.e the innocent petitioner a uictim bg failing to exercise due diligence, not onlg in terms of the statutory scheme of the SARFAESI Act and the Rules of 2O02, but also in its oun commercial interest, let alone public interest, u.then it accepted this propertA as secuitg for the loan sanctioned bu it, This utter carelessness on the part of the bank in sdnctioning loans, bg use of public monies, on the strength of secured assets uhich are not euen uorthy of being mortgaged_, requires to be deprecated in the strongest terms. Bank necessarilg haue to exercise more care and caution uLhile using public monies auailable uith them, be it through deposits bg customers or othenuise, when sanctioning loans without coution or worse and cannot be permitted to claim protection under outdated legal pinciples so as ,o uictimize innocent auction purchasers, such as the petitioner. This Court therefore has no hesitation in hold.ing that the auction sale held bg the bank, ulithout euen exercising minimum care to ascertain the encumbrances attaching to the subject propertg and. without informing the petitioner or other bidders of the same, uitiates the sale proceedings, culminating in issuance of the sale certifi.cate ruhich is get to be registered.

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The wit petition is accordinglg alloued setting aside the said sale. The bank shall refund the sale consideration of Rs,4,80,44,OO0/ - paid bg the petitioner, with interest eon at 18% per annum from the date of the deposit tilt the of realization, tuithin ttoo weeks from the date of Tqt (sf6 copg of this order. As tlrc bank is itself at fault r|!,t imbroglio and the petitioner was made to qt| his ualuable monies with no consequential br and the bank enjoyed the anstody of these hrough, the rate of interest as applied bg the ;^,omffi[i in the ciranmstances in MATHEW frok -.-iffih^'?z. , .,r"ef.Fv.rr) V/ s. tW. AMRIT'HA KUMAR is adopted." ..I .,'.

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5A.No,236/2022

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Ld. counsel for the Applicants arso placed his reliance on a judgment of the Hon'ble High Court for the State of Telangana and Andhra Pradesh in WP.No.4S0 of 2O2O - "D.E.C. Infrastntcture & projects (India) Priuate Limited Vs. IFCI Limited.", decided on 27.O2.2et8, whereunder in paragraphs No.l2 & l3 it is held as under:_

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"12. In our considered opinion, the respondent-institution cannot deng its responsibility to tahe phgsical possessjon of the propertA, if anot und.er Section 151+1 o|^tne Act, at least bg inuoking _section 14 of the Aci,'after taiing assislance of the Chief Metropolitan MagistratL or Distriit Magistrate, when it is empowered to do so und.er the prouisions of the Act. It cannot force the innocent auction purchasers like petitioner to take steps to get possession of the propertA, which theg haue purchasea yrom after thl respondent coollg pockets the amount paid. bg auction purchaser. It cannot compel the petitioner to coniinue rtith sale transaction in light of its conduct in not fulfilling its obligation to deliuer the physical po."...io, of the propertA though almosl .four months haue elapsed. since receipt of full sale consideration by the respond.ent institution from the petitioner.

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13, Accordinglg, the Wit petition is allowed. with costs of Rs.10,000/-; letter dt.1g.j2.2O1g as utell as sale certificate dt.25.11.2019 issued bg the respondent institution are set aside; the respond.ent institution shall refund to the petitioner the sale amount of Rs.8,2^j,00,O00/- paid bg the petitioner to it with intereit @^{18% per annum} from the date of said payment bg petitioner till repayment by the respond"ent subject to thL petitioner returning oiginal title d.eeds of tie subject propertA to the respondent, within a period of tu.to wieks from^{the date of receipt} of a copy of this order.,

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Per contra, Ld. counsel for the Respondent Bank argued that, prior to auction were duly informed about the pendency of the borrower against the Respondent Bank e Applicants were also informed that the sale of the shall be subject to the outcome of the said SA. He argug[ t symbolic possession of the subject property was not taking of physical possession of the propert5z, in auction was conducted, cannot be a ground lor the

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SA.No.236/2022

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Applicants to seek refund of the amount. I,le further argued that, as per Rule 9(4) of the Rules, 20O2, the auction purchaser is expected to deposit baiance of the bid amount within 15 days from the date of confirmation of sale. As the Applicants were not having funds, they addressed a letter seeking time and time was extended by the Respondent Bank but, the Applicants have failed to pay the balance amount and so they are not entitled to claim refund of 250/o of the bid amount and the Respondent Bank is justified in forfeiting the said amount as per Rule 9(S) of the Rules, 2OO2. Ld. Counsel for the Respondent Bank in support of his contcntions has relied upon a decision of the Hon'ble Supreme court in "ITC Limited vs. Brue coast Hotels Ltd.", reported in AIR 201g Supreme Court 3063, whereunder in paragraph 50, it is held as under:-

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'50. In this case, the creditor did not haue actual possessfon of the secured asset but only a constructiue or sgmbolic possessjon. The transfer of thi secured. asset bg -a the creditor therefore cannot be constructed. to be co_mplete transfer as contemplated bg Sec.B of the Transfer of Propertg Act. The creditor neueiheless iad a righi to take actual possession of the secured assels and must therefore be held to be a seanred creditor euen after the limited transfer to the auction purchaser under the agreement. Thus, the entire interest in the propertg not hauing bee.n passed on to the creditor in the fiist ptai, the creditor in turn could not pass on the entire inteiest to the auction purchaser and thus remained a secured_ creditor in the Act."

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Ld' counsel for the Respondent Bank has arso praced his reliance on another judgment of the Hon'bre Apex court in the case of "Nationar Highways AuthoritA of Ind.ia Vs. Ganga Enterprises and in (2003) 7 Supreme Court Cases 410, whereunder held as undcr:-

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the High Court felL in error in so holding. k Guarantee and/ or enforcing the bid theP ls no statutory igh6 exercise oy uhich u.,as being fettqr&i'There is no term in the contract which is contral.:tj;($ttib prouisions of the Indian Contract Act. The Indian Contract Act meret[ prouid-es thot a person can

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sA.No.236/2022

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withdratu his offer before^{its acceptance. But, uithdrau-nl} of an offer, before it is accepted,^{is a completely different} aspect from forfeiture of^{Damest/Seanntgmoney u-thich} has been giuen for a^{particular purpose.A person mag} haue a right to uithdratu his^{offer but, if he has made his} offer on a condition that^{some Eamestmoney tttill be} forfeited for^{not enteringinto contract or if some act is not} performed, then euen though he may^haue a^{ight to} tuithdraw his offer, he^{has no right to claim that the} Eamest/ Secuity be retumed to^{him' Forfeiture of such} Eamest/ Secuity, in no uaA,^{affects ang statutory ight} under the Indian Contract^{Act. Such Earnest/ Secuitg is} giuen and taken to ensure that a contract^{comes into} eistence. It would be an^{anomaloussituation that a} person utho, bg his oun conduct,^{precludes the coming into} existence of the contract is^{thengiuen aduantageor benefit} of his oun urong bg not^allowing forfeiture.^{It must be} remembered that,^{partiatlarlyin gouernmentcontracts,} such a term is abuags^{included in order to ensure that} only a genuine^partA makes^{a bid. If such a term u)as not} there, euen a^person utho^{does not haue the capacitg or a} person rttho has no intention of enteing^{into the contract} u,till make a bid. The whole^{purpose of such a clause i.e.,} to see that only^{genuinebids are receiued uould be lost if} forfeiture^wasnot Permitted."

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Ld. Counsei for the Respondent^{Bank has also placed his relianceon} another decision of the Hon'ble^{Supreme Court inCivil Appeal} No.2545 of 2023 arising^{out of SLP (C) No. 14896l2OlB} -^"Authorized Officer, State Bank of^{IndiaVs' C. Natarajanand another", decided on} 1O.O4.2023, whereunder^{in paragraphs 34 & 35 it is held as under:-}

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.34. Yel again, in Indian Council for Enuiro-Legal Action Vs. Union of Indio, this Court^{held that a person is} eniched if he has^{receiued a benefit,and he is unjustly} eniched if retention^{of the benefit tttouldbe unjust.}

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In the light of^{guidance prouidedbg the aboue} what needs to be ascertained first^{is uhether}

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receiued or deriued any^{benefit or aduantagebg}

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biw .V ZSq" of the sale^{price. We do not think that the} rt fra} &ren eniched,^{much less unjustlgeniched,by} ,o"or?011\h. impugned forfeiture.^{Receipt of 25% of the}

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'1,[ trfffi f;:i#*::;::{';r.:?:ffi':;:ix"':::::::;:#:;

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SA.No.236/2022

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It utas pursuant to a public auction, inuoluing a process of offer and acceptance, and it was in termi of statutory prouisions contained in the Rules, partiatlarlg, Rule 9(3) that, moneg changed hands foi a deJiniie purpose. Receipt of 25% of the sale price does nto constitute a benefit, a fortiori, retention thereof bg forfeiture^canot be tenned unjust or inequitable, ", t. fi attract the doctine of unjust enichment. The bank, as a secured creditor, is entitled in law to enforce the seatitg interest and in the process to initiate ait such steps anl take all such measures for protection of public intirest by recouering the public mone!4, Ient to a borrower and taio has squandered it, in a manner authorized bg law.

¶63

The contestinq respondent participated in the auction uell and trulg autare of the risk of hauing 2S%o of the sale pice forfeited in a case of ang default 6r failure on hi.s part to make pagment of the balance amouni of the sale pice. euestion of the bank being eniched. Ly a forfeiture,^which is in the nature of a statutory p"niltg, does not and cannot therefore aise in the circaisiances.-,''

¶64

The undisputed facts of the case are that the Respondent Bank conducted auction of the subject property on 1g.03.2020 by issuing e- auction notificarion dated 1r.o2.2o2o. The Applicants participated in the auction by depositing Earnest Money and they became successful bidders and therealter thcy paid 2soh or the bid amount, including EMD made by them, i.e., Rs.47,20,000/-. There is also no dispute regarding the fact that the borrower of the Respondent Bank filed SA.No.S9 l2o2o before this Tribunal chailenging the proposed auction of the subject property, along with a stay petition vide 14.No.49212020, wherein interim orders were passed by this Tribunal on 16.03.2020. A copy of the said order is fi1ed by the Applicants th the present SA. As per the said order dt. 16.03.2020, it is sel for the Respondent bank herein having filed caveat, made ap and opposed grant of stay. However, this Tribunal dircctbd the ndent bank to go ahead with auction but not to ,ffi.{frrfoff. .1)I"^favour of the highest bidder. There is also no the fact that Respondent Bank addressed a letter to the Applicants herein confirming the sale of the and directing the Applicants to pay balance amount

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SA.No.236/2022

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within 15 days from the date of said letter. In the said letter, it is specifically mentioned that the said sale shall be subject to outcome of the SA'No.S9 l2O2o. Thereafter, there was correspondence between the Applicants and Respondent Bank regarding payment of balance amount in view of COVID Pandemic, which was prevailing in the year 2020.

¶67

12' The Respondent Bank is not clear and consistent about its stand whether pendency of the SA is informed to the Applicants prior to conducting of auction of the subject property on tg.o3.2020. In the reply statement, at one stage it is averred that the Applicants were informed about the pendency of SA prior to auction but, in paragraph 16 of the reply statement it is clearly stated that lodging of the SA.No.S9 l2O2O two days prior to auction is not within the knowledge of the Respondent Bank. When Counsel for the Respondent Bank made his appearance at the time of hearing of stay petition on 16.03.2020, by no stretch of imagination can it be said that Respondent Bank is not aware about the SA, which was filed by the concerned borrower. No material is placed by the Respondent Bank to show that it has informed the Applicants before conducting auction of the subject property about the pendency of sA.No.59 l2o2o. As per the correspondence made between parties it is very clear that it is only on 19.O3.2020, the Respondent Bank has informed the Applicants that the sale shall be subject to outcome of SA.No.59 l2o2o.

¶68

As per the records, it is clear that, subsequently there was a settleme.nt between the borrower and the Respondent bank and the . ,.r : - .,,, _ ,i. -iF, .or,,"tonsegpetf:i',$fg*.r !r^{-"-.iIir,""u r's,} .,.i.. ?5^-\i^+yvvur has paid^{rrd.D lJaru} the^Lrru a^rn m oun ft un qer ul's der OTS to the h' ReWei,ndent ffi\ and the concerned borrower has withdrawn the by him and so this Tribunal dismissed the said 07.O4.2022, as evidenced by the copy of docket filed ,ffi:f:.."'--.-'a.'

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SA,No.236/2022

¶70

As per the ratio laid down by the Hon,ble High Court of Andhra Pradesh in Mandaua Kishna Chaitanga,, case, which is relied upon by the Ld. Counsel for the Applicants, (referred supra), it is very clear that, it is the bounden duty of the concerned Bank to inform about the pendency of any proceedings of the sA to the bidders/auction purchasers before conducting of auction, because if any such proceedings are pending, il enabres the bidders/auction purchasers to take a decision whether to participate in auction or not. So, non_ disclosure of pendency ol SA to the Applicants herein before conducting of auction is a clear lapse on the part of the Respondent Bank. Even after conducting of auction, there was a settlement between the borrower and the Respondent Bank and as the Respondent Bank received the outstanding dues from the borrower, the SA filed by the borrower was withdrawn.

¶71

Sub-rules (3), (4) & (5) of Rule 9 of the Securiry Interest (Enforcement) Rules, 2002, deal with deposit of sale price by the auction purchasers, which read as under:-

¶72

"(!) ,, .On eug.rA sale of immouable propertg, the purchaser snatr tmmedtatelA, i.e., on the same dag or not later than next uorking dag, as the case mag be, pag a deposit of t.ue.ntA fi.ue per cent of the amount of the -sale price, tahiclh b inclusiue of eamest money d.e[osited, if anA, to the authorized officer conducting the^-sale and" in iefautt of such deposit, the propertA shall be sold. again.

¶73

(4) The balance amount of purchase pice pagable shalt be ^paid _bg the purchaser io the authiriz.i iff"", on o, lefore^{the ftfteenth dag of confi.rmation otf} sale^q tf the property:or such extended peiod. as mag be in writing bettueen the purchase, ond th" ', tn anA case not exceeding three months.

¶74

of^'payment tuithin the period mentioned. in deposit shall be forfeited. to the seanred the property shall be resold and the cha\er shall forfeit all claims to the propeftg of the sum for ulhich it mag be subseqientfi

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54.No.236/2022

¶76

As can be seen from above referred Rule 9(5) of the Rules, 2OO2, t}.e secured creditor is entitled to forfeit 25%o of the bid amount paid by the auction purchaser if auction purchaser fails to deposit balance 7 5%o of the bid amount within the time stipulated under Rule 9(4). As per Rule 9(5), after forfeiture of the amount, the property shall be resold by the secured creditor. But, in the instant case, the borrower by paying the outstanding dues to the Respondent Bank redeemed the property and so the question of conducting auction of the subject property again by the Respondent Bank does not arise. It is not the case of the Applicants that they were not interested to go ahead with the auction proceedings by depositing balance T so/o of the bid amount. Initially, the Applicants were unable to pay the balance T so/o of the bid amount due to lockdown imposed by the central (]overnment in view of the COVID pandemic but later, they were not willing to pay the balance amount in view of sA.No.S9/ 2o2o ftred by the concerned borrower challenging the e-auction notification of the subject property. It is pertinent to note that the concerned borrower filed the said SA.No.59/2020 just two days prior to the auction, which was conducted on 18.03.2020 and withdrew the said SA only on 07.O4.2O22 and so the said SA was pending till 07.04.2022. As per the record, it is crear that the Applicants earlier filed wp.No.137g5 0f 2o2o before thc r-ron'blc I ligh court for thc state of rclangana at Hyderabad onr2.or ,2o2o, challenging the forfeiture of 25ok of the bid amount by the Respondent Bank and the Hon'bre High court vide order dt. r9.08.2022 disposed of the said writ petition granting liberty to the Applicants herein to approach the DRT, Hyderabad and also .,1;,.ffit$r.{el ex-Wiea^{the time spent belore the Hon'bleHigh Court} will be .4r:4!c" }'computing^{rhe limitarion. So, after disposarof the said} jit'+ -i:i+ wri @effie tition ,ki]lt $ ,. app lir c ants-.,ts filed b yv the present sA. So, even before 1i . P r lhnaritEra^ttlisn.ru.,. s9 t2o 2o firerr h' rhp ann^^---r L.^--^...^- +r^^ fired by rhe concerned borrower, rhe ':^g I {nmTUr^rtilsn.r,ro.^ss/2o ,ti ...^{Applicantst^x$ 7fu*..,steps by filing writ petirion before the Hon'ble} t.; +. tllgh S$l.ffittenging thc lcrrer dL.2S.06.2020 issued by the 'qr$try'#nk informing the Applicants about forfeiture of 2o/o ot the bid amount deposited by them. So, all these circumstances clearly

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SA.No.236/2022

¶78

indicate that, the Applicants were not interested to pay the balance 75oh of the bid amount only due to pendency of SA.No.S9/2020 filed by the concerned borrower challenging the e_Auction Notification issued by the Respondent Bank but not for any other reasons. when the Respondent Bank has failed to establish that it has dury informed to the Applicants about the pendency of the SA before conducting of auction, it cannot contend that it is entitled to forfeit 250/o of the bid amount deposited by the Applicants. If really the Respondent Bank had informed the Applicants about pendency oI the SA, before conducting of auction, nothing prevented the Respondent Bank to take acknowledgement from the Applicants to the said effect. But, admittedly, no such acknowledgement was taken by the Respondent Bank from the Applicants. As per the documents filed by both the parties to the present SA, it is clear that only lor the first time on 19.O3.2O2O i.e., after conducting of auction on 1g.03.2020, the Respondent Bank informed the Applicants that the sale of the subject property shall be subject to the outcome of sA.No.59 l2o2o. So, nondisclosure of pendency of SA filed by the borrower to the Applicants before conducting of auction is a valid ground for the Applicants to seek refund of 25o/o of the bid amount with interest.

¶79

So, considering all the circumstances I hold that the Respondent Bank is not justified in issuing letter dt.2s.06 .2o2o, wherein it has forfeited 25o/o of the bid amount deposited by the Applicants. So far as the other relief of declaring the auction conducted on rg.03.2020 and the Sale Confirmation letter dt. 19.03.2020, issued by the Respondent cerned, now there is no necessity to give any finding as the r has redeemed the property by paying outstanding ndent Bank and withdrawn the SA.No.S9l2O2O. As wn by the Hon'ble High Court of Andhra pradesh 1i0 00{nm,a Chaitanga Vs. \JCO Bank, Asset Management Branch" upra), the Applicants are entitled for refund of 25,'/o t deposited by them and they are also entitled to @^{18% p.a.,} from the date of deposit till the date of

¶80

SA.No.236/2022

¶81

refund by the Respondent Bank. The judgments relied upon by the Ld. counsel for the Respondent Bank do not apply to the facts and circumstances of the case. so, this point is answered accordingly.

¶82

Potnt No.(ti):-

¶83

In the result, the present securitization Application is allowed by declaring the letter of the Respondent Bank dt.26.0s.2o2o, forfeiting 25o/o of the bid amount deposited by the Applicants, as illegal; The Respondent Bank is directed to refund to the Applicants 21o/o of the bid amount i.e. , Rs.4T,20,oo0/- deposited by them, with interest @ 18oh p.a., from the date ol deposit till the date clf payment, within a period of one month from the date of this order. consequently, the Interlocutory Applications, pending if any, shal stand disposed of. No order as to costs.

¶84

communicate a copy of this order to the parties concerned.

¶85

(Dctated to the Priuate secre:?^ry:.transcribed bg hirt, corrected., signed. and pronounced bg me in the open court on this the 16,h daA of October, 20i3).

¶86

sd/-

¶87

(G. coPrcHANDl Presiding Officer

¶88

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t'l

¶89

E^gCIPY

Mr Anwar Ali Jiwani v. Union Bank of India

Case brief

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Mr Anwar Ali Jiwani v. Union Bank of India

Case brief

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