Allowed

Ms Tudor Management Consultants Pvt. Ltd. v. Ifci Limited

DRT18 Jul 2025SA/182/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an applicant's application to set aside a forfeiture of Rs.8 crores paid as a bid amount. The court held that the respondent failed its statutory duty under Rule 8(7) to disclose known Income Tax attachments and prohibited list status before the auction.

What did the court decide?

Auction set aside; forfeiture letter quashed; refund of Rs.8 crores with interest awarded; prayers for damages and compensation rejected.

Ms Tudor Management Consultants Pvt. Ltd. versus Ifci Limited — Banking and Recovery | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL AT HYDERABAD

¶2

DATED THIS THE 18TH DAY OF JULY, 2025

¶3

PRESENT: SH. RAMESHWAR KOTHE, B.Com, L.LB. (Hons.), M.A, PRESIDING OFFICER

¶4

Securitization Application No. 182 of 2O2S

¶5

M/s Tudor Management Consultants pvt. Ltd. Rep. by its Managing Director Mr.D.V.V.S.G. Murthy S/o D. Venkateswara Rao Aqe 52 years, Occ: Business Flat No.1106, Mount Nazir Apartments Beside Ravindra Bharathi, Saifabad Hyderabad, Telangana - 500004

¶6

Versus

¶7

.....Applicant.

¶8

The Authorized Officer IFCI Limited 5-9- 1 3, Taramanda I Complex Saifabad, Hyderabad Telangana 500004

¶9

.....Respondent.

¶10

Counsel for the Applicant : Sri P.S.N. Ravindra Counsel for Respondent : M/s Kochhar & Co,

¶11

-TORDER:-

¶12

The present Securitization Application is flled by the Applicant u/s.77 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (..Act,, for short) to set aside the letter dated 26.03.2025 issued by the respondent cancelling the auction held on 21.10.2024 and forfeiting Rs.8 crores along with interest and consequently order and order refund of the same along with compensation, damages and costsfu$.ti

¶13

Page 2 of¹⁰

¶14

SA N0.182/2025

¶15

The^{case of the applicant,briefly' is that the applicant} participated and^{was declaredas the successful bidderin the e-} auction^{held on 12.07.2022by the respondentin respectof the} application^{schedule property at Rs'10'54 crores Vide letterdated} 12.01.2022, the^{respondentsought for payment of 2sVo of the bid} amount on^{the same day or next day and informedthat 75olosale} consideration^{will be demandedSince the respondentfailed to} identify the^{boundariesapplicant did not pay the bid amountand as a} result Rs.2,09,30,000/-^{was forfeitedand the same was refundedby} the order^{of DRT-I, Hyderabad in SA No 4412023 At theassurance} given by the^{respondentto get the property surveyed and boundaries} demarcated,^{the applicant again participated in the fresh auctionheld} on 27.1o.2o24^{and stood as successful sole bidder at Rs'11'66 crores} followed by^{payment of Rs'8 crores before the due date and Rs'130} crores after^{the due date. On enquirywith SRO' applicantcame to} know that^{thereis an attachmenton the property by the Income Tax} Department^{and under the prohibitedlist of SRo' The respondent} asked to^{pay balance Rs.2.36 crores and applicant refused to pay till} raising of IT^{attachment. On 26 03 2025respondent issued letter} informinq forfeiture^{of Rs.8 crores and refundof Rs 1 30 crores'} Aggrieved^{by the action, the present SA is flled'}

¶16

The respondent^{filed reply statementThe submissions' shortly} are that the^{respondent has first chargeover the property and any} attachment^{is inconsequentialfor enforcementSARFAESIAct beinga} special legislation^{has overriding effect on the generalActs including} the IT Act.^{The applicant was awareof attachment as evidentfrom} their letter dated 02.04'2025.^{Howeverthe property was sold on AS} IS WHERE iS AND^{WHATEVERTHERE IS BASIS ANd WITHOUT} RECOURSE^{BASIS' Despite repeated extensionsthe applicant failed to} pay the bid amount in full and^{failed to fuffil thffi@^lonsstipulated} / /'/ 'ti'v t

page 3 of10

SA No.182/202s

for the auction. Despite being fully aware of the attachment, applicant paid Rs.1.30 crores after due date which shows that contention is only an afterthought solely to justify failure to comply the conditions. The amount of Rs.8 crores has been forfeited as per Rule 9(5) of the Security Interest (Enforcement) Rules, 2002 (..Rules,, for short). Clauses 2.11 and 13.8 of tender document clearly advised the intending bidders to make their own independent inquiries and satisfy themselves regarding encumbrances etc and obtain any clarification before submitting the tender form, Respondent relied upon judgment of Hon'ble Supreme Court in lhe Authorized Officer, Central Bank of India v. Shanmugavelu (Civil Appeal No(s).235-236 of 2024) with special attention to paragraphs 68, 89, t02, 118, 119, 120 and 121 thereof. The application is liabte to be dismissed.

¶21

The applicant filed Rejoinder to the reply statement denying the adverse averments therein.

¶22

Heard learned counsel for the applicants and learned counsel for the respondent. Perused the written arguments filed learned counsel for applicant as well as respondent and also perused the material documents brought on record.

¶23

Besides reiterating the facts narrated in the application as well as Rejoinder, learned counsel for the applicant further advanced his arguments stating that the respondent was duty bound under Rule 8(7)(a) and (f) of the Rules of 2002 to disclose in the tender document the subsisting Income Tax attachment over the^property but it failed to perform the duty. Learned counsel relied upon^the judgement of Hon'ble Madras High Court in./al Logistics rep. by its Partner vs. The Authorized Officer, Syndicate^Bank in^{WP No.27079of} 2009 wilh special emphasis on^para-5 of the^{jud!(nent. The} /Ihin-/- <sup><' /'/ '-(6^{\ '+}

¶24

Page 4 of¹⁰

¶25

SA No.182/2025

¶26

respondent^{could not insist the applicantto carry on with the entire} payment and take^{the property togetherwlth IT attachment'The} property is tainted^{due to IT attachment and placing in prohibited list} of Sub-Registrar.

¶27

Learned^{counselfurthercontendedthat the applicantdid not} know about^{IT attachmenttill it enquired with the Sub-Registrar's} office. Nowhere^{in the e-auction notice and in Tender Form'the} respondent mentioned^{aboutattachmentand property being in} prohibited list. Only on^{assuranceto raise the IT attachment and} obtain original^{documents from CBI, applicantpaid Rs'1 30 crores} was paid though^{due date was over whichwas acceptedby the} respondent.^{Even till today the boundariesare not demarcatednor} physical possession taken^{even though observations weremade in} final order dated^{14'11'2023 passed by learnedDRT-1 in SA} No.4412023.

¶28

It is the^{furthercontention of the learned counsel for the} applicant that the^{respondent cannot take advantage of clause} pertaining to 'as is where is'and'as^{is what is'' He reliedupon} judgment of Hon'ble High Court of^{Judicatureat Hyderabad for the} State of Telangana^{and the State of Andhra Pradesh betweenMr'} Mandava Krishna Chaitanya^{and |-JCO Bank, Asset Management Branch in} wP No-3g084 of 2017 decided^{on 21.02.2018. Havingfailed to applydue} diligence in ascertaining^{and mentioning the encumbrancein thee-} auction sale notice as^{well as Tender form, the respondentcannot} insist upon applicant^{to take the property which does not have clear} and marketable title.^{With thesecontentiol)r learned counsel sought} to allow the SA. U<$7''

¶29

Page 5 of 10

¶30

sA No,182/2025

¶31

Per contra, the learned counsel for the respondent while reiterating the contents of the reply statement would submit that with the unwarranted intervention of learned DRT-1 in SA No.44/2O23, the respondent had to refund the forfeited amount to the applicant and it resulted in stalling of asset recovery^process. The instant application is filed only to cover up the deficiency on account of non-payment of bid amount within time. He would also submit that the attachment^of property by the IT Department is inconsequential effect as the respondent has the first charge. Further the^proceedings under^the SARFAESI Act have overriding effect on any^{general law including} that of IT Act. He relied upon the^judgment of^{Hon'bleSupreme Court} in The Authorized Officer, Central Bank of India v. Shanmugavelu^(Civil Appeat No(s).235-236 of 2024) with emphasis on^{paragraphs68, 89,} 102, 118, 119. 120 and 121

¶32

Learned counsel would further submit that^{it is evident from} letter dated 02.04.2025 that the applicant^{was awareof attachment,} paid Rs.1.30 crores even after knowing that fact and^they acknowledged the urgency^{of the payment, delayin payment etc. The} amount of Rs.1.3 crores^paid after the^{due date was bonafidely} refunded to applicant and Rs.8^{crores was forfeited as per Rule 8(5)} of the Rules, 2OO2 due to failure^{in payment of bid amountas per} Rule 9(4) thus, there is no illegality^{committed by the respondent.} The respondent is under no^{legalobligationto disclose the mattersof} which it itself was not aware.^{Learnedcounselrelied uponthe} judgement of Hon'ble Madras High Court in R' Shanmugachandran^vs' The Chief Manaqer of Indian^{BankAsset Recovery Managementwherein} Hon'ble High Court refereed^{to judgement in lai Logistics case (supra)} and held that the ratio^{laid down therein is limited to onlythose} encumbrances known to^{the securedcreditor.He} ",* :"5dP;l{" ./ /^{" /rt} l-/

¶33

Page 6 of 10

¶34

sA No,182/202s

¶35

judgement of Hon'ble Madras High Coutt ifi Beauline Global services (P) Ltd vs. India Bulls Housing Fiannce Ltd & Another [2014]^{3 MU 129 in Lhe} same context. Further, the sale was conducted on'as is where is' and'as is what is'basis and an advice was^given in the sale notice to the intending bidders to exercise their own inquiry and obtain clarifications on the asset. With these submissions, learned counsel for the respondent said that the respondent is entitled to forfeit Rs.8 crores and accordingly SA is liable to be dismissed with exemplary costs.

¶36

Now, the point that arises for determination is;-

¶37

i) Whether the applicant has made out any valid ground to order refund of Rs.8,00,00,000/- paid by them towards bid amount which was foieited by respondent and award damages and compensation as prayed for?

¶38

ii) To what relief?

¶39

I have given anxious consideration to the contentions advanced by the learned counsel for both parties. As admitted by both sides, the applicant earlier participated in the e-auction for the same subject property, it deposited EMD but did not pay the bid amount as respondent failed to demarcate the property as a result of which respondent forfeited the EMD amount. Aggrieved by the forfeiture, applicant herein filed sA No.44/2023 before learned DRT-1, Hyderabad for refund of forfeited amount and the SA was allowed directing the respondent to refund the forfeited amount. A perusal of the order dated 14.11.2023 passed in SA No.44l2023 by the learned DRT-1, Hyderabad would reveal that the respondent took the same plea that bids were invited for sale of the schedule property on .AS IS WHERE IS BASIS AND AS IS WHATEVER IS AND WITHOUT RECOURSE BASIS' but the said contention was not accepted by the learned DRT-1. While referring to judgments in Mandava Krishna

'W.or"'

Page 7 of 10

sA No.18212025

chaitanya vs. Uco Bank (supra) and^judgement of Hon'ble^{High Court} for the State of Telangana and Andhra Pradesh in D.E.c. Infrastructure & Projectrs (India) Private Limited vs. IFCI Limited in WP No.450 of²⁰²⁰ decided on 27.O2.2Of8, it was held that the^respondent did^not exercise minimum care in^getting demarcation of the^{boundaries and} obtaining physical possession of the subject^{propertybefore} conducting the auction. In my considered opinion^{there is no} improvement in the sltuation even as on today^since the^applicant contended that demarcation has not been done,^{physicalpossession} not taken and original documents have been obtained from the^CBI. Thus, the applicability of^judgment to the^{presentcase also does not} change. The contention on'as is where is basis and as ls^whatever basis'has already been addressed in SA^{No.44l2023 and the order} has since not been challenged rather it has been^{compliedwith, the} respondent cannot be^permitted to take the same defence.

¶44

The core issue involved in the case is^{non-disclosure of} attachment of the subject^property by^{the Income Tax Department} and listing in Prohibited List of^{SRO in the e-auction sale notice and} Tender Forms. According to applicant, the entire^{bid amount was not} paid as it had come to its knowledge that the auctioned^{property was} under attachment by the IT^{Departmentand was placed in the} Prohibited List of concerned SRO.^{The respondent has taken plea that} the^proceedings under the SARFAESI^{Act, 2002 have overriding effect} over any other General^{Laws includingthat of Income Tax Act.The} respondent has also taken a sudden^{plea that the encumbrancewas} unknown to the respondent.^{Whilecontending so, the respondent has} not placed any proof that it made^{minimumefforts to obtain} encumbrance certificate from the^{concernedSRO before issuing the} e-auction notice. Had a^{fresh encumbrancecertificatebeen obtained,} the fact of attachment by IT^{Departmentand placing} -N"'-*^{t!€. propertvin}

¶45

Page 8 of 10

¶46

SA No.182/2025

¶47

Prohibited List with SRO would have seen the light. In the absence of such^proof, the contention that it is unknown encumbrance cannot be accepted.

¶48

The secured creditor is obligated under Rule 8, sub-Rule (7) to notify the encumbrances. Said rule reads as hereunder:-

¶49

"8. Sale of immovable secured assets.-

¶50

(7) every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the web- site of the secured creditor, which shall include;

¶51

(a) the description of the immovable propefty to be sold, including the details of the encumbrances known to the secured creditor;

¶52

(b) the secured debt for recovery of which the property is to be sold;

¶53

¶54

(d) time and place of public auction or the time after which sale by any other mode shall be completed;

¶55

(e) deposit of earnest money as may be stipulated by the secured creditor;

¶56

(f) any other terms and conditions, which the authorized officer considers it necessary for a purchaser to know the nature and value of the property,

¶57

As per proviso (a) and (f) under Rule I sub-rule (7) of the Rules of 2002, the secured creditor is duty bound to describe the known encumbrances and any other terms and conditions, which the authorized officer considers it necessary for a purchaser to know the nature and value of the property. Unfortunately, as observed supra, the respondent has failed to prove that it applied Eue diligence in /,4v<-,.t(l/^{'.u'' '}

¶58

Page 9of10

¶59

SA No.t82l2025

¶60

obtaining any encumbrances over the property to be auctioned. It is a fact that there are number of Acts in force in the country. The bidder participating in the auction sale cannot be made to wait to know which and what Acts have the overriding effect. Even as per para 89 of the judgement in Shanmugavetu (supra) relied upon by the respondent, forfeiture can be justified if the terms of the contract are clear and explicit. Thus, it is clear that the respondent faited to exercise its due care in obtaining encumbrances over the property to be auctioned and notify the same in the e-auction sale notice and Tender documents as per Rule g, sub-Rule (7) of Rules of 2002.

¶61

There is no dispute that the applicant paid Rs.1.30 crores towards balance bid amount after expiry of due date and after knowing the fact of IT attachment. It is also undisputed that Rs.1.30 crores has been returned to the applicant. However, this has no relevance to the failure of respondent in obtaining and notifying the encumbrance. The applicant claiming that it attained knowledge about IT attachment in January, 2025. The respondent having shirked off the responsibility cannot blame the auction purchaser for not obtaining encumbrances on its own. It could be an additional measure but not the primary responsibility which should be fulfilled by the secured creditor.

¶62

In the light of the above discussion, it is concluded that the applicants have made out valid ground to cancel the auction held on 27.10.2024, to set aside the forfeiture letter dated 26.03.2025 and consequently order for refund of Rs.8,00,00,000/-^ -with interest thereon from the date of deposit titt date or OuV^.n{ft.'re

¶63

Page 10^{of 10}

¶64

sA No.182/2021

¶65

18.^{With regard to paymentof damagesand compensation'except} claiming them,^{no tenable explanation has beenoffered'Hence the} prayer is liable^{to be rejected'}

¶66

Point No.(ii):

¶67

In the^{result, the SA is allowed by setting aside the forfeiture} letter dated^{26.03.2025, quashing the auction held on 2l'lO'2024in} respect of^{SA schedulepropertyand directingthe respondentto} forthwith^{refund Rs.B,0O,OO,OOO/-to the applicant with interest@60lo} p.a. simple thereon^{from the respective dates of deposits till the date} of^payment.

¶68

The^{prayer with regard to grant of damages/compensationis} rejected.

¶69

2t. Consequently,^{Interlocutory Applicationspending'if any' shall} stand closed.

¶70

No order^{as to costs.}

¶71

Communicate^{a copy of this order to the partiesconcernedand} upload in^{the officialwebsite.}

¶72

(Typed to mY dictation by^{the PS, c?rre-c:9!! signed and pronouncedbY me in the} op.n court on^{this the 18thday of luly, 2025)'}

¶73

ffi.,* sHwAR KOTHE) PRESIDING OFFICER RAMESHWAR KOTHE Presiding Officer Govt. of lndia Mlnistry of Finance DEBTS RECOVERY^TRIBUNAt.2 Abids, Hyderabad-500^001.

Ms Tudor Management Consultants Pvt. Ltd. v. Ifci Limited

Case brief

What is this about?

What did the court decide?

Ms Tudor Management Consultants Pvt. Ltd. v. Ifci Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Bank of Baroda versus Boya Rajashekar

Bank of Baroda versus Panasa Deepthi

Hdfc Bank Ltd. versus Gudur Santosh Reddy

Canara Bank versus M/S Srinivasa Engineering Works

B. Anil Kumar Goud and another versus Hdb Financial Services Limited

Union Bank of India versus M/S. J P Tent House