Partly allowed

Raj Purohit Sogaram v. Indian Overseas Bank

DRT9 Jun 2025SA/3/2023

Case brief

AI extract

What is this about?

Applicants sought security recovery direction after 25% of their bid in a mortgage auction was forfeited by the Bank for non-payment of balance dues. DRT held the forfeiture illegal because the Bank proceeded to confirm sale despite a stay order. Court directed the Bank to refund the 25% amount but allowed subsequent injury proceedings.

What did the court decide?

Impugned notice forfeiting 25% bid amount set aside; Directors Bank to refund Rs.23,27,500 within one month.

Raj Purohit Sogaram versus Indian Overseas Bank — Banking and Recovery | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL^- I AT HYDERABAD

¶2

DATED THISTHE^gTH DAY OF JUNE, 2025

¶3

PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

¶4

sA.No.O3,/2023

¶5

Raj PurohitSogaram, S/o Ashaji Raj Purohit, Aged 42 years, Occ:business, R/o H.No.8011170, JPN Road, Warangal Chowrastha, Warangal-506002.

¶6

Raj PurohitUttam, S/ o SankajiM.Anuradha, Aged 35 years, Occ:business, R/o H.No.8-22-75, PNB lane, Warangal-506001. . . . Applicants

¶7

Versus 1.The Indian Overseas Bank Rep. by Chief Manger and Authorized officer Hanamkonda Branch, H.No.2-5-74, Nakkalagutta, Hanamkonda, Warangal-506 001. 2. M/s Hardens Steel Industries Rep. by its Prop.SriKusumaSatyanarayana, Plot No. 168, Sy.No.466&467lA, Pragati Industrial Estate, Sthambhampalli village, Narsampet Road, Geesukonda Mandal, 1,, ." 't-.:t::tt ---,t. _ iif4-- ' -' Warangal District. 3. KusumaSatyanara W-'""8\ S/o Shankaraiah, Occ:business, R/o H.No [:ffiA,^JUlr 425 Desaipet Road, Warangal 7 .d.| Counsel for the Counsel for lst Sri A.Kishnam Raju Respondent No.3 Exparte

¶8

SA.No.3/2023

¶9

JORDER.'

¶10

This Securitization application is filed by the Applicants u/s. 17 of the SARFAESI Act, 2O02challenging theNotice dt.Ol.O9.2022 issued by the lst Respondent Bank and for directing the lst Respondent bank to accept the payment of balance 7 5%o of the bid amount and execute registered sale deed in their favour or alternatively, refund 2|yo of ttle bid amount paid by them pursuant to the auction conducted by the lst Respondent in respect of the schedule property on 30.09.2019.

¶11

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

¶12

a) Respondents No.2&3 availed loan from the 1"r Respondent Bank and thereafter committed default in repaying the loan dues and so, the 1"t Respondent Bank initiated proceedings under the provisions of SARFAESI Act, 2OO2 and the Applicants participated in the e auction conducted on 30.09.2019 in pursuance of the e Auction Sale Notice dt.l2.Og.2Ol9 and in the said auction, the Applicants became successful bidders in respect of the schedule property for a sum of Rs.93,00,000/The Applicants paid 25%u ol the bid amount i.e. Rs.23,00,OOO/and the sale was confirmed in favour of the Applicants by the 1"t Respondent bank vide letter dt.30.09.2019. The Applicants have to pay balance 7 5o/o of the bid amount within 30 days which can be extended up to 90 days. Subsequently, the officials of the 1"! Respondent bank informed that Respondents No.2&3 filed SA 27rlt9 before this Tribunal challenging the sale notice t.12.O9.2019 and obtained stay. So, the Applicants awaited for of the said SA for payment of balance 75% of thebid

¶13

Subsequently due to Covid- 19, there was a complete and in January, 2022, the Applicants were informed

¶14

0 I JUI{ ffit tr,& SA filed by the Respondents No.2&3 was dismissed dt.o4.lo.2o2l. Thereafter, The Applicantsreceived

¶15

1.O9.2O22 from the l"t Respondent bank wherein they

¶16

SA.No.3/2023

¶17

stated that the writ petition No.28 1 lS l2O2l fi1ed by the Respondents No.2&3 was dismissed on 02.08.2022 and as the Applicants have not paid balance T So/o of the bid amount on or before 29.12.2019(90 days from the date of issuing the sale confirmation dt.30.09.2019), the amount paid by the Applicants i.e. the initial 25% of the bid amount of Rs.23 iakhs was forfeited.

¶18

b) The l^st Respondent Bank has never informed the Applicants about the orders passed by the Debts Recovery Tribunal, Hyderabad, having appeared before the DRT in SA 27ll2olg and as such, the letter d1.01.09.2022 issued by the 1st Respondent bank forfeiting 25o/o of the bid amount paid by the Applicants is illegal and liable to be set aside. Hence the SA.

¶19

The I^sr Respondent Bank filed their Rcply and the contentions of the 1"t Respondent Bank, in brief, are as under-

¶20

In the auction conducted by the 1"t Respondent Bank on30.09.2o19, the Applicants are declared as successful bidders for a sale consideration of Rs.93,O0,0O0/- and upon receipt of 25o/o of the bid amount i.e. Rs.23,27,50O/- the sale was confirmed and the Applicants have to pay balance 7 5o/o of the bid amount within thirty days. Respondents No.2&3 herein who are the bororwers filed SA 27ll2Ol9 challenging the auction sale notice dt.12 .O9 .2019 issued by the lst Respondent Bank before this Tribunal and this Tribunal granted conditional stay directing the Respondent bank to go ahead with the auction of the schedule property but not to confirm the sale.

¶21

tly,the said SA was dismissed on O4.1O.2O21 and thereafter, tion was filed by the Respondents No.2&3 challenging the d* ,'P passed by this Tribunal in the SA and the said writ petition was also issed. The Applicants never bothered to deposit 7 5',/o of u * 09 iutiE[oto unt on or before 29.12.2019 i.e. within 30 days from the rtl#

¶22

!,A.No.3/2023

¶23

J t

¶24

date of auction and so, the lst Respondent bank was constrained to issue notice dt.O1.O9.2O22 forfeiting 2,oh of the bid amount i.e. Rs.23,27,500 I - paid by the Applicants. Accordingly, the l st Respondent Bank prayed to dismiss the SA as it is devoid of merits.

¶25

Heard ld. Counsel for the Applicants andld. Counsel for the lst Respondent Bank whereas claim against Respondent No.2 is dismissed as no notice was taken against him and Respondent No.3was set exparte.

¶26

Now, the points that arise for consideration are,-

¶27

Whether the l,t Respondent Rank is entitledto forkit 2 So/o of the bid amount deposited bg the Applicantsin pursuance of the auction conducted on 30.09.2019 in respect of the schedule propertg?

¶28

iil To what relieP

¶29

Polnt No.lll:-

¶30

During the course of arguments, Ld. Counsel for the Applicants and Ld. Counsel for the 1"t Respondent Bank reiterated their respective versions as stated supra.

¶31

The undisputed facts of the case are that the Respondents No.2&3 availed loan from the l"t Respondent bank by creating mortgage in respect of the schedule property. In view of the default committed by the ts No.2&3 in repaying the loan dues, the lst Respondent proceedings under the provisions of SARFAESI Act,2OO2 uction Sale Notice dt. 12.O9.2019 for conducting auction of 0 s J 0[ .rn}"Oy$li:roperty :^{on 30.09.2019. Thcre is no dispute regarding the} facttHat tlre /A pplicants participated particioated in the auction held on 30. Oq09 .20 19I^q

¶32

SA.No.i/2023

¶33

and became successful bidders for a sale consideration of Rs.93,00,000/- and paid 25o/o ot the bid amount i.e. Rs.23,00,00O/on the date of auction. There is aiso no dispute regarding the fact that the Respondents No.2&3 filed SA 271l2Ol9 challenging the Sale Notice dt.12.O9.2019 issued by the lstRespondent bank for conducting auction of the schedule property. Along with the SA, RespondentsNo.2&3 fied1.A.2814 119 seeking stay of theauction proposed to be conducted on 30.09.20 i9. In the said LA, this Tribunal passed conditionalstay order regarding the confirmation of auction to be conducted on 30.09.2019. There is also no dispute regarding the fact that subsequently, the said SA was dismissed by this Tribunal on 04.lO.2O2). and thereafter Respondents No.2&3 liled writ petition No.2811512021 challenging the said order passed by this Tribunal in SA 27112019 and the same was also dismissed.

¶34

B. The present SA is filed by the Applicants challenging the Notice dt.Ol .O9 .2022 issued by the 1"1 Respondent bank wherein it is mentioned that the Applicants have to pay 7 So/o of the balance bid amount on or before 29.12.2019 and in view of the non-payment of the 7 5o/o of the bid amount within the stipulated tirrre, 21o/o of the bid amount as paid by the Applicants is forfeited.

¶35

So, in the said impugned letter dt.Ol.O9.2022, the lsr Respondent bank stated that the Applicants are expected to pay the balance TSyo of t]ne bid amount on or before 29.12.2019. But it is pertinent tonote that this Tribunal in LA.28l4 12019 in SA 27 112019 granted stay against the lstRespondent Bank herein regarding confirmation of salepursuant to the auction on 30.09.2019 in respect of the schedule f the said order in 1.A.2814/2019 makes it clear Bank is having knowledge about the stay

¶36

grantgd_by rhis Tribuqa$ in 1.A.28141 19 regarding confirmation of sale a",n9Jo.U$Jffi, d*i. 1sr Responden, ;;;; had appeared by nring

¶37

SA.No.3/2023

¶38

caveat by the time of hearing in the said I.A. But in spite of the stay granted by this Tribunal, the l."t Respondent Bank confirmed the sale on 30.09.2019 without informing the Applicants about the filing of SA 27ll19 by the Respondents No.2&3 wherein this Tribunal granted stay regarding the confirmation of sale. In view of the staygranted by this Tribunal h SA27), 119, the 1st Respondent bank is not expected to insist the Applicants to pay 7 Sok of the bid amount on or before 29.12.2019. Only after dismissal of the SA 27t119 liled by the Respondents NO.2&3 herein and also after disposal of the writ petition filed by them, the l^stRespondent bank herein is expected to issue letter to the Applicants regarding the confirmation of sale and thereafter the l"t Respondent bank is expected to demand the Applicants to pay the balance bidamount. So, inview of the above circumstances, the l^stRespondent bank is not entitled to forfeit 25o/o ol thebid amount paid by the Applicants.

¶39

The specific contention of the Applicants is that they are entitled for registration of sale deed in respect of the schedule property after payment of 7 SVo of the bid amount or alternatively for refund of the 25oh of the bid amount paid by them. For the reasons best known to the Applicants, the Applicants have not taken any interest for serving notice to the Respondent No.2 and hence the claim against Respondent No.2 is dismissed whereas Respondent No.3 was set exparte. So, in the circumstances, I am inclined to grant only alternative relief regarding the refund of 25%" of the bid amount paid by the Appiicants in the auction conducted on 30.09.2019 in respect ofthe schedule property.

¶40

So, in view of the above facts and circumstances of the case, I hold that a directfrn-can'qe divg.n^ to the lst Respondent bank to refund 257o ,.) -

¶41

of the bid.,Qmount d€'positeflfpy the Applicants.This point is answered 7

accordingfui.

I^g Jl,lllZUSⁱ

sA.No.3/202j

Point No^(iil

In the result, SA 312023 is partly allowed by setting^asidethe impugned letter dt.01.09.2o22 issued by the^1"1 Respondent^{bank in} respect of the schedule propcrty regarding the forfeiture of^{2570of the} bid amount paid by the Applicants. Accordingly, the l"t^Respondent Bank is hereby directed to refund Rs.23 ,27,5OO I - deposited by^the Applicants towards 25Vo of the bid amount,which shall be^madewithin one month from the date of receipt of this order.^{The lst Respondent} Bank is at liberty to initiate fresh^proceedings against the^schedule property by scrupulously following the procedure in accordance with the provisions of SARFAESI Act,2OO2 and Rules^{made thereunder'}

¶48

Consequently, the lntcrlocutory Applications,^pending if any,^shall stand disposed of. No order as to costs.

¶49

t4. Communicate a copy of this Order to the^parties concerned.

¶50

(Dictated to the P.5., transcibed bg her, conected, signed and pronounced bg me in the open court on this the th day of June, 2025).

¶51

sd/(G. GOPTCHAND) PRESIDING OFFICER

¶52

RUE COP
0I lu[M
9tr,-a,

Raj Purohit Sogaram v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

Raj Purohit Sogaram v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Ms Gssmr Energy Private Limited versus Union Bank of India

Sousheel versus Sriram City Union Finance Ltd.

Mergu Yellappa versus Punjab National Bank

Rajasekhar Kotte versus Karnataka Bank Limited

Raghavulu Bade versus Iifl Home Finance Limited

Sri Kashpe Srinivas versus Andhra Pradesh Mahesh Co. Operative Urban Bank Ltd.