Dismissed

Smt. Sandya Joshi v. Idbi Bank

DRT6 Feb 2025SA/213/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application challenging an auction sale notice and seeking a refund of 25% bid amount. The Court held that the 'as is where is' auction terms bound the bidder, and forfeiture was valid due to failure to deposit the remaining 75% of the sale price within the extended deadline.

What did the court decide?

Application for refund of bid amount and challenging the auction sale notice is dismissed. Sale confirmation and fresh auction were valid.

Smt. Sandya Joshi versus Idbi Bank — Cheque Dishonour | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL - I AT HYDERABAD DATED THIS THE 6TiI DAY Otr FEBRUARY, 2025

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.213,/2C24

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Smt. Sandhya Joshi, W/oTikam Chand Joshi, Aged 47 years, Occ:business, R/o H.No. 15-7-8, Kolsawadi, Begum Bazar, Hyderabad-SOO 012.

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.... Applicant

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Versus

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IDBI BanK Ltd., Zonal Office

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Rep.by its Authorized Olficer 5-9-89 l1&2, Chapel Road, Abids, Hyderabad-500 001

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.. Respondent

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Counsel for the Applicant Counsel for the Respondent Bank

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SnT. Vijag Kumar Smt. P.S. Sujata

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.:ORDER:

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This application is filed by the Applicant u/s. 17 of the SARFAESI Act, 2002, challenging the Sale Norice dt.24.O5.2024 issued by the Respondent Bank for conducting auction in respect of the schedule property and for direction to the Respondent bank to refund an ,78,OOO l- with future interest @24ok p.a.

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in the application, in brief, are that:

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rh.ot"PPBt0ff issued Auction Sale Notice dt.O24 .O1.2O24 n of the schedule property on 24.O1.2024. ted in the said auction and quoted his bid at

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Rs.95,13,OO0/- and he became the successful bidder and paid 21oh of the bid amount i.e. Rs.23,7g ,ooo l- and accordingly, sale confirmation dt.25.O1.2021 was issued. Thereafter the Applicant took a surveyor to the schedule property and got measured the property and the actual extent of the land came to be l6s.Tor sq.yds instead of 225 sq.yds. The Applicant approached the Respondent bank and explained the said fact and the Respondent bank stated that they will return the bid amount after enquiry. So, the Applicant waited for two months but the Respondent Bank instead of retuning the 2Soh of the bid amount, issued fresh Auction Sale Notice dt.24.O5.2O24 for conducting auction onl2.O6.2O24.The Respondent bank is liable to refund the 25oh of the bid amount paid by the Applicant in view of the discrepancy in the extent of the land of the schedule property. Hence the SA.

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The Respondent Bank filed their Reply contending that the Applicant participated in the auction conducted on 24.O1.2024 in respect of the schedule property and he became the successful bidder and paid 25% of the bid amount. The auction was conducted on "As is where is, As is what is & whatever there is and without recourse" basis. The description of the schedule property is given basing on the mortgage created by the borrower and the Authorized officer is not responsible for any shortfall of the extent of the schedule property. As per the terms of the auction, the interested parties have to inspect the property at their own cost and if the successful bidder fails to deposit 25oh of the sale consideration within the stipulated time, the EMD paid shall be forfeited and if the successful bidder fails to deposit 75o/o of the sale consideration, then the 25o/o of the sale consideration includingffiallbeforfeited.AstheApplicantfailedtopay the bilfi&ffrt.#ffit quleconsideration, the Respondent Bank has i, . .,1 sale;ait$ the 2}oh of the bid amount paid by the Appli-q..ant was forfeited --. :. as..stipulated in the terms and conditional of thriibid d"0r[,Jr[$J,q2J r..rt, "1,. *." fixed and auction sale was also

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conducted onl2.o6.2o24 in respect of the schedule property. The Respondent vide their letter dt.25.01.2024 and 06.04.2024 has advised the Applicant herein to makethe balance sale consideration within a period of there months from the date of confirmation of sale which is the maximum period as per sub-rule (a) of Rule (9) of security Interest (Enforcement) Rules, 2oo2. But the Applicant failed to make the payment. Hence the Respondent Bank cancelled the sale and forfeited the bid amount as per the terms of the sale. Accordingly, Respondent Bank prayed to dismiss the SA.

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Heard Ld. Counsel for the Applicant, Ld. Counsel for Respondent Bank and Perused the material brought on record.

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Now, the points that arise for consideration are,

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i) whether the Applicant is entitled to challenge the Auction sale Notice dt.24.05.2024 issued bg the Respondent Bank?

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ii) whether the Applicant is entitled for refund of the bid. amount as deposited bg her towards 25% of the sale consid"eration?

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iil To what relieft

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Points No.(i)&(tll:-

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The undisputed facts of the case are that on24.ot.2o24, the Respondent Bank conducted auction in respect of the schedule property and in the said auction, the Applicant participated and became ul bidder for a sale consideration of Rs.95, 25o/o of the bid amount. There is also no the t the Applicant failed to deposit the "[.E8fl.&25n.

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amount and again conducted fresh auction in respect of the schedule property on 12.06.2024.

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The specific contention of the Applicant is that as per the Auction Sale Notice dt.02.01.2o24, the extent of the schedule property is 22s sq.yds. but after the auction, when the Applicant got surveyed the schedule propert5r, the actual extent came to be r6s.To7 sq.yds.and thus there is shortfall in the extent of the land of the propert5r and so, the Respondent Bank is liable to refund the 25o/o of the bid amount paid by her. Per contra, the Respondent contended that the auction was conducted on "As is where is, As is what is & whatever there is and without recourse" basis and it is the responsibility of the Applicant to inspect the schedule property and if there is any discrepancy or short fall in the extent of the schedule property, the Respondent Bank is not responsible. In view of the non-payment of the 75oh of the bid amount by the Applicant within the stipulated period, the Respondent is entitled to forfeit the 25o/o of bid amount.

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Along with the Securitization Application, the Applicant liled letter dt.25.01.2o24 issued by the Respondent bank to the Applicant wherein it is stated that the Applicant has to pay 2}o/o of the bid amount i.e. Rs.23,78,oool- including EMD as on 25.01 .2024 and balance sale consideration of Tso/o shall be paid on or before 08.02.2024. The other document filed by the Applicant is that the letter of GEARR civil works company dt.0s.03.2024 wherein it is mentioned that the actual extent of land came to be l6s.To7 sq.yds. The Applicant filed copy of anotlfer letter issued by the Respondent to the Applieer#rgTm€f .2024 stating that the Applicant shall pay the aauy$. i!^,..0!' ".ai*;i#'L{aa.i.hh" ii',;' i ,,',.^--;a of Rs.71 ,34,7s)1-Vrithin three months from.,,$Jre datE pf cdnfirmation of sale dt.2s.0 1.2024 which is 'i ,A*,eEfHff pe*r-nitted as per sub-rute (a) of Rule (e) of :**"T sccuflry Interest (Entbrcerhent) Rules, 2OO2. The other document filed

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by the Applicant is that copy of the Sale Notice 02.0 I.2024 wherein it is clearly mentioned that the auction will be conducted on ,,As is where is, As is what is & whatever there is and without recourse,, basis.

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Along with the Reply, the Respondent Bank filed copy of terms and conditions of the auction to be conducted by the Respondent. In the said terms and conditions aiso, there is a stipulation to the effect that the auction shall be conducted on "As is where is, As is what is & whatever there is and without recourse" basis. In clause 21 of the said terms and conditions, it is mentioned that "in case, the succe.ssTtr/ bidder fails to deposit 25% of the sale price uithin the aboue stipulated time, the EMI paid shall be forfeited bg the bidder and if tlle successful bidder backs out after paging 2s% of the sale price, then the 2s% of the sale consideration so deposited. including the EMD shatt be forfeited bg the bidder."

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sub-rule (4)&(5) of Rule (9) of security Interest (Enforcement) Rules, 2oo2 deals with the payment of the bid amount by the auction purchaser and the effect of non-payment of bid price by the auction purchaser within the stipulated time and the same is extracted below:

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(4) "The balance amount of purchaser price pagable shatt be paid. by the purchaser to the authorized. offtcer on or before the fifteen the day of confirmation of sale of the immouable property or such extended period [as may be agreed. upon in utriting between the purchaser and the secared cred.itor, in ang case not exceed.ing three montttsl.

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(51,9 tefciulfM?yment uithin the peiod mentioned in sub-rule Aii'ru"igrf$"+m\f forfeited [to the secured. creditor] and. the pyoperty $u be ,66pq and the d.efaulting purchaser shall forkit .all claimi"'io the, proryrt.a or to ang part of the sum for which it *o# bE Jld,IW;",iie'[ia,,

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1 1. Ld. Counsel for the Respondent argued that as the Applicant failed to deposit 75o/o of the bid price within the stipulated period, the Respondent forfeited the 25oh of the bid amount paid by her and conducted fresh auction again and so, the Applicant is not entitled for refund of the 25o/o of bid amount as sought.

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In support of their contentions, Ld. Counsel for the Respondent relied upon the judgement of Hon'ble Supreme Courtin Ciuil Appeal JVO(s/ 235-236 of 2Oo4between The Authorized OfJicer, Central Bank of Indta Vs.Shanmugaaeluwherein it is held that:

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In C. Natarajan (supra), this Court while affirming the decision ofAlisha Khan (supra) obserued that after the earnestmonea deposit

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is forfeited, the courts should ordinarilg refrain from interfering unless

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the existence of uery rare and exceptional ciranmstances are shown.

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The releuant obseruations read as under: -

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13 If, howeuer, circumstances are shown to exist where a bidder is faced with such a graue disability that he has no other option but to seek extension of time oru genuirle grounds so as not to exceed the stipulated period of ninety dags and the prayer is rejected witltout due consideration of all facts and circumstances, faAer for^{extensioncould alford a ground} for^a decision-making process on ualid ground(s). ircumstance led to the decision in Alisha Bank) [2021 SCC OnLine SC interuened and granted relief because,

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due to COWD complications, the appellant had failed to pag the balance amount.

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The up-shot of the aforesaid discussion is that utheneuer a challenge is laid to an order of forfeiture mad.e by an authoriz,ed_ offi.cer under sub-rule (S) of rute 9 of the Rules bg a bidder, uho has failed to deposit the entire sale pice taithin ninetg dags, the tribunals/ courts ought to be extremelg reluctant to interfere unless, of course, a uery exceptional case for interference is sel up. What would constitute a uery exceptional case, hotaeuer, must be determined bg the tibunals/ courts on tlw facts of each case and by recording cogent reasons for the conclusion reached. Insofar as challenge to an orde.r of forfeihtre that is made upon rejection of an application for extension of time pior to expiry of ninetg days and within the stipulated. period_ is concemed., the scruting could be a bit more intntsiue for ascertaining uthether anA patent arbitrainess or unreasonableness in the d.ecision_ making processhas had the effect of uitiating the order und_er challenge. Houteuer, in course of such scruting, the tibunals/ courts

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mu stb ecarefulandcautiou s anddire cttteirattention to examine e ach case in some depth to locate uthether there is likelihood of ang hidden interest of the bid"der to stallthesale tobenefitthedefaultingbororaerandmust, as of necessitg, weed out claims of bidders uho instead ofgenuineinteresttoparticipateintheauctionsdoso to rig prices with an agenda to withdraut from the fray post conclusion idding^{p ro} ce s s. Incourse ofsuch y't -* courtsoughtnottobesu_taged only by like a subsequent sale at a r,:'

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distance since extending sg mp athg, g race orcomp assion are out sid.e the scope of the releuant legislation. In ang euent, the underluing principle of least interuention bg tribunals/ courts and. the ouerarching objectiue of the SARFAESIA ct dulg c o mp lime nt e d. b g the Ru I e s, w hi ch are geared toutards efficient and. speed"g recouery of debts, t o g e the rw itht he inte rp r e t atio noft he r e le u ant I aw s b g this Courtshouldnotbelostsightof. Losingsightthereofmay not be in the larger interest of the nation and" susceptible to interference.,,

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13' As per the record, it is clear that auction was held by the Respondent Bank on 24.OL.2O24"As is where is, As is what is & whatever there is and without recourse" basis. Before participating in the auction, the Applicant is expected to inspect the schedule property and if necessary, take measurements of the property. But the Applicant has not taken any such steps. But he contended that only after participating in the auction, he got surveyed the schedule property and there is shortfall in the extent of the land of the property. If really, the reason for non-payment of the 7s% of the bid amount is shortfall in the extent of the land of the propert5r, the Applicant is expected to address a letter to the Respondent Bank immediately after the inspection and survey of the property but no such correspondence was made by the Applicant expressing her grievance regarding the actual extent of the schedule property.

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14- As per Rule 9(a) of Security Interest (Enforcement) Rules, 2002, the Applicant is expected to pay 75o/o of the bid amount within lifteen days ffom tiie a{tptgconfirmation of sale. But however, the time cang'bg*extendefl'uf,'S)-aximum period of three months. Sub rule (5)'' of ;RuI. 9 dt$".ry i"T.s that in case of defaurt of payment of Tsok:,of h,%"tfA.Infn. depidsit arreadv made shall be forfeited by the secured creditor-an'd'the.'property shall be re-sold and the defaulting

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purchaser shall forfeit all claims to the property or to any part of the sum for which it may be subsequentry sold.,,The said rule was clearry extracted in the terms and conditions of the auction. So in view of the non-payment of 750/o of the bid amount by the Applicant within the extended time, the Respondent has rightly forfeited 25o/o of the bid amount as deposited by the auction purchaser i.e. Applicant herein and conducted fresh auction again in respect of the schedule property on 12.06.2024.

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So, considering all the circumstances and in view of the ratio laid down by the Hon'ble Supreme court in the decision referred supra, I hold that the Applicant is not entitled to challenge the auction Sale Notice dt.24-os.2o24 issued by the Respondent Bank for conducting fresh auction of the schedule property and the Respondent Bank has rightly forfeited the 250/o of the bid amount deposited by the Applicant in view of the non-payment of barance 7s%o of bid amount within the stipulated period. Hence, there are no merits in the sA. Accordingly, this point is answered in favour of the Respondent Bank and against the Applicant.

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Point No.(iii):-

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In the result, the present Securitization Application is dismissed. consequently, the Interlocutory Apprications, pending if any, shall stand disposed of. No order as to costs.

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17 ' communicate a copy of this order to the parties concerned.

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'"7"i!rr:1"fr,*;;;Stranscibed bv her,-conected., signed. and. pronounced bg me in the open court on this the 6th day

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sd/_ (c. coPr CHANDI PRESIDING OFFICER npr-{ ^ffi-ayoig n.r,fi. 9

Smt. Sandya Joshi v. Idbi Bank

Case brief

What is this about?

What did the court decide?

Smt. Sandya Joshi v. Idbi Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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