Allowed

Lenin Rajasehar v. Recovery Officer II

DRT12 Mar 2026APPEAL/2/2025

Case brief

AI extract

What is this about?

In an appeal under the Recovery of Debts and Bankruptcy Act, the Debts Recovery Tribunal set aside an order cancelling an e-auction and forfeiting the earnest money. The Tribunal held that payment via demand draft taken on the due date constituted sufficient compliance, rejecting the Respondent's claim of default due to the delayed physical receipt of the draft.

What did the court decide?

The order of the Recovery Officer cancelling the e-auction and forfeiting the EMD was set aside.

Lenin Rajasehar versus Recovery Officer II — Banking and Recovery | DRT (2026)

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Appeal No.02/2025

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 12^th DAY OF MARCH, 2026

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PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd]

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PRESIDING OFFICER

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Appeal No. 02/2025

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Lenin Rajasehar,

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S/o. Annadurai, 107J/165A/1, Anna Nagar 3rd Street, Tutucorin, 628008.

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…. Appellant

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Recovery Officer – II,

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Debts Recovery Officer, Officer of the Recovery Officer, BSNL Level – IV Building, 1st Floor, CTO Compound, Tallakulam,

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Madurai – 625002.

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The Senior Manager, Canara Bank, Chidambaram Nagar Branch, Tuticorin..

…. Respondents

Page 1 of 6

Appeal No.02/2025

Appearance of Advocates: Ms. Prabahari ---- Counsel for the Appellant Mr. R. Pandivel ---- Counsel for the Respondent Bank

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This Appeal was heard in the presence of Counsels for the Appellant and the Respondent Bank and fixed for passing order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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1 . This Appeal has been filed u/s. 30(1) of the Recovery of Debts and Bankruptcy Act 1993 by the Appellant praying that this Hon'ble Tribunal may be pleased to set aside the order dated 05.08.2025 in R.C.No.69/2021passed by the Recovery Officer-II, Madurai.

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2 . The brief averments of the Application filed by the Appellant are as follows:-

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The petitioner submitted that the appeal is filed against the order dated 05.08.2025 passed by Ld. Recovery Officer-II of this Hon’ble Tribunal Madurai in R.C No.69/2021. It is further submitted that the Ld. Recovery Officer-II issued an E-Auction Notice dated 02.06.2025 and fixed the E-Auction on 24.07.2025 from 11.00 A.M to 11.30 A.M for appeal mentioned property. It is further submitted that the said E-Auction notice dated 02.06.2025 as imposed certain conditions of sale and fixing the upset price of Rs.14,00,000/- and 10 % of the upset price must be remitted towards EMD in the account of respondent and submission of the application should be on or before 5.00.P.M on 21.07.2025 and the successful bidder shall pay 25% of the sale proceeds after adjustment of EMD on the next date i.e., by 3.00 P.M. and to deposit 75% of the sale proceeds on or before 15^th day from the date of sale if property.

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Page 2 of 6

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Appeal No.02/2025

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It is further submitted that the appellant have remitted 10% of the upset price towards the EMD of Rs.1,40,000/- and all necessary documents including the payment receipt with auction bid form was submitted. It is also submitted that on 24.07.2025 the appellant was confirmed as successful bidder in the E-auction by the Ld. Recovery Officer-II through email dated 24.07.2025 and further asked to pay the 25% of the bid amount of Rs.20,00,000/- which after adjusting the EMD furnished by the appellant on or before 3.00.P.M on the next day i.e.,25.07.2025 which comes around Rs.3,60,000/- and to pay 75% of the balance bid amount along with the poundage fee which is Rs.15,20,010 within 15 days from the date of auction i.e, on or before 08.08.2025. It is also submitted that as per the E-Auction notice the payment of 25% and balance 75% of the bid amount shall be paid either through RTGS/NEFT/Money Transfer to the bank account mentioned in the E-Auction notice dated 02.06.2025.

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It is further submitted that on 25.07.2025 the appellant approached the U.C.O Bank Tuticorin Branch and made a request for transferring the 25% of bid amount through RTGS/NEFT but the same was not fructified in view that an option to do RTGS/NEFT can be done from Home branch only and the appellant home branch saving account is with U.C.O Bank, TNLS Branch (Tiruchirappalli). It is also submitted that on the same day a demand draft dated 25.07.2025 was taken in favour of respondent vide DD.No.434252 UCO Bank, Tuticorin and the same was communicated to the respondent vide email dated 25.07.2025 along with a soft copy of the demand draft and the same day i.e.,25.07.2025 the said demand draft along with covering letter has been couriered to the respondent and the same was duly acknowledged by the respondent on 28.07.2025.

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Page 3 of 6

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Appeal No.02/2025

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It is also submitted that the balance amount of 75% of the sale proceeds which comes around Rs.15,20,010/- has been paid in the account of the respondent on 08.08.2025 and the same was credited in the account of the respondent in terms of E-Auction notice dated 02.06.2025 and the same was intimated by appellant through his email dated 09.08.2025 along with proof payment to the respondent. Both 25% of the bid amount Rs.3,60,000/- and 75% of the bid amount of Rs.15,20,010/- has been encashed by the Respondent.

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It is further stated that thereafter appellant visited the Respondent Office on 11.08.2025 and sought for a copy of Title Deeds of the Auctioned Property. At that time the Respondent informed that 25% of the sale proceeds of Rs.3,60,000/- shall be paid on or before 3 P.M on 25.07.2025 itself which appellant has not paid, though the respondent has received the Demand Draft dated 25.07.2025 only on 28.07.2025 which is beyond the date of 25.07.2025 and informed that they have already passed an order thereby cancelled the Auction and fortifying the EMD. Since there is a delay in getting a Written communication from the respondent with regard to cancellation of E- Auction and forfeiture of EMD amount, appellant approached the respondent on 18.08.2025 and sought for a copy of the impugned order, for which the respondent furnished a copy of the impugned order dated 05.08.2025 in which it is informed that since appellant has not complied the payment of 25% of the bid amount or before 3 P.M i.e., 25.07.2025 as such the respondent has cancelled the E- Auction and EMD already paid by appellant is fortified to the Government. Subsequently the respondent communicated the original impugned order dated 05.08.2025 and the same was received by appellant only on 21.08.2025. It is relevant to state that

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Page 4 of 6

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Appeal No.02/2025

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the respondent informed about the impugned order only on 11.08.2025, prior to that appellant was not intimated about the cancellation of Auction and fortifying the EMD and however appellant has paid the 75% of the bid amount on 08.08.2025 itself. Even thereafter the respondent has not intimated about the impugned order till appellant met the respondent on 11.08.2025.

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It is also submitted that the respondent passed the impugned order in a hasty manner and without considering the payment of 25% of the bid amount through a Demand Draft dated 25.07.2025 and further in the present case appellant has made the entire balance bid amount on 08.08.2025 itself in terms of E-Auction notice dated 02.06.2025. It is further submitted that in view of the above facts and circumstances appellant has no other option except to approach this Hon’ble Court under Article 226 of Constitution of India to redress his grievances.

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4. On the other hand respondent bank has submitted that they have no objection to allow this appeal.

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5 . Having heard the parties, I Perused the record and I find that the appellant has challenged the order passed by the Recover Officer of Debts Recovery Tribunal, Madurai dated 05.08.2025 cancelling the e-auction sale dated 24.07.2025 in favour of the petitioner and forfeiting the EMD already paid by him to the Government. From Perusal of the order dated 05.08.2025 I find that the Learned Recovery Officer has conducted e- auction sale on 24.07.2025 as per the sale proclamation issued by him on 02.06.2025 and in the said sale the appellant was the successful bidder who had not paid 25% percent of bid amount after adjusting the EMD furnished by him before 3.00 P.M as per the Terms and Conditions. It has also been mentioned in the said order that the successful bidder of the e- auction notice dated 02.06.2025 has to pay 25% of the sale proceeds after

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Page 5 of 6

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Appeal No.02/2025

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adjustment of the EMD and Poundage fee @ 2% for the amount up to Rs.1,000/- and @ 1% for the excess of the bid amount on being knocked down by next date i.e., 25.07.2025 by 3.00P.M. It is further submitted that in the said account as per the details mentioned in the para 5 of the sale notice all the payments shall be made through RTGS/NEFT to the Account number mentioned in the proclamation of sale.

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I also find that the successful bidder has taken Demand Draft bearing no.434532 dated 25.07.2025 for Rs.3,60,000/- from UCO Bank, Tuticorin Branch which has been received by this Tribunal on 28.07.2025 well beyond the date of 25.07.2025. I also find that since the Demand Draft dated 25.07.2025 was received by this Tribunal on 28.07.2025 hence the Learned Recovery Officer has cancelled the sale and forfeited the EMD. Here, I find that the Demand Draft for EMD amount of Rs.3,60,000/- has already been taken on same day i.e., 25.07.2025 which clearly shows that the said amount of EMD has already been deducted from the account of the successful bidder for the payment of EMD for the said auction sale. So, I do not find any irregularities in payment of EMD for the said e-auction sale. Hence, the order passed by the Recovery Officer dated 05.08.2025 cancelling the e-auction sale and forfeiting the EMD of the successful bidder is hereby Set Aside.

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In the result, Appeal No. 2/2025 is hereby allowed.

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Dictated to Varshini, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 12^th March, 2026.

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Sd/- (SEEMA SINHA)

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PRESIDING OFFICER

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Uploaded on 26.03.2026

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Lenin Rajasehar v. Recovery Officer II

Case brief

What is this about?

What did the court decide?

Lenin Rajasehar v. Recovery Officer II

Case brief

What is this about?

What did the court decide?

What the court decided

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