Writ petition challenging auction cancellation and forfeiture of earnest money due to alleged one-day delay in depositing 25% of sale consideration. Court directed refund of earnest money on grounds of peculiar facts, clarifying it is not a precedent.
Respondent bank directed to refund Earnest Money Deposit of Rs. 3,12,000/- within two weeks.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
C/SCA/309/2022 ORDER DATED: 18/02/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 309 of 2022
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ASHWIN DHIRAJLAL THAKER Versus BANK OF BARODA
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Appearance:
HARSH M KHEMKA(7880) for the Petitioner(s) No. 1 BHASKAR SHARMA(9209) for the Respondent(s) No. 1 JUHI D CHAVDA(8626) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 18/02/2022
ORAL ORDER
“A.Pass any appropriate writ/order/direction to the respondent Bank to quash and set aside the auction notice dated 22.12.2021(Annexure-A) for e-auction proceedings to be conducted on 12.01.2022 qua the subject property as mentioned in Para No.2, till the pendency and final outcome of this petition.
B. Pass any appropriate writ/order/direction to the respondent Bank to quash and set aside Letter being BOB/ZOSARB/AHM/2021/677
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dated 19.11.2021 (Annexure-H) cancelling the sale and forfeiting the earnest money.
C. Pass any appropriate writ/order/direction to the respondent Bank directing to give statutory time period for depositing the full consideration amount and execute the sale deed in favour of the petitioner qua the subject property in lieu of e-auction dated 16.11.2021.
D. The Hon’ble Court be pleased to pass such other orders as may be deemed just and proper in the circumstances of the case.”
3.1) Pursuant to advertisement dated 28th October, 2021 for e-auction of the property situated at Flat No.104, 1st Floor, Crystal Apartment, Bopal, Ahmedabad, admeasuring 200 sq. mtrs with super-built up area, in Plot No. E-2-X-93, Block No. 180 (Old Survey No. 145/2, 145/3) Mouje Bopal, Taluka Dascroi, District Ahmedabad, the petitioner desired to offer his bid in the auction of the said property. Pursuant to such auction, the petitioner had paid Earnest Money Deposit of Rs. 3,12,000/- as a pre-condition to auction. The petitioner emerged as the highest bidder at Rs. 33,70,000/-.
3.2) As per the terms and conditions of the auction, once the bid is accepted and confirmation of sale is received, 25% of the total amount of bid excluding the Earnest Money
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Deposit amount has to be deposited on the same day or by end of the next working day but the petitioner did not receive any information about confirmation of sale in his favour and it is only on 17th November, 2021, when the petitioner had personally visited the respondent bank, the petitioner was informed that the sale has been confirmed and thus the petitioner had immediately arranged 25% amount to be deposited before the bank. However, the amount being in cash, the petitioner was instructed to deposit the same on the next day via transfer and thus on 18th November, 2021 the petitioner deposited the amount via RTGS during the first banking hours.
3.3) The respondent-bank had issued letter dated 16th November, 2021 confirming the sale via e-auction on 17th November, 2021 which the petitioner had received on 18th November, 2021. It is the case of the petitioner that had the petitioner not visited the bank premises on 17th November, 2021, the petitioner would have received the confirmation of sale only on 18th November, 2021.
3.4) It is the case of the petitioner that upon personal inquiry, it came to the knowledge of the petitioner that the original documents of the property for which the petitioner had offered his bid was in the custody of Additional
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Chief Metropolitan Magistrate, Ahmedabad.
3.5) It is the case the petitioner that the respondent issued letter dated 19th November, 2021 on 22nd November, 2021 stating that the petitioner had failed to deposit the amount of 25% on or before 17th November, 2021 after confirmation of sale on 16th November, 2021, despite being informed about the same via e-mail and letter, and therefore, the Earnest Money Deposit is forfeited and the sale stands cancelled.
3.6) The respondent bank thereafter returned back 25% of the amount deposited by the petitioner on 8th December, 2021 and forfeited the Earnest Money Deposit.
3.7) Thereafter, a fresh advertisement was published in newspaper on 22nd December, 2021 for conducting e-auction of the property on 12th January, 2022 for which the petitioner had earlier offered his bid and paid the Earnest Money Deposit which is lying with the respondent-bank as of now.
3.8) The respondent-bank has neither executed the sale deed in favour of the petitioner nor returned the Earnest Money Deposit. Being aggrieved by such action of the respondent-bank, the petitioner has preferred the present
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petition.
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deposited amount late by a day, the respondentbank is justified in cancelling the auction and forfeiting the Earnest Money Deposit of Rs. 3,12,000/- as per the condition nos. 8 and 9 of the auction.
5.1) It was submitted that Rule 9(3) of the Security Interest (Enforcement) Rules, 2002 (For short “the Rules, 2002”) also stipulates that the successful auction purchaser has to deposit the amount on the same day or not later than next working day as the case may be, being 25% of the amount of sale price inclusive of Earnest Money Deposit. It was therefore, submitted by learned advocate Mr. Sharma that the respondentbank neither can consider the case of the petitioner to permit him to proceed with the auction sale of the property in question nor refund the Earnest Money Deposit as the same is required to be forfeited as per condition no.8 of the terms of the auction conducted by the respondent bank.
Section 9(3) of the Rules, 2002 reads as
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under :
“9. Time of sale, issues of sale certificate and delivery of possession, etc.
(1)……
(3) On every sale of immovable property, the purchaser shall immediately i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorised officer conducting the sale and in default of such deposit, the property shall be sold again.”
Conditions No. 8, 9 and 10 of the auction sale reads as under :
“8. The successful Auction Purchaser/Bidder shall have to deposit 25% (Twenty Five Percent) of the bid amount (i.e including EMD amount deposited earlier) immediately on finalization/concluding of Auction i.e. on the same day or not later than next working day. The balance amount of bid purchase price payable shall be paid by the successful Auction Purchaser/Bidder to the Authorised Officer on or before the fifteen day of confirmation of sale of the property or such extended period as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months. In case of failure to deposit the amount as mentioned above within the stipulated time, the amount deposited by successful bidder will be forfeited to the Bank and Authorized
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Officer shall have the liberty conduct a fresh auction/sale of the property & the defaulting bidder shall not have any claim over the forfeited amount and the property.
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Rs. 3,12,000/- to the petitioner within a period of two weeks from the date of receipt of this order. However, it is clarified that payment of refund of EMD shall not be treated as a precedent in any other case.
(BHARGAV D. KARIA, J)
RAGHUNATH R NAIR
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2 issues framed by the court
Whether an auction purchaser who deposited the 25% sale consideration one day late, but only after banking hours initially, can obtain refund of the forfeited earnest money.
Whether the respondent Bank is liable to refund the earnest money deposit despite a one-day delay in payment caused by banking procedural constraints.
2 provisions across 2 enactments
ASHWIN DHIRAJLAL THAKER
BANK OF BARODA
BHARGAV D. KARIA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
