Petitioner challenged forfeiture of Rs.10,10,000 bid security and sought execution of sale deed after failing to deposit balance payment. Court held Rule 9(5) of SIE Rules mandates forfeiture on default.
Writ petition dismissed; forfeiture of Rs.10,10,000 upheld; pending applications disposed off.
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NC: 2026:KHC:487 WP No. 37139 of 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF JANUARY, 2026
BEFORE
THE HON'BLE MR. JUSTICE ASHOK S.KINAGI
WRIT PETITION NO. 37139 OF 2025 (GM-DRT)
BETWEEN:
SRI MOHAMMAD RIYAZ
S/O HYDROSE AGED ABOUT 55 YEARS RESIDING AT NO.2-107 C,
SHEHNAZ MANSION, PAKSHIKERE ROAD,
Digitally signed by SUNITHA K S Location: HIGH COURT OF KARNATAKA
NEAR SUBRAMANYA SCHOOL, 10TH THOKUR, ATTUR DAKSHINA KANNADA 574 148
(AADHAR CARD 9242 1085 0451)
…PETITIONER
(BY SRI. SANJAN G.V., ADV.)
AND:
THE BANK OF MANAGER AND AUTHORISED OFFICER UNION BANK OF INDIA
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RAM BHAVAN COMPLEX NAVA BHARATH CIRECLE KODIALBAIL, MANGALURU 575 003
…RESPONDENT
(BY SRI. ASHOK KUMAR SHETTY K, ADV.)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO A) ISSUE A WRIT, IN THE NATURE OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT QUASHING THE ORDER ANNEXURE A DATED 30.09.2025 IN NO.OW/REC/E AUCTION/2025 FORFEITING THE DEPOSIT AMOUNT OF RS.10,10,000/DEPOSITED BY THE PETITIONER B) ISSUE A WRIT, IN THE NATURE OF MANDAMUS OR ANY OTHER APPROPRIATE WRIT OR DIRECTION, DIRECTING THE RESPONDENT TO CONSIDER THE REQUEST OF THE PETITIONER AND TO EXECUTE THE REGISTERED SALE DEED IN FAVOUR OF THE PETITIONER. C) GRANT SUCH OTHER RELIEF/S AS THIS HON'BLE COURT DEEMS FIT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND ETC.,
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI
ORAL ORDER
The petitioner filed this writ petition seeking a writ of certiorari quashing the order at Annexure-A dated 30.09.2025 forfeiting the deposit amount of Rs.10,10,000/- deposited by the petitioner, and also sought a mandamus directing the respondent to consider the request of the petitioner and to execute a registered sale deed in favour of the petitioner.
The respondent-Bank has tendered ‘E’ auction notification. The petitioner participated in ‘E’ auction conducted by the respondent-Bank on 26.06.2025 and the petitioner was the successful bidder and petitioner deposited earnest money of Rs.4,00,000/- at the time of e-auction and deposited Rs.6,10,000/- being the 25% of the bid amount, totally the petitioner has deposited
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Rs.10,10,000/-. The respondent-Bank issued a
confirmation letter of sale to the petitioner on 27.06.2025. The petitioner requested the respondent-Bank to extend the time for payment of remaining balance consideration amount. The respondent-Bank issued an impugned endorsement vide Annexure-A forfeiting the deposited amount of Rs.10,10,000/- without considering the request of the petitioner. Hence, this writ petition.
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Bank issued an impugned endorsement forfeiting the deposited amount. He submits that the action of the respondent-Bank in forfeiting the amount is arbitrary and erroneous. Hence, on these grounds, he prays to allow the writ petition.
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submissions of the learned counsel for the parties.
Bank has put the property in auction, and issued a paper publication fixing the date for auction of the property in person on 26.06.2025. The petitioner participated in the auction proceedings and he was the highest bidder, and his bid was accepted. Accordingly, the petitioner has deposited earned EMD amount of Rs.4,00,000/-and at the time of e-auction, deposited Rs.6,10,000/-. Thus, in all, the petitioner deposited Rs.10,10,000/-. The Bank has issued a confirmation letter of sale vide letter dated 27.06.2025. The petitioner ought to have deposited the balance amount within 15 days from the date of confirmation of sale. In the default, the bank has got a right to forfeit the said amount.
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examine Rule 9 of the Security Interest (Enforcement) Rules, 2002, which reads as follows:
“9. Time of sale, issue of sale certificate and delivery of possession, etc.
(1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to SubRule (6) of Rule 8 or notice of sale has been served to the borrower:
Provided further that if sale of immovable property by any one of the methods specified by sub rule (5) of rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.
(2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorized officer and shall be subject to confirmation by the secured creditor:
Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under subrule (5) of [rule 8]
Provided further that if the authorized officer fails to obtain a price higher than the reserve
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price, he may, with the consent of the borrower and the secured creditor effect the sale at such price.
(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 authorized officer conducting the sale and in default of such deposit, the property shall be sold again;
(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable 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.
(5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited [to the secured creditor] [Inserted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).] and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold.
(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorized officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the Form given in Appendix V to these rules.
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(7) Where the immovable property sold is subject to any encumbrances, the authorized officer may, if he thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him.
(8) On such deposit of money for discharge of the encumbrances, the authorized officer may issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly.
(9) The authorized officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above.
(10) The certificate of sale issued under subrule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not.”
9. Rule 9(1) of the Rules, 2002 provides that no
sale of immovable property under the rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is
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published in newspapers as referred to in the proviso to sub-rule 6 of Rule 8..
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of default in payment of balance amount as contemplated in sub-rule (4), the authorized officer shall forfeit all claims to the property or to any part of the sum for which it may be subsequently sold.
5.3 The mandatory character of Rule 9(5) of the Rules, 2002 was highlighted in Agarwal Tracom Pvt. Ltd., (supra) to observe that Rule 9(5) confers express power on the secured creditor, to forfeit the deposit made by the auction purchaser in case the auction purchaser commits any default in paying the installment of sale money to the secured creditor,
“We also notice that Rule 9(5) confers express power on the secured
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creditor to forfeit the deposit made by the auction-purchaser in case the auction-purchaser commits any default in paying instalment of sale money to the secured creditor.”
(para 28)
Rule 9 of the Rules, 2002 has rightly forfeited the amount
deposited by the petitioner. I do not find any error in the impugned endorsement issued by the respondent-Bank.
ORDER
The writ petition is dismissed .
Pending applications, if any, stand disposed
off accordingly.
Sd/(ASHOK S.KINAGI) JUDGE
SSB
3 issues framed by the court
Whether the bank was empowered to forfeit the bid security because the petitioner failed to deposit the balance consideration amount within 15 days.
Whether the Bank's decision to forfeit the deposit amount and reject the request for extension of time was arbitrary or erroneous.
Whether the writ petition seeking to quash the forfeiture order and direct execution of the sale deed should be allowed.
Colour shows how this judgement treated each authority
Canara Bank vs. Mr. Subramany Rao K. and AnotherExplained¶93
IN CANARA BANK VS. MR. SUBRAMANYA RAO.K AND ANOTHER in W.A.NO.349/2024
Agarwal Tracom Pvt. Ltd.Explained¶93
Agarwal Tracom Pvt. Ltd. (supra)
1 provisions across 1 enactments
SRI MOHAMMAD RIYAZ
THE BANK OF MANAGER AND AUTHORISED OFFICER UNION BANK OF INDIA
ASHOK S. KINAGI
As recorded by the court registry
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