A successful auction purchaser in a bank sale under the SARFAESI Act failed to deposit the balance bid amount even after two extensions and sought to quash forfeiture of his deposit. Holding the forfeiture strictly per Rule 9(4) and 9(5) of the 2002 Rules, the Court dismissed the writ petition.
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.
2025:KER:28919
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
THURSDAY, THE 3RD DAY OF APRIL 2025 / 13TH CHAITHRA, 1947
WP(C) NO. 7595 OF 2025
PETITIONER:
ABDUL OFFUR,
AGED 60 YEARS, S/O. MOIDUNNY,
AMANATH PANIKKAVEETTIL HOUSE, GURUVAYOOR,
PUTHANPALLII P.O., THRISSUR DISTRICT,
PIN – 680 103.
BY ADV RASMI NAIR T.
RESPONDENT:
AUTHORIZED OFFICER,
SOUTH INDIAN BANK, REGIONAL OFFICE, THRISSUR,
PLATINUM JUBILEE BUILDING, CIVIL LANE ROAD,
AYYANTHOLE, THRISSUR P.O., KERALA, PIN – 680 003.
BY ADV S.LAKSHMY (SC)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 03.04.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
2025:KER:28919
WP(C) 7595/2025
2
JUDGMENT
The petitioner was the successful bidder in an auction held by the respondent bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The sale was held on 22-08-2023. According to the petitioner, the petitioner remitted a sum equivalent to 25% of the bid by 23-08-2023 (a total sum of Rs.17,50,000/-) and the petitioner was required to pay the balance amount of Rs.52,50,000/- within 15 days. However, the petitioner could not remit the said amount within the time specified and approached the bank for extension of time. The bank vide communications issued on 04-09-2023 and 25-09-2023 extended the time for payment of the balance amount by the petitioner by 15 days each. The petitioner did not remit the amounts within the extended time also. The petitioner is now before this Court seeking to quash Ext.P6 communication and seeking a direction to the respondent bank not to forfeit the amount already remitted by the petitioner.
2025:KER:28919
WP(C) 7595/2025
3
specified in terms of the provisions contained in Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘2002 Rules’). It is submitted that the right of the bank to grant extension of time is also controlled by the provisions of Rule 9(4) of the 2002 Rules. It is submitted that the terms of the sale and the provisions of the 2002 Rules contemplate forfeiture of the amount already remitted by the petitioner, if the balance amount is not paid. It is submitted that the petitioner also withdrew from the sale. The learned counsel appearing for the respondent bank also placed reliance on the judgments of the Supreme Court in Authorised Officer, Central Bank of India v. Shanmugavelu; 2024 KLT OnLine 1060 (SC) and Authorised Officer, State Bank of India v. Natarajan; 2023 KLT OnLine 1792 (SC) to contend that forfeiture is permissible and authorised by the statute (SARFAESI Act).
2025:KER:28919
WP(C) 7595/2025
4
conditions of the sale and the provisions of the 2002 Rules contemplate that where the successful bidder fails to deposit the amount within the time specified or within the extended time permitted by the bank, any amount deposited by the successful bidder will be forfeited by the bank. There is no challenge to the provisions of the 2002 Rules, and in such circumstances, it is not possible for this Court to direct that the bank must act contrary to the provisions contained in the 2002 Rules. In Shanmugavelu (supra) it was held :-
“66. At this stage, we may also answer the submission of the respondent that the authorised officer under Rule 9(5) of the SARFAESI Rules has been conferred with unguided and unfettered power of forfeiture and as such the said rule is liable to be struck down. However, we are not impressed with such submission. First, there was no challenge to the constitutional validity of Rule 9 sub-rule (5) of the SARFAESI Rules. Secondly, even as per Agarwal Tracom (supra) it is always open for a person aggrieved by an order of forfeiture under the SARFAESI Rules to challenge the same before the DRT under Section 17 of the SARFAESI Act.
WP(C) 7595/2025
5
2025:KER:28919
the 1872 Act, the same was negatived by this Court in C. Natarajan (supra) with the following observations: -
“22. .... We have considered it necessary to advert to this question as it is one of general importance and are of the considered opinion that the answer must be in the negative. While the Contract Act embodies the general law of contract, the SARFAESI Act is a special enactment, inter alia, for enforcement of security interest without intervention of court. Rule 9(5) providing for forfeiture is part of the Rules, which have validly been framed in exercise of statutory power conferred by section 38 of the SARFAESI Act. Law is well settled that rules, when validly framed, become part of the statute. …”
2025:KER:28919
WP(C) 7595/2025
6
more particularly the forfeiture of earnest-money deposit which has been statutorily provided under Rule 9(5) of the SARFAESI Rules as a consequence of the auction purchaser’s failure to deposit the balance amount.
Therefore, the act of the bank in forfeiting the amount deposited by the petitioner cannot be found fault with.
Writ petition fails and it is accordingly dismissed. However, this will not prevent the petitioner from participating in any fresh auction that may be conducted in respect of the property.
Sd/GOPINATH P. JUDGE
ats
2025:KER:28919
WP(C) 7595/2025
7
APPENDIX OF WP(C) 7595/2025
PETITIONER’S EXHIBITS
Exhibit P1THE TRUE COPY OF THE LETTER DATED
23.08.2023 SENT BY THE RESPONDENT BANK
Exhibit P2THE TRUE COPY OF THE RECEIPT OF
REMITTANCE OF RS. 10,50,000/- ON
22.08.2023
Exhibit P3THE TRUE COPY OF THE LETTER GIVEN BY THE
PETITIONER TO THE RESPONDENT BANK
Exhibit P4THE TRUE COPY OF THE LETTER DATED
11.01.2024 SENT BY THE RESPONDENT BANK
Exhibit P5THE TRUE COPY OF THE REPRESENTATION
DATED 08.01.2025
Exhibit P6TRUE COPY OF THE LETTER RECEIVED FROM
THE BANK 16/01/2025
1 issue framed by the court
Whether the bank could forfeit the amount deposited by a successful auction purchaser who failed to pay the balance within time and extended time under Rule 9(4) and 9(5) of the 2002 Rules.
Colour shows how this judgement treated each authority
Authorised Officer, Central Bank of India v. ShanmugaveluRelied on¶27
Authorised Officer, Central Bank of India v. Shanmugavelu; 2024 KLT OnLine 1060 (SC)
Authorised Officer, State Bank of India v. NatarajanRelied on¶27
Authorised Officer, State Bank of India v. Natarajan; 2023 KLT OnLine 1792 (SC)
3 provisions across 2 enactments
Abdul Offur
Authorized Officer, South Indian Bank
Gopinath P.
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court