Dismissed¶108

A.Raja v. Indian Bank

Madras HC17 Apr 2026CS/160/2024

Case brief

AI extract

What is this about?

SARFAESI e-auction forfeiture; Rule 9(5) Security Interest (Enforcement) Rules; 25% bid-deposit forfeiture upheld; refund of auction deposit refused despite higher-price re-auction; loss to bank irrelevant; Sections 73/74 Indian Contract Act held inapplicable to SARFAESI forfeiture (per adopted SC ruling); Rule 8(6) irrelevant; Authorized Officer, Central Bank of India v. Shanmugavelu (2024) 2 MLJ 65 (SC) applied; recovery of money suit CS No. 160 of 2024, Madras HC (Original Side), P. Dhanabal J., dismissed 17-04-2026; plaintiff A. Raja vs Indian Bank Saidapet Branch; borrower M/s. Arun Agencies; re-purchaser Mrs. Parameswari (Rs.5,06,00,000); Rs.94,77,500 forfeited; Rs.65,00,000 credited 08.02.2024; EMD Rs.37,90,000 refunded; no order as to costs.

What did the court decide?

None; the Civil Suit was dismissed with no order as to costs.

A.Raja Vs Indian Bank — Banking and Recovery | Madras HC (2026)

What the court decided

AI extract

Outcome

None; the Civil Suit was dismissed with no order as to costs.

¶108

Issue for consideration

Whether the Plaintiff is entitled to refund a balance sum of Rs.94,77,500/- as per law? +3 more

¶48

Court's answer

The plaintiff admittedly did not pay the entire bid price (having paid only a sum printed as Rs. 1,59,17,500/- out of Rs.3,79,10,000/-), thereby failing to comply with rule 9(3) and 9(4) of the Security Interest (Enforcement) Rules; consequently 25% was forfeited and the remaining Rs.65,00,000/- was returned.

¶98

Ratio / Principle

This Court decided that the defendant bank is entitled to forfeit 25% of the deposit amount of the bid price as per rule 9(5) of the Security Interest (Enforcement) Rules.

¶98

Key takeaways

Since the forfeiture of 25% is as per law, the plaintiff is not entitled to relief in respect of the money forfeited by the bank.ratio¶98
The plaintiff admitted his non-payment within the time stipulated by the bank, after which alone the property was re-sold by re-auction.ratio¶87
The auction terms and conditions (Ex.P.2), accepted by the plaintiff before participating, expressly warned that failure to deposit the due amount by the scheduled dates would result in cancellation of the sale and forfeiture of amounts deposited related to the bid.

Detailed headnote1 paragraphs

MADRAS HIGH COURT (Original Side) — CS No. 160 of 2024 (P. Dhanabal, J.; reserved 27-02-2026; pronounced 17-04-2026). Recovery suit by A. Raja against Indian Bank, Saidapet Branch, claiming refund of Rs.1,59,77,500/- (with interest @ 24% p.a.) paid towards a SARFAESI e-auction (03.03.2023) purchase of the mortgaged property of M/s. Arun Agencies (successful bid Rs.3,79,10,000/-; deposit Rs.94,77,500/- paid). The plaintiff defaulted on the balance; the sale was cancelled and the deposit forfeited by letter dated 21.06.2023. In the re-auction of 28.07.2023 the property fetched Rs.5,06,00,000/- from Mrs. Parameswari; the plaintiff's fresh EMD of Rs.37,90,000/- was refunded (03.08.2023), and after forfeiting 25% (Rs.94,77,500/-) the bank credited Rs.65,00,000/- on 08.02.2024. Applying Authorized Officer, Central Bank of India v. Shanmugavelu, (2024) 2 MLJ 65 (SC), the Court held (Issues 1-3) that forfeiture of 25% under Rule 9(5), Security Interest (Enforcement) Rules, is a statutory consequence of default that follows irrespective of the higher resale price or absence of loss to the bank; the plaintiff having admitted default of rule 9(3)/9(4) compliance, the forfeiture stands and the plaintiff is not entitled to the forfeited money. Rule 8(6) was held irrelevant to the case. Issue 4: no relief; Civil Suit dismissed, no order as to costs.

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CS No. 160 of 2024

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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RESERVED ON: 27-02-2026

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PRONOUNCED ON: 17-04-2026

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CORAM

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THE HON'BLE MR.JUSTICE P. DHANABAL

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CS No. 160 of 2024

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A.Raja 3/92, Pillaiyar Koil Street, Kazhipattur, Pudur Post Omr, Chengalpattu.

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..Plaintiff(s)

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Indian Bank Represented By Its Manager, Saidapet Branch, Bali Towers No.1, Abdul Razack Street, Saidapet - Chennai - 600 015.

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..Defendant(s)

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PRAYER : This Plaint has been filed under Order IV Rule 1 of High Court Original Side Rules read with Order VII Rule 1 of Code of Civil Procedure praying for a) Directing the defendant to pay a sum of Rs.1,59,77,500/- with interest at 24 percentage p.a. from this dated till realisation and b) to pay the cost of this suit.

¶14

For Plaintiff(s): Mr. K.V.Ananthakrishnan For Defendant(s): Mr. M.A.Abdul Wahab for M/s. K.V.Subramanian Associatez

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Page1 of 18

Exhibit No.	Date	Description of Documents
Ex.P.1	15.02.2023	E-Auction notice paper publication.
Ex.P.2	16.03.2023	Photocopy of the Auction confirmation.
Ex.P.3	16.03.2023	Letter by Plaintiff seeking extension.
Ex.P.4	20.03.2023	Photocopy of the Confirmation of Sale.
Ex.P.5	21.06.2023	Photocopy of the Forfeiture of entire amount.
Ex.P.6	12.07.2023	2^ndE-Auction notice paper publication.
Ex.P.7	27.07.2023	Deposit of EMD for fresh auction Rs.37,90,000/-.
Ex.P.8.	18.07.2023	Bank statement for Return of Rs.37,90,000/-
Ex.P.9.	12.09.2023	Letter from Plaintiff to defendant with postal tractk.

Ex.P.10	04.10.2023	Letter from defendant to Plaintiff.
Ex.P.11	28.10.2023	Legal notice from Plaintiff’s counsel to defendant with acknowledgement card.
Ex.P.12	16.12.2023	Reply to the legal notice from defendant counsel with cover.
Ex.P.13	08.02.2024	Photocopy of the bank statement for credit payment of Rs.65 lakhs.

Exhibit	Date	Description of Documents
No.
Ex.D.1	14.02.2023	Notice of intended sale.
Ex.D.2	10.07.2023	Notice of intended sale.
Ex.D.3	04.10.2025	Letter to the Plaintiff from bank.

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