Auction purchaser challenged a bank's threat to forfeit his 25% bid amount after discovering pending civil litigation on the auctioned property. The High Court held the petition not maintainable given the Section 17 SARFAESI remedy before the DRT, found no illegality in the forfeiture, dismissed the writ and vacated interim orders.
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.
[3300 ]
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
(Special Original Jurisdiction)
WEDNESDAY, THE TWELFTH DAY OF NOVEMBER TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION : 16108 OF 2025
Between:
Mr. Datla Ravi Varma, S/o. Datla K. S. N VarmaAged about 53 Years,Occ: Pvt Employee, Fl/o.. Flat No. 102, Block1 7,RainTree Park, Malaysian Township, KPHB, Hyderabad- 500 085.
...'ET'T.ONER
AND
Petition under Article 226 of the Constitution oflndia praying that in the circumstances stated in the affidavitfiled therewith,the High Courtmay be pleased to issue a writ or order or direction one more specificallyin the nature of Writ of Mandamus thereby declaringthe actionof the Bank and the emaildated 05. 06. 2025 issued by the RespondentNo. 1 threateningthe writ petitionerof forfeiture of the 25 (percent) bid amount ofRs.'1 ,21,69,5001paid by him as illegal, arbitrary, contrary to theprovisionsof the SARFAESI Act 20O2 and Rulesmade there under also in violation of the Article14 and 300Aof the constitution of lndia and consequently declare the saleauction noticedated'14. 02. 2025 issuedby Respondent No. 1, i. e. UnionBank oflndia as null, void thereby directing Respondent No. 1 to return the25 (percent)of bid amount of Rs.'1 ,21,69,5001 along with 1go/o rate of interest.
lA NO:'l OF 2025
Petition under Section 15'l cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to direct Respondent No 1 not to proceed with any steps or actions in pursuance of the email dated. 05. 06. 2025 to forfeit the amount of the petitioner.
lA NO: 2 OF 2025
Petition under Section i s1 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to extend the interim orders granted on 13.06.2025 in l.A. No. I of 2o2s in w.p. No. 1 6108 of 2025 untit the final disposal of the Writ petif ion.
lA NO: 3 OF 2025
Between:
AND
...Petitioner/ Respondent Nos. 1 & 4
...Respondents/ Respondent Nos. 2 to 3
Petition under Section 1s1 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to vacate the lnterim order granted in w.p. No. 16108 of 2o2s dated 13.06.2025 and dismiss the above referred writ petition with costs.
lA NO: 4 OF 2025
Petition underSection 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the interim orders granted on 13.06.2025 in l.A. No. 1 of 2025 in W.P. No. 16108 of 2025 until the final disposal of the Writ Petition lA NO: 5 OF 2025
Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the interim orders granted on 13.06.2025 in l.A. No. 1of 2025 in W.P. No. 16108 of 2025 until the final disposal of the Writ Petition
Counsel for the Petitioner: SRI V. V. S. N. RAJU
Counsel for the Respondent No. 1 & 4:..--
Counsel for the Respondent No. 2: SRI K. RATHANGAPANI REDDY
Counsel for the Respondent No. 3: SRI P. SHASHIDHAR REDDY
The Court made the following: ORDER
HON'BLE SRI JUSTICE NAGESH BHEEMAPAI{A
WRIT No. 16108 oF2025
ORDE R:
petitioner,s case is that Respondent No.1 is functioning as a specialized branch to handle NpA accounts and undertake proceedings under the SARFAESI Act for rearization of security interest. Respondent No.4 is the Head t)rnce of the union Bank of India, wh,e Respondent Nos. 2 and.J are formar parties to the case.
1.1.
1.1. It is stated, Novus Green Energz Systems Ltd., a company under the Companies 'Act, 2013, had availed several credit facilities from the union Bank of India thro,gh its Mid corporate Branch, Jubilee Hilrs, Hyderabad. After crassification of those loan accounts as Non-performing Assets (NpA), the accounts were transferred to Respondent No.1 for recovery. The Bank, in order to recover dues, invoked provisir>ns of the SARFAESI Act, 2oo2, and initiated steps to enforce the security interest created by guarantors. Among the securities was the subject property, which had been mortgaged. by one sri Yenigalla vardhaman through his attorney holder, sri yeniga[a Anshuman.
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1.2. while so, Respondent No.l issueda public auction noti{ication dated14.O2.2025for the sale of various properties, including the subjectproperty,stating that propertywas free from encumbrancesand litigationand that the Bank had taken possession. E-auctionwas conductedon 11.o3.2O25. Believing these representations,petitioner participated and offered a bid of Rs. 4,86,78,000/-,emerging a5 thehi-ghEstbidder.He duly paid, 25o/o of the bidamount, totalling Rs' 1,2L,69,5OO I -, as per the auction terms,whereuponsale of the propertywas confirmed in hisfavour. Auction terms also stated that property was free from encumbrancesand any court litigation,thereby inducing petitioner'sparticipation.
1.3. Petitioner assertedthat after payment of 25oh of the bid amount, hevisited the subject propertyon 15.a3-2025 and was shocked to discovera notice board stating that a civil suit, O.S. No. 2ll of2024, was pend.ing before the XIX Additional Senior civil Judge,city civil court, Secunderabad, concerning the sameproperty. Petitioner immediatelyaddressedthe letter dated 24.O3.2O25.tothe Bank,enclosingphotographs of the notice board andsought extensionof time to verisr the third- party claims. Bank'sauction sale notice claimed that
.,
possession of the property was taken under Section 13(4) of the SARFAESI Act read with Rure g of the security Interest (Enforceme't) Rules, 2oo2. However, in reality, the Bank had neither taken physical possession nor disclosed the existence of pending litigation. The Bank's concealment of litigation and possession details was deliberate and in violation of the statutory requirements under Rule g(7)(a) and (f) of the Security Interest (Enforcement) Rures, 2oo2. Furthermore, the Bank later filed an Application seeking impleadment in the saicl civil suit, thereby confirming that litigation existed even before the auction notice was issued.
L-4. Petitioner relied on the settled positio. of law laid down by the Hon'bre Supreme court in rndian B,,nks, Association, Bombay a. Deukq.lq. consultancy senticest, wherein it was held that statutory authorities must exercise powers strictly in the manner prescribed and that disclosure of encumbrances and pending litigation is a mandatorv statutory duty and not a mere formality. He also cited other judgments, including K. senthil Kumar a. The General Manq.ger (writ Petition No. 13269 of 2016) and s. shanmuganathan a. The
| (2OO4) 1 1 SCC I
4
Authorized Officer, IOB Bank2 wherein it was reiterated that the bank's duty to disclose encumbrances is a statutory obligation under Rule 9(9) of the Security Interest(Enforcement) Rules, 2OO2, and that failure to do so would attractSection l8(2) of the Indian Contract Act, L872, enabling thepurchaser to avoid the contract.
1.5. Being disturbed by these dgvelopAen_t1,petitioner addressed several communications to theBank on 24.03.2025, 22.05.2025 and 23.A5.2025, informing them aboutthe litigation and caution notices, and sought timeto veriSr the third-party claims. Subsequently, petitioner came toknow that an ex parte ad interim order had beenpassed on28.O4.2025 in I.A. No. 757 of 2024 in o.S. No. 211 of 2024by the XIX AdditionalSenior Civil Judge, City Civil Court, Secunderabad,restraining alienation or interference with theproperty. Upon discovering this, he addressed a detailed representationdated 30.O5.2025 to Respondent No.1, seeking clarificationand appropriate action.
1.6. According to petitioner, it was theBank's responsibility to verify the title,possession and extent of the
' 1zotz1ibclaw.in1o4 HC,
)
land before auction. Having relied on the Bank,s representations, he paid the bid amount in good faith. Hence, Bank's faih-rre to disclose ongoing litigation and the interim order dated 28.04.2025 constituted a clear violation of the statutory and judicially-recognized obligation to disclose all known encumbrances. Petitioner stated that in its reply dated os.oo.zo2S, the Bank admiited awareness of the notice board and that it rvas taking steps to get impleaded in o.S. No. 211 of 2024. It is stated, due to the pending litigation, he could not peacefully enjoy or utilize the property. The trncertainty regarding the duration of the case prevented him from developing or alienating the property, thereby causing financial loss and distress. Upon further scrutiny, petitioner discovered that mortgage had been executed by the attorney holder, Mr. Yenigalla Anshuman, under a power of attorney granted by the owner, Mr. Yenigalla Vardhaman. Legal examination revealed that the saicl power of attorney did not authorize the attorney to mortgage the property, rendering the mortgage itself doubtful and possibly invalid. Thus, the legality of the Banl<,s action in bringing the property to auction was questionable.
\
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L.7 . When petitioner requested refund of the amount paid, the Bank refused and instead issued a threatening e mail dated 05.06.2025 demanding payment of the remaining75ohof the sale price on or before 09.06.2025, failingwhich25o/o already paid would be forfeited. Thisarbitraryact of the Bank, without addressing petitioner'sgrievancesor clari$ringthe legal status of the.property, was statedto beillegal,violativeof the SARFAESI Act, 2OO2, and theConstitution of India-
7
measure under Section 13(4) of the Act, should have filed a Securitisation Application before the DRT. It is a settled position that auction purchasers aggrieved by measures under Section lrtOtmust approachtheDRT and not toinvoke writ jurisdiction. writ jurisdiction under Article 226 being equitable and discretionary, should be exercised only in exceptional cases, which Petitioner has failed to demonstrate. The writ Petition is therefore, liable to be dismissed on maintainability. 3.1. It is stated, M/s Novus Green Energg Systems Private Limited (Principal Borrower) availed financial assistance of Rs.113.07 crores from Union Bank of India, Mid corporate Branch, Hyderabad. The repayment was secured bv immovable properties mortgaged by the Principal Borrower and guarantors, including Mr. sri Yenigalla vardhaman. upon default in repayment, the account was declared as Non-perforrning Asset (NPA) on 28.02.2024 and the account was transferred to Respondent No.l branch for initiating recovery under the SARFAESI Act. Respondent No.1 initiated recovery measures under the SARFAESI Act, 2oo2, and issued a pubr.ic e-auction notice dated 14.02.2025 for sale of mortgaged properties, including Plot No.63P (Northern part), Manasa Hills, Budvel,
8
Rajendra Nagar,Hyderabad ("subjectproperty") belongingto Sri Yenigalla Vardhaman'
As per the e-auctionnotice datedl4-o2.2o25, bidders were allowed to inspectthe secured assets with prior appointment and. required tosatisfy themselvesregarding title, encumbrances anddues before bidding. The sale was to be conducted. strictl5ron "as is where is," "as is wha.t is," and ,,whatever there is" basis-
Respondent No.lstatesthat itduly compliedwith all the provisions of theSARFAESIAct and Rules, disclosing encumbrances onthe propertyas known to the Bank, which were 'NIL',at thattime. The Bank categorically declaredthat, to its. best knowledge,there was no encumbranceon the subject property. Bidders,including Petitioner, were requiredto conduct their own due diligenceprior to bidding'
3.2. Petitionerparticipatedin the e-auctioncond'ucted on 11 .O3.2O25after unconditionally acceptingall the terms and conditions, andwas declared thehighest bidder for Rs.4,86,78,000/-,and was issued a sale intimation letter dated 11.03.2025 directingpaymentof 25oh withinone workingday and the remainingTSo/owithin15 days (by 26.03.2025]l' Instead
I
of paying the balance, Petitioner sent an e-mail dated 24.03.2025 alleging discovery of a notice board on the subject property rel'erring to o.S. No.21l of 2024 before the XIX Addl. Senior civil Judge, city civil court, secunderabad. petitioner alleged non-disclosure of this suit and sought 60 days' extension or time till completion of section 14 proceedings under SARFAESI Act. Petitioner again, through e-mail dated 22.05.2025, demanded the Bank to take steps under Section L4.
3.2(l). Petitioner, by e-mail dated 23.O5.2O25, informecl Respondent No.l that transfer of balance amount was in process but delayed due to procedural issues in his capital Gain Account. He requested a 15-day extension, assuring completion of payment within 3 months. This, according to Respondent No.1, shows that Petitioner was fuly aware of the terms of the e-auction and voluntarily sought extensions. Later, Petitioner's letter dated 30.0s.2025 stated that an ex parte interim injunction was granted on 28.o4.2o2s in I.A. No.757 of 2024 in o.s. No.21L of 2024 restraining dealings in the subject property, and questioned the validity of the Menrorandum of Deposit of l'itle Deeds (MorD). Respondent No.1 notes that this
l0
interim order came after the e-auction on 7L.03.2025. Respondent No.1 replied by letter dated 05.06.2025 to Petitioner's letters dated 30.05.2025 and 04.06.2025 stating that Bank was not aparty to the suit andno notice wasserved. However, after the auction, the Bank noticed a board onthe property by unknown persons referring to the civil suit.The Bank file{ an impleadment application in that suitand _no adverse order existed against the auctionedproperty; the Bank clarified that no staywas grantedby the DRT and auctionwas held under SARFAESI Act, a special enactment forbank recovery; Bank informed Petitioner thatextensionshad already been granted five times andfinal deadline to pay 75o/obalance was 09.06.2025, failing which 25o/o bid amountwouldbe forfeited.
3.3. It is stated, Petitioner, having voluntarily accepted all the arrction ternts, cannot laterchallengethe contractual consequences of non-compliance.Forfeiture of25ohdeposit is valid under Rule 9(5) of SARFAESI Rules,2OO2.The doctrine of estoppel applies as Petitioner cannotnow take acontrary position.
Respondent No.1 reiterates that itdisclosed encumbrancesto
ll
the bestof itsknowledge as 'NIL'. Bank was under no further obligationunder Rule 8(6) beyond disclosure of facts within its knowledge.
The PrincipalBorrower and guarantors, who received the sale notice underRule 8(6) and Rule 9(1), did not disclose any civil suit. Hence,there was no concealment by the Bank. The e- auction terms expressly at"tad the sale was on "as is where is,,, "as is what is," and "whatever there is" basis, and bictders were responsibleto verify title and encumbrances. The Bank made no representation or warranty, and cannot be held li:rble for any third-PartY claims. Petitionerparticipated after accepting the e-auction r:onditions.
3.4. The judgments cited by petitioner are in.applicable as the facts differ. Respondent No.1 submits that the Petitioner'se-mail dated 23.05.2025 shows he had accepted the e-auction terms and sought time due to transfer delays, not because ofzrny alleged concealment. His later objections were afterthoughts to delay payment. The allegation regarcling power of Attorneyis false. The Power of Attorney was exe<:uted by Sri YenigallaVerrdhaman in favour of his brother Sri yenigalla Anshuman on 23.12.2015 (Document No.157/BKfi-2o15) and
t2
againon 26.O4.2OL9 (Document No.60-BKIV-19).The Petitioner was freeto inspect the propertyprior to auction but failed to do so. TheBank had no further obligation beyond this disclosure- requestfor extensions was accommodatedtwice, on .petitioner's 25.03.2025and 27.05.2025,yet he failed to pay the balance Rs.3,65,O8,5OO1-.consequently, the Bank issueda final letter dated05.06.202! w-arningof forfeiture-'
l3
the legality of measures taken under Section 13(4). It is wellsettled that when a statute provides a specific rernedy, writ jurisdiction shall not ordinarily be exercised. Petitioner, being an auction Jrurchaser, has the same remedy under Section l7 if aggrieved by the measures of the secured creditor.
u 22- The iaw with regard to entertaining a petition uncler Article 226 ol the Constitution in case of availability of alternative remedy is well settled. ln satyawati'l'ondon[IJnited Bank of Ind.iav. satgawatt rondon, (2olo) g SCC 110 : (2010) 3 scc (civ) 260 :2oto INSC 4281 , this court observed thus : (scc p. 123, paras 43-45)
"43. Unfortunately, the High court [Safyawati rondonv. state of u.p., 2oo9 scc Online All 2608l overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with llreater rigoui in matters involving recovery of taxes, cess, fees, other types of public money ana tne dues of banks :lnd other Frnancial institutions. In our view, while iealing with the
t (:o:+) 6 scc -5?9
t4
petitions involving challenge to the action takenflor recovery of the public dues,etc. the t{ighCourtmust keepin mind that the legislations enactedby Parliament and StateLegislaturesfor recovery of such dues are a codeuntothemselves inasmuch as they notonly contain comprehensiveprocedure for recoveryof the duesbut also envisageconstitution of quasi-judicial bodies for redressal of thegrievanceof any aggrievedperson. Therefore, in all suchcases,the HighCourt must insist thatbefore availingremedyunder Article 226 of the Constitution,a person mustexhaustthe remediesavailable under the relevant statute.
24.Th'eviewtaken by thisCourthas been followedinAgarutal Tracom(P) Ltd.v. PunjabNatiorual BanklAganaalTracom(P) Ltd.v. Puniab National Bank,(20181 t SCC 626:(2018)1 SCC (Civ) a25 :2017 INSC 11461 .
" 16.TLre rvrit petition oughtnot to have been entertainedand the interimorder granted forthe mere askingwithout assigning special reasons,and thattoo without ivengranting opportunit5rto the appellant to contestthe maintainability of the writ
l5
petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter-affidavit having subscquently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justilication to have declined interference."
" 34. The order of the Tribunal dated l -8-2019 was an appealable ordt:r under Section 18 of the Sarhesi Act, 2oo2 and in the ordinary course of tlusiness, the borrowers/person aggrieved was supposed to avail the statutory remedy of appeal which the larv provides under Section,18 of the S4rfae_qi Act, 201,92. In th_e absence of efficacious altcrr"rative remedy being availed, there was no reasonable justilication tendered by the respondent borrowers in approaching the High Courl and l-rling writ application assailing order of the Tribunal dated 1-8-2019 under it.s jurisdiction under Article 226 of the Constitution without exhausting the statutory right of appeal available at its comrnand."
29.Recentl-v,inCelirLLP[CelirLLPv.BafnaMotors(Mumbai) (P) Ltd.,(20241 2SCC I : Qo2al I scc (civ) 62 : 2023 INSC 8381 , after surveying various jtLdgments of this Court, the Court observed thus: (SCC p.81, para 101)
"101. More than a dccade back, this Courthad expressed serious corlcern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the Rdbfi Act and the Sarfaesi Act and exercise of jurisdiction under Article 226 of the Constitution. Even after the decision of this court in satyautati rondonlunited Bank of Indiav. satgawati rondon, (2010) g scc 110 : (2010) 3 scc (civ) 260 :2olo INSC 4281 , it appears that the High courts have continued to exercise its rvrit jurisdiction under Article 226 ignoing the statutory remedies under the Rdbfi Act and the Sarfaesi Act."
3O. It can thus be seen that it is more than a settled legal position of law that in such matters, the High Court strould not entertain a petition under Article 226 of tine constitution particularl-v when an alternative statutory remedy is available.
"11. rt is true that under Section 18 of the SarfaesiAct, the petitioner has the alternative remedy against the impugned order by hling appeal belore the appellate Tribunal. However, having regard to the fact that the writ petition is pending before this Court for qtrite some time and also considering the fact that Lf the impugned order is allowed to stand, petitioner rvould be left without a remedy to ventilate his grievance, we dt:em it fit and proper not to non-suit the petitioner cn the ground of not availing the alternative remedy.
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may lile an application thereunder.The SupremeCourt has held timeand againthat the Tribunal exerciseswidejurisdictionunder Section 17 of the SarfaesiAct, even to the extent of settingasidean auction;sale.In the instantcase, we areconsciously not referring to the merit o[ the case. All thatwe are concernedis whether for whatever reason a person who is aggrieved inlaw shouldbe left remediless. In the instantcase, the petitioner had invoked hisremedy byfiling securitisation application undersub- section (t) of Section 17 of theSarfaesiAct.The application was pending for three years before the Tribunal. From the docket orderdated 21-9-2O2O,we find that a junior counsel appearing on behalf of the petitioner had reportedthat the matter was settledout of Court and therefore,leavewassought for withdrawing the securitisation application which was accordinglygranted.
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18
Constitution of India in the Bank's action. The allegations of suppression or misrepresentation are unsubstantiated.
1 1. For the foregoing reasons, this Court is of the considered view that Writ Petition is not maintainable in view of the statutory remedy under Section 17 of the SARFAESI Act, 2OO2 before the Debts Recovery Tribunal. Accordingly, the Writ Petition is dismissed. No costs;
L2. The interim order dated 13.06.2025 stands vacated automatically
SD/. C. DEEPIKA ASSISTANT REGISTRAR //TRUE COPY// G
SECTION OFFICER
To
1 One CC to SRI V.V.S. N. RAJU, Advocate [OPUC] 2 One CC to SRI K. RATHANGAPANI REDDY, Advocate [OPUC] 3 One CC to SRI P. SHASHIDHAR REDDY, Advocate IOPUC] 4 Two C.D Copies MMT t GJP
HIGH COURT
DATED:1211112025
ORDER
WP.No.16108 of 2025
))
Sottou6 zI
{
t
DISMISSING THE WRIT PETITION
WITHOUT COSTS
i. +l
Dl
r{\tt<br>
2 issues framed by the court
Whether a writ petition under Article 226 by an e-auction purchaser aggrieved over alleged concealment of litigation and forfeiture of deposit is maintainable when Section 17 SARFAESI remedy before th
Whether the Bank violated statutory disclosure duties or Articles 14/300A in conducting the auction and forfeiting the 25% bid amount
Colour shows how this judgement treated each authority
United Bank of India v. Satyawati TondonRelied on¶94
(2010) 8 SCC 110 · Who else cites this
Authorized Officer, State Bank of Travancore v. Mathew K.C.Relied on¶103
(2018) 3 SCC 85 · Who else cites this
Phoenix ARC Pvt. Ltd. v. Vishwa Bharati Vidya MandirRelied on¶107
(2022) 5 SCC 345 · Who else cites this
PHR Invent Education Society v. UCO BankRelied on¶93
(2024) 6 SCC 579 · Who else cites this
Agarwal Tracom (P) Ltd. v. Punjab National BankFollowed¶102
(2018) 1 SCC 626 · Who else cites this
Varimadugu Obi Reddy v. B. SreenivasuluRelied on¶108
(2023) 2 SCC 168 · Who else cites this
Celir LLP v. Bafna Motors (Mumbai) (P) Ltd.Relied on¶111
(2024) 12 SCC 1 · Who else cites this
M.V. Ramana Rao v. UCO BankExplained¶114
2022 SCC Online TS 3479 · Who else cites this
4 provisions across 3 enactments
Datla Ravi Varma
The Authorized Officer, Union Bank of India, Stressed Asset Management Branch (SAMB), Hyderabad
The Reserve Bank of India
Union of India
Union Bank of India
Nagesh Bheemapaka
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
