2015 (3) TMI 238 - HC - Indian Laws

Court orders refund of purchase price with interest & costs to petitioner.

KD. FABRICS PVT LTD. & ANR. Versus STATE BANK OF INDIA & ORS.

The court ruled in favor of the petitioner, directing the respondent authorities to refund the purchase price within seven days, along with interest at a ... Sale of property under SARFAESI ACT, 2002 - Commercial Transaction - Proceeding pending before Debts Recovery Tribunal - Refund of purchase price with reasonable interest - Held that:- The writ petitioners have put in a sum of ₹ 1.21 crores with the respondent authorities. The respondent authorities have put up the property for sale in exercise of powers under the SARFAESI Act, 2002. The respondent authorities have conducted the sale in its usual course of business. The transaction, therefore, can only be commercial. The writ petitioners are therefore, entitled to refund of the purchase price together with reasonable interest thereon. The respondent authorities did not put up the property for sale on the condition that, the possession of the property will be made over only after completion of the proceeding before Debts Recovery Tribunal with regard to the property or that the purchase price will not be refunded till disposal of any SARFAESI action. In such circumstances, the respondent authorities are directed to refund the sum of ₹ 1,21,00,000/- to the writ petitioners within a period of seven days from date together with interest calculated at the rate of 12 % per annum on and from the date of receipt of the purchase price until the full payment thereof is made to the writ petitioners. Such rate of interest is awarded keeping in view that, the nature of transaction between the parties is commercial. - Decided in favour of appellant. Issues:1. Refund of purchase price with interest under SARFAESI Act, 2002.2. Dispute over possession of immovable property purchased.3. Interpretation of orders by Debts Recovery Tribunal.4. Entitlement to refund and interest in commercial transactions.5. Direction for refund and interest calculation.6. Award of costs to the petitioner.Detailed Analysis:1. Refund of purchase price with interest under SARFAESI Act, 2002:The petitioner sought a refund of the purchase price along with reasonable interest from the State Bank of India under the SARFAESI Act, 2002. The respondent authorities had conducted the sale of an immovable property, and the petitioner, as the successful bidder, paid the entire purchase price but did not receive physical possession of the property. The court found that the petitioner was entitled to the refund of the purchase price along with interest at a rate of 12% per annum, considering the commercial nature of the transaction.2. Dispute over possession of immovable property purchased:The petitioner had made several representations to the respondent authorities for possession of the property but was not satisfied with the actions taken. The court noted that the petitioner had been waiting since 2011 to take possession of the property they had purchased. Despite payment, physical possession was not granted, leading to the petitioner seeking legal intervention for the refund of the purchase price along with interest.3. Interpretation of orders by Debts Recovery Tribunal:The court analyzed the orders passed by the Debts Recovery Tribunal regarding the possession and sale of the property. It was observed that there was no subsisting interim order from the Tribunal that prevented the bank from refunding the purchase price along with reasonable interest. The court found the respondent authorities' stance, linking possession to the Tribunal's proceedings, as unsustainable and directed the refund within a specific timeframe.4. Entitlement to refund and interest in commercial transactions:Considering the commercial nature of the transaction and the absence of any agreement regarding possession linked to Tribunal proceedings, the court held that the petitioner was entitled to the refund of the purchase price along with interest. The court emphasized that the transaction was conducted as a commercial one, and the petitioner's claim for refund with interest was justified.5. Direction for refund and interest calculation:The court directed the respondent authorities to refund the purchase price to the petitioner within seven days, along with interest calculated at a rate of 12% per annum from the date of receipt of the purchase price until full payment. The interest rate was determined based on the commercial nature of the transaction, ensuring that the petitioner received compensation for the delayed possession and refund.6. Award of costs to the petitioner:Recognizing the petitioner's prolonged wait for possession and refund, the court awarded costs in favor of the petitioner, amounting to Rs. 25,000. This cost was assessed considering the petitioner's efforts to seek legal redress and the delay in resolving the dispute over possession and refund of the purchased property.