TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Bank must refund auction amount when failing to deliver vacant possession despite sale certificate</h1> <h3>Rakesh Kumar Kaushal Versus State of U.P. Thru. Prin. Secy. Finance & Anr.</h3> Rakesh Kumar Kaushal Versus State of U.P. Thru. Prin. Secy. Finance & Anr. - TMI Issues Involved:1. Maintainability of the writ petition under Article 226 of the Constitution versus the remedy under Section 17 of the SARFAESI Act.2. Obligation of the bank to hand over vacant physical possession of the secured assets despite the 'as is where is' condition.3. Entitlement of the auction purchaser to physical possession of the secured asset and the reliefs available.Issue-wise Detailed Analysis:1. Maintainability of the Writ Petition:The court considered whether the writ petition filed by the auction purchaser seeking a refund of the sale consideration is maintainable under Article 226 of the Constitution or if the petitioner should have sought remedy under Section 17 of the SARFAESI Act. It was noted that Section 17 of the SARFAESI Act provides for an appeal to the Debt Recovery Tribunal (DRT) by any person aggrieved by measures taken under Section 13(4). However, the court found that the petitioner was not aggrieved by any measures taken by the bank but by the inaction in handing over possession. Therefore, the petitioner did not have an efficacious alternative remedy under the SARFAESI Act, making the writ petition maintainable.2. Obligation of the Bank Despite 'As Is Where Is' Condition:The court examined whether the 'as is where is' condition in the auction notice absolved the bank from the obligation to hand over vacant physical possession. It was emphasized that Rule 8(6) of the Security Interest (Enforcement) Rules, 2002, mandates the disclosure of material facts about the property, including any encumbrances. The court found that the bank failed to disclose that the property was in possession of third parties, which was material information for potential bidders. The court held that the 'as is where is' condition does not relieve the bank of its responsibility to deliver vacant possession, especially when such material facts were not disclosed.3. Entitlement to Physical Possession and Reliefs:The court noted that the petitioner had complied with all terms and conditions of the auction, including full payment of the bid amount. Despite this, the bank failed to hand over possession due to pending proceedings under Section 14 of the SARFAESI Act before the District Magistrate. The court criticized the delay and inaction by the District Magistrate and held that the bank's failure to deliver possession within a reasonable time (six months) entitled the petitioner to a refund. The court directed the bank to refund Rs. 60 lakhs with 9% interest and imposed a cost of Rs. 2 lakhs for mental trauma and harassment suffered by the petitioner.Conclusion:The court allowed the writ petition, directing the bank to refund the auction amount with interest and costs due to the bank's failure to deliver possession within a reasonable time, despite the 'as is where is' condition. The court also highlighted the duty of transparency and full disclosure by the bank in auction proceedings.
TaxTMI 
TaxTMI 
