Auction purchaser rights: "as is where is" sale does not override disclosure duties or failure to deliver possession.

An auction purchaser's writ petition was held maintainable where the grievance was the secured creditor's failure to deliver possession after accepting full auction consideration, because Section 17 of the SARFAESI Act was directed at measures under Section 13(4) and the alternative remedy was ineffective on the facts. The High Court held that an "as is where is" sale did not dilute the statutory duty under the Enforcement Rules to disclose material particulars and known impediments, or to deliver possession free from known encumbrances. As the purchaser had paid the bid amount in time but possession was not handed over within a reasonable period, refund of the sale consideration with interest and costs was granted.

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Issues: (i) Whether the writ petition by an auction purchaser seeking refund of sale consideration was maintainable under Article 226 of the Constitution of India despite the remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (ii) whether sale on an "as is where is" and "as it is where it is" basis relieved the secured creditor of the obligation to disclose material defects and deliver vacant physical possession; (iii) whether, after payment of the full auction consideration, the secured creditor was bound to hand over possession and what relief the auction purchaser was entitled to.

Issue (i): Whether the writ petition by an auction purchaser seeking refund of sale consideration was maintainable under Article 226 of the Constitution of India despite the remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002?

Analysis: Section 17 of the Act was held to be directed against measures taken under Section 13(4). On the facts, the petitioner was not challenging any coercive measure under Section 13(4), but complained of the bank's failure to deliver possession after accepting the full sale price and issuing the sale certificate. The relief sought could not be effectively granted by the DRT in the circumstances, and the plea of alternate remedy was found misconceived.

Conclusion: The writ petition was maintainable, and the objection based on alternative remedy failed.

Issue (ii): Whether sale on an "as is where is" and "as it is where it is" basis relieved the secured creditor of the obligation to disclose material defects and deliver vacant physical possession?

Analysis: Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 required the sale notice to disclose material particulars relevant to the purchaser's assessment of the property, and Rule 9(9) required delivery of the property free from encumbrances known to the secured creditor. The clause "as is where is" did not dilute the statutory duty to disclose known encumbrances or other material impediments, nor could it be used to suppress information affecting possession and value.

Conclusion: The "as is where is" clause did not absolve the bank from its statutory obligations.

Issue (iii): Whether, after payment of the full auction consideration, the secured creditor was bound to hand over possession and what relief the auction purchaser was entitled to?

Analysis: The petitioner had paid the entire bid amount within time and the bank had acknowledged receipt through the sale certificate. The bank's failure to secure and deliver possession for an extended period, despite the auction purchaser having complied with all terms, was treated as a failure of obligation. In the factual setting, refund of the sale proceeds with interest and costs was considered justified.

Conclusion: The secured creditor was required to refund the bid amount with interest and costs, and the petitioner was entitled to relief.

Final Conclusion: The writ petition succeeded on merits, the alternative-remedy objection was rejected, and the auction purchaser was granted refund of the deposited sale consideration with interest and costs because possession was not delivered within a reasonable time.

Ratio Decidendi: In a secured asset auction, the secured creditor must disclose material defects and known impediments to possession, and an "as is where is" clause does not override the statutory duty to deliver or otherwise account for the property after full compliance by the auction purchaser.

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