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of <h1>Bank must refund auction money with 12% interest for failing mandatory 30-day notice under Security Interest Rules</h1> <h3>GOVIND KUMAR SHARMA & ANR. Versus BANK OF BARODA & ORS.</h3> GOVIND KUMAR SHARMA & ANR. Versus BANK OF BARODA & ORS. - TMI Issues involved:The judgment deals with the correctness of the judgment and order passed by the Allahabad High Court dismissing the Writ Petition of the appellants, confirming the orders passed by the Debt Recovery Tribunal (DRT) as well as the Debt Recovery Appellate Tribunal (DRAT) regarding the auction sale held in favor of the appellants.Issue 1 - Compliance with Statutory Procedure:The borrower filed a securitization application under Section 17 of the SARFAESI Act to set aside the auction sale due to the Bank's failure to follow the statutory procedure prescribed under the Security Interest (Enforcement) Rules, 2002. The DRT set aside the sale due to non-compliance with Rules 8(6) and 8(7) of the 2002 Rules, directing the Bank to refund the auction money with interest upon receiving possession of the property from the auction purchaser.Issue 2 - Rights of Appellants as Purchasers:The appellants contended that they were bonafide purchasers for value and had invested significantly in developing the property post-sale. They sought compensation for the improvements made by them in case the sale was set aside. The Bank argued that the appellants, having enjoyed the property during the litigation, were not entitled to additional compensation for improvements made.Issue 3 - Resolution and Directions:The Supreme Court affirmed the setting aside of the auction sale due to the Bank's failure to provide mandatory notice to the borrower. The status of the appellants as tenants was restored, and the auction money along with compound interest was ordered to be returned to the appellants. The Bank and the borrower were directed to streamline their accounts, with the Bank issuing a No Dues Certificate upon settlement.This judgment highlights the importance of adherence to statutory procedures in auction sales, the rights of purchasers in such transactions, and the resolution of disputes between borrowers, purchasers, and financial institutions in cases of non-compliance with legal requirements.
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