TaxTMI 
TaxTMI 
2026 (6) TMI 1352
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....eby, the bank initiated proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act [SARFAESI Act] and brought the said property for sale through an auction on 03.03.2023. The Plaintiff had participated in the E-auction and he was a successful bidder for a sale consideration of Rs. 3,79,10,000/- and paid a sum of Rs. 94,77,500/- and the remaining amount is payable on or before 31.03.2023. However, the defendant had orally permitted and granted extension of time by 90 days. The Plaintiff effected payment on 06.06.2023 and last payment was made by him on 08.06.2023 and paid a total sum of Rs. 1,56,77,500/- and the balance amount of Rs. 2,19,32,500/- has to be remitted on or before 30.06.2023. Considering the oral extension and payments received till 08.06.2023, the Plaintiff requested the defendant for extension of time till 30.06.2023 for payment of balance sale consideration. However, the defendant bank refused to extend the time and accepted the payment of third parties offered to buy the property for higher consideration. When the Plaintiff approached the defendant on several times for refund of the amount of Rs. 1,59,77,....
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....d the benefits of the Plaintiff's money and the defendant sold the property for a higher price than the previous sale price. Rule 9(5) of the SARFAESI Rules is subject to the provisions of Section 73 of the Indian Contract Act. Therefore, the defendant is liable to repay the said amount with interest @ 24% per annum. 3. Brief averments of the Written Statement filed by the defendant are as follows:- The allegations levelled in the Plaint are all denied as false. The averments that the defendant bank orally permitted and granted extension of time and refused to extend the time and accepted the payment because of third parties offered to buy the property for higher consideration and the Plaintiff approached the defendant on several times for refund of money and the defendant asked the Plaintiff to participate in a fresh auction to be held on 28.07.2023 and if he becomes a successful bidder, the amount already deposited would be adjusted towards the bid amount, are all denied. The Plaintiff himself admitted that he was unable to pay the entire sale consideration of Rs. 3,79,10,000/- within a period of 90 days as stipulated under Rule 9(3) and 9(4) of the SARFAESI Rules. As....
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....d the Suit for recovery of money as against the defendant bank. In fact, the Plaintiff participated in the E-auction sale held on 03.03.2023 for the purchase of property belonging to one M/s. Arun Agencies through SARFAESI proceedings. The Plaintiff became successful bidder to the tune of Rs. 3,79,10,000/- and he already paid a sum of Rs. 94,77,500/- and thereafter, the balance amount to be paid within 90 days. The Plaintiff has paid Rs. 1,59,77,500/- and the remaining amount of Rs. 2,19,32,500/- has to be paid within 90 days. On 21.06.2023, the defendant bank cancelled the sale and forfeited the entire amount of Rs. 1,59,77,500/-. Again the defendant bank conducted second e-auction sale, in which, the Plaintiff has also participated and paid a sum of Rs. 37,79,000/- as EMD, but the property was sold to one Parameswari, who was a successful bidder in the second auction, for a sum of Rs.5,06,00,000/-. Therefore, the said EMD amount of Rs. 37,90,000/- was refunded to the Plaintiff and previous sale consideration amount of Rs. 1,59,77,500/- has not been repaid by the defendant bank and later a sum of Rs. 65 lakhs alone was credited into the account of the Plaintiff on 08.02.2024 after....
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.... price and the forfeiture. Therefore, the Suit itself is not maintainable. As per Rule 9(4) of SARFAESI Rules, the bank is entitled to forfeit 25% of the sale price and thereby, they forfeited a sum of Rs. 94,77,500/- and remaining amount of Rs. 65 lakhs was repaid to the Plaintiff and without any protest, the Plaintiff also accepted the said amount. Therefore, the Plaintiff is not entitled to any relief and the Suit has no merits and deserves to be dismissed. 8. Heard both sides and perused the entire materials. 9. This Court has framed appropriate issues. Since all the issues are inter-linked, all the issues have been taken together for answering. 10. In this case, according to the Plaintiff, the property belongs to M/s. Arun Agencies was sold through public auction under the SARFAESI Act and he was also a successful bidder and the total amount of sale price was Rs. 3,79,10,000/-, the Plaintiff initially paid a sum of Rs. 94,77,500/- and the remaining amount has to be paid within 90 days. While so, the Plaintiff had only paid a sum of Rs. 1,59,77,500/- and the balance amount of Rs. 2,19,32,500/-was not paid by the Plaintiff within the stipulated time, thereby, the proper....
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...., participated in the re-auction. Ex.P.2, there is a condition that "Please be informed that in case you fail to deposit due amount by scheduled dates, sale shall be cancelled and any amount deposited by you related to this bid, shall be forfeited". As per Ex.P.2, the remaining amount of Rs. 2,84,32,500/- has to be paid on or before 31.03.2023 and thereafter, the Plaintiff also sought for time for making balance amount on or before 03.06.2023. However, no payment was made by the Plaintiff and the sale in favour of the Plaintiff was cancelled through Ex.P.5 on 21.06.2023, where the defendant bank had duly informed about the forfeiture of the amount. The Plaintiff has also admitted the non-payment by him within the time stipulated by the bank and thereafter only, the property was re-sold by re-auction. Therefore, the Plaintiff has himself admitted the default in payment of balance sale price. Now, the main point is issue No. 2 whether the bank is entitled to forfeit 25% of the sale price?". 13. In this context, the learned counsel appearing for the defendant would submit that as per Section 9(5) of the SARFAESI Act, the bank is entitled to forfeit 25% of the sale price and he has ....
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.... decided that the defendant bank is entitled to forfeit the 25% of deposit amount of bid price as per rule 9(5) of Security Interest (Enforcement) Rules. It is admitted fact that the plaintiff has not paid the entire bid price and only paid a sum of Rs. 1,59,17,500/- out of Rs. 3,79,10,000/- thereby failed to comply the condition of rule 9(3) and 9(4) of Security Interest (Enforcement) Rules, thereby 25% deposit money was forfeited by the defendant Bank and the remaining amount of Rs. 65,00,000/- was returned to the plaintiffs. Therefore the plaintiff is not entitled to relief of the money forfeited by the Bank as the forfeiture is as per law. Thus Issue No.1 is answered. Issues No.3: According to the plaintiff the defendant bank forfeited the 25% of deposit money of bid price, without any loss caused to the bank. The Bank sold the property through subsequent auction for a higher price of Rs.5,06,00,000/- and thereby no loss caused to the bank and hence to the bank cannot forfeited the money. The Hon'ble Suprement court in the case of Authorized Officer, Central Bank of India -vs- Shanmugavelan reported in (2024) 2 MLJ 65 SC settled the law that the consequ....