2020 (10) TMI 1373 - HC - Indian Laws

Cancellation of sale and forfeiture of amount deposited - failure to comply the terms and conditions of auction sale - petitioner alleges high handedness of the respondent Bank in cancelling the sale and forfeiture of the amount deposited - HELD THAT - From the material on record it is established that it is the petitioner who having not deposited the 75% of the auction sale within stipulated time, has to blame herself. The circular of the Reserve Bank of India relied by the petitioner in paragraph 6.7 of the petition is of no assistance to the petitioner, as it is applicable to the borrowers. Even the impugned cancellation communication reveals that the petitioner was given the reminders and Covid 19 extension which is not denied by the petitioner. There are no illegality in the impugned communication as would warrant any indulgence - petition dismissed.

Summary

Issues:
1. Quashment of communication and auction notice.
2. Allegations of high handedness by the respondent Bank.
3. Failure to comply with auction terms and conditions.
4. Applicability of RBI circular to the petitioner.
5. Legality of the impugned communication.
6. Challenge to the fresh auction notice.

Analysis:
1. The petitioner sought the quashment of a communication and a direction to quash an auction notice regarding a property in question, House No.403 Ashoka Vihar Colony, Bhopal, which was a secured asset in the account of Shri Nawab Khan. The respondent Bank proceeded to auction the property under the Securitisation and Reconstruction of Financial Assets Act, 2002. The petitioner, despite being the highest bidder, failed to deposit the remaining 75% of the bid within the stipulated time, leading to the cancellation of the sale and forfeiture of the amount deposited.

2. The petitioner alleged high-handedness by the respondent Bank in canceling the sale and forfeiting the amount. However, the court found that the petitioner's failure to comply with the auction terms and conditions was the reason for the cancellation. The court noted that the circular of the Reserve Bank of India cited by the petitioner was not applicable in this case, as it pertained to borrowers. The court observed that the petitioner was given reminders and Covid-19 extensions, which were not denied by the petitioner.

3. The court concluded that there was no illegality in the impugned communication that would warrant any relief for the petitioner. Additionally, regarding the challenge to the fresh auction notice, the court held that since the Bank was a secured creditor and the property was a secured asset, and there was no accrual of rights in favor of the petitioner, the auction notice was not faulty.

4. Consequently, the petition was dismissed, and no costs were awarded. The judgment clarified the legal standing of the petitioner's claims, the actions of the respondent Bank, and the applicability of relevant regulations in the context of the auction and sale of the secured asset.