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TMI Blog2010 (7) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... raises an interesting question as to whether a bank or financial institution, while invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Rules made thereunder, is entitled to bring the property for sale by way of auction without disclosing the encumbrance. 2. The petitioner is a firm engaged in the business of providing logistics services. They came across a publication in one of the issues of 'The Daily Thanthi' dated 7.10.2009 for the sale of an extent of 4.38 acres of land comprised in S.F.No.291/2, Ichipatti Village, Kothumuttupalayam Road, Palladam Taluk, Tirupur District. That property belonged to one M/s Sowmya Textiles, which had avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the petitioner to deposit the balance sale consideration was not willful. Hence the impugned order of forfeiture is liable to be set aside. 4. On the other hand, the learned counsel for the respondent-bank would submit that even when the sale notice was issued, the bank was not aware of the encumbrance and therefore only the publication did not carry the encumbrance. As far as the bank is concerned, it is entitled to forfeit the earnest money deposit in the event the balance sale consideration is not paid in time. The auction bidder cannot have any right to seek for either the amount deposited towards earnest money to be refunded or to purchase the land after the clearance of encumbrance by the bank or financial institution. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice as to the encumbrance, as otherwise he/she will be purchasing the property and simultaneously buying the litigation as well and an intending purchaser may not bid in the event he/she came to know of any encumbrance over the property. That is why the rule specifically contemplates a provision for the authorised officer, while notifying the sale, to specifically state as to the encumbrance. It will be a different issue in the event the auction notice indicated that it is the duty of the intending purchaser to verify not only the encumbrance by way of alienation of the property, but also the other statutory liabilities and in that case, the intending purchaser cannot later on turn around and seek for either the refund of the earnest mon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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