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TMI Blog2017 (2) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... n was to be submitted on or before 03.09.2016 and the sale dated was fixed for 07.09.2016. It is important to note that the bank has filed W.P. on 29.08.2016. Therefore, there is sufficient time for intending purchasers to make their own independent inquiries regarding the defects in the property. The petitioner prayed for extension of time to make the balance payment. As it has been declared by the supreme court that Rule 8(3) of Security Interest (Enforcement) Rules, 2002 is mandatory, we hold that the petitioner is not entitled to extension of time for the balance payment. As per Rule 9(3) of Security Interest (Enforcement) Rules, 2002 if the buyer does not deposit 25% of the sale price immediately, the immovable assets shall be offered for e-auction on 25.07.2016. The Bank has already issued subsequent sale notice on 15.09.2016 and the sale was fixed for 24.10.2016 in terms of Rule 9(3) of Security Interest (Enforcement) Rules, 2002. Therefore, we are inclined to accede to the offer of the petitioner. The Bank has forfeited the earnest money deposit of ₹ 6,60,00,000/- paid by the petitioner. For the reasons stated above, the Writ Petition is allowed in part. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt a representation dated 08.09.2016 to the third respondent seeking extension of time till 29.09.2016 for payment of the balance amount of 25% of the bid amount. He has also informed about the pendency of W.P.No.16561 of 2016 and raised certain issues of encumbrance and encroachment on the property. However, the Bank cancelled the sale since the petitioner failed to pay the balance of ₹ 9,92,50,000/- by their letter dated 09.09.2016. The Bank has also forfeited the Earnest Money Deposit paid by the petitioner. 4. Thereafter, the petitioner approached this Court by way of the present Writ Petition. This Writ Petition has been filed to issue a Writ of Certiorarified Mandamus, calling for the records of the second respondent relating to the impugned Reference No.SAMB/CBE/CLO-11/1065 dated 09.09.2016 forfeiting the EMD payment of ₹ 6,60,00,000/- made by the petitioner and quash the same thereby consequently direct the respondents 2 and 3 to enlarge the time for compliance of the balance payment of ₹ 9,92,50,000/- payable by the petitioner in accordance to the E-Auction dated 07.09.2016. 5. Subsequent to the said sale notice, the Bank has filed W.P.No.16561 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 9(3) of Security Interest (Enforcement) Rules, 2002, successful bidder is required to deposit 25% of the sale price immediately. The Bank has allowed the petitioner to deposit the balance amount of ₹ 9,92,50,000/- by 08.09.2016. However, the petitioner has failed to pay the balance sale consideration. The Bank forfeited the earnest money deposit and cancelled the auction. 9. The learned counsel for the petitioner relied on the decision in VISHAL N.KALSARIA vs. BANK OF INDIA AND OTHERS [(2016) 3 SCC 762 to submit that the SARFAESI Act can be enforced subject to the other mandate of laws including the Transfer of Property Act, 1882. According to him, in terms of Section 55 of Transfer of Property Act, 1882 the Bank is bound to disclose the material defects in the property put up for sale. His contention is that in the sale notice issued by the Bank the pendency of the Writ Petition and the encumbrances listed in W.P.No.16561 of 2016 were omitted to be mentioned and therefore, the Bank is not entitled to forfeit the earnest money deposit. In JANATHA TEXTILES AND OTHERS vs. TAX RECOVERY OFFICER AND ANOTHER [(2008) 12 SCC 582] the Supreme Court in a similar situation has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pation was to be submitted on or before 03.09.2016 and the sale dated was fixed for 07.09.2016. It is important to note that the bank has filed W.P.No.16561 of 2016 only on 29.08.2016. Therefore, there is sufficient time for intending purchasers to make their own independent inquiries regarding the defects in the property. 12. A Division Bench of this Court in R.SHANMUGACHANDRAN (DECEASED) OTHERS vs. THE CHIEF MANAGER, INDIAN BANK ASSET RECOVERY MANAGEMENT BRANCH [2012-4-L.W.900] has held that it is for the auction purchaser to apply for encumbrance certificates, in the time of 30 days made available to the intending buyers to see if there are any encumbrances. In JAI LOGISTICS vs. THE AUTHORIZED OFFICER, SYNDICATE BANK [2010 (4) CTC 627] the Division Bench has observed thus 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 money deposited or insist the Bank to clear the encumbrance. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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