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The Allahabad High Court disposed of a petition seeking refund of the entire amount paid by the petitioner in auction purchase of house with a direction that the respondent-bank shall forthwith file a proper application before the ADM (Finance & Revenue), seeking actual physical possession over the secured asset/property in question situated at Khajuri, Shivpur, District Varanasi.
The division bench of Justice Naheed Ara Moonis and Justice Saumitra Dayal Singh noted, “It is undisputed between the parties that pursuant to the e-auction notice dated September 21, 2017, the secured asset was auctioned on January 09, 2018. The Sale Certificate came to be issued in favour of the petitioner on January 28, 2018. As to non-execution of the sale-deed, counsel for the Bank has also stated that the Bank has always been willing to execute such sale-deed. Also, no relief has been sought by the petitioner against the aforesaid Sale Certificate,”
“After the issue of sale certificate on payment of bid amount in the bank auction, there is no such law to cancel the certificate,”
-the bench remarked.
The bench observed that the petitioner is the auction purchaser of a secured asset bearing House, Khajuri, Shivpur, District Varanasi. It was put up for auction by the respondent-Bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 for recovery of its dues against a home loan advanced to one Indu Bhushan Jaisawal and Kalawati Jaisawal, to the tune of Rs 7,79,279 on November 30, 2005.
Upon default in repayment of that loan, the respondent-Bank resorted to proceedings under the Act. The auction of the secured asset itself took place on January 09, 2018. The petitioner made the highest bid at that auction at Rs.29.61 lacs. It was accepted.
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Despite a lapse of more than three years and nine months, neither the Bank has executed the sale-deed in its favour nor, it has handed over physical possession of the secured asset to the petitioner.
“Bank had misled the petitioner in auctioning the property without first obtaining actual physical possession of that property,” Counsel for the petitioner submitted further.
On the other hand, Counsel for the respondent-Bank relied upon another division bench decision of this Court, in Dilip Kumar Singh and another Vs. State of U.P. and others (2013) 1 ADJ 91(DB) to submit, there is no patent illegality in the respondent-Bank seeking actual physical possession over the property in question, after execution of the Sale Certificate. In fact, such proceeding would be valid and maintainable even after execution of the sale-deed in favour of the auction purchaser, if that eventuality arises.
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On facts, Counsel for the respondent-Bank submitted that the Bank did not mislead the petitioner in any way. The respondent-Bank did not make any other representation to the petitioner as may constitute misrepresentation either with respect to the fact of physical possession (of the secured asset), being not with the Bank on the date of e-auction sale or any other matter.
It has been submitted by counsel for the respondent-Bank that the said respondent had acted with fairness, due diligence and in accordance with law. Only on account of the procedural delays and illegal acts of the principal borrower, physical possession over the secured asset could not be made over to the petitioner.
The bench opined,
“The burden was on the petitioner to establish, on the basis of firm pleadings and cogent evidence that the respondent-Bank had actively concealed or misrepresented any material fact from the petitioner with respect to the true value of and/or possession over the secured asset. No such fact pleading, or evidence exists that the respondent-Bank had at any stage represented to the petitioner that it had obtained physical possession of the secured asset before it was put up for auction,”
“In the case of Rakesh Kumar Kaushal (supra), that report, it was clearly recorded – after accepting the deposit of the bid amount, the respondent-Bank (in that case), neither confirmed the sale nor handed over the Sale Certificate to the auction purchaser,”
-the bench noted.
“Though, the issue of maintainability of the petition is not involved here, the relief being claimed in the case cannot be granted on the strength of the aforesaid decision in view of the distinction on facts, noted above. As to the third issue decided in the aforesaid decision, we agree with that pronouncement. The respondent-Bank is obligated to hand over physical possession of the secured asset to the petitioner, pursuant to the auction sale concluded in his favour. What therefore survives for consideration is whether, under the Act, the respondent-Bank continues to be entitled to claim physical possession over the secured asset as may prevent the petitioner from seeking relief or refund of the bid money deposited by her. First, the petitioner may never claim such refund in face of the continued existence of the valid Sale Certificate dated January 28, 2018. That Sale Certificate has not been cancelled till date. Also, the petitioner has not sought any relief against it,”
-reads the order.
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The Court said that the respondent-Bank was at liberty to either first obtain physical possession over the secured asset and to later put it for auction or to first auction the same and later secure physical possession. That being the law, the petitioner may never claim misrepresentation by the respondent-Bank because the latter chose to auction the secured asset without first obtaining physical possession.