The Allahabad High Court while dismissing a petition observed that in such a situation, where a bidder has failed to deposit the entire sale price within the stipulated period of ninety days, the tribunal/court would be extremely reluctant to interfere, unless of course, a very exceptional case for interference is made out.
The Division Bench of Justice Siddhartha Varma and Justice Yogendra Kumar Srivastava passed this order while hearing a petition filed by Anil Pathak and Another.
The facts as pleaded in the petition indicate that House, Awas Vikas Colony Betiyahata, Gorakhpur, owned by Ujjwal Banka and Tushar Banka, was mortgaged against a loan amount of Rs 1 Crore plus Rs 20 Lakhs overdraft.
The above-mentioned loan amount, having not been repaid, respondent no 3-Bank issued a notice under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Thereafter, a possession notice under Section 13 (4) of the SARFAESI Act, 2002 was issued, and a newspaper publication for auction of the above mentioned property was also made. The auction date was fixed on 23.10.2024 and the petitioners, being the only bidders, were declared successful.
The petitioners deposited 25% of the auction money, amounting to Rs 55,93,750/-, within the prescribed time period of 15 days. For depositing the balance 75% of the auction money, the petitioners applied for a loan from the respondent-Bank. The said application was rejected by the respondent-Bank on 3.1.2025.
It is stated that although the petitioners have made a request for grant of three months’ further time for depositing the balance 75% of the auction money, the respondent-Bank is going to auction the property on 22.1.2025.
The petitioners have, accordingly, preferred the petition, seeking a direction to respondent no 3-Bank for granting three months’ further time for depositing the balance 75% of the auction money, or to refund 25% amount deposited earlier, within a stipulated time period.
Counsel for the petitioners has referred to the afore-stated facts, to contend that the delay in depositing 75% of the auction money is mainly due to rejection of the loan application of the petitioners by the respondent-Bank, and accordingly, they have sought further three months’ time for the purpose.
It is submitted that the Bank is seeking to re-auction the property which would gravely prejudice their interests.
The Court observed that,
In the case, at hand, the petitioners having participated in the auction held on 23.10.2024, and having deposited 25% of the bid amount on the said date, were required to deposit the remaining 75% of the purchase price before the fifteenth day of the sale confirmation, i.e by 7.11.2024.
However, upon request being made by the petitioners on 5.11.2024, the Bank granted extension of time till 6.12.2024. Another representation dated 2.12.2024 was submitted by the petitioners, seeking extension of time till 7.1.2025, stating their difficulty in arrangement of funds. The said request was also acceded to by the Bank and further extension of time was allowed to deposit the balance sale price till 27.12.2024.
The petitioner made yet another representation dated 22.12.2024, seeking further extension of time upto 7.2.2025, which was turned down by the Bank on the ground that no extension could be granted to the auction purchaser beyond the time period stipulated under the statutory rules.
There is no material on record, which may persuade the Court to come to a conclusion that there has been any manifest arbitrariness or unreasonableness on the part of the respondent-Bank in not acceding the repeated requests of the petitioners for depositing of the balance 75% amount of the bid amount beyond the time period stipulated under subrule (4) of Rule 9 of the Rules, 2002.
The maximum permissible limit of three months, as provided under the relevant statutory rules, having already been granted by the secured creditor, there is no plausible reason which may warrant issuance of any direction for further extension of time period, as sought by the petitioners.
The Court further observed that,
It may be reiterated as a settled principle of law that when a statute requires a particular thing to be done in a particular manner, it must be done in that manner or not at all, and other methods of performance are necessarily forbidden.
Rule 9 (4) of the Rules, 2002, as amended with effect from 4.11.2016, contains an ordainment that on mutual agreement, the time for making deposit of the balance amount of sale price can be extended for a period not exceeding ninety days; however, extension beyond ninety days would not be permissible in any case.
The decision in the case of GM, Sri Siddeshwara Cooperative Bank Ltd (supra), followed in the subsequent decision of Gaurav Garg (supra), which are sought to be relied on behalf of the petitioners, were rendered in the context of the unamended Rule 9 (4) of the Rules, 2002, wherein there was no outer limit provided for extension of the time period for depositing of the balance amount of 75% of the purchase price. The said authorities cannot be relied upon by the petitioners to claim further extension of time beyond the outer limit prescribed under sub-rule (4) of Rule 9 of the Rules, 2002, as it now exists.
The secured creditor is entitled in law to enforce the security interest and in the process, to initiate all such steps and take all such measures for the protection of public interest by recovering public money lent to a borrower, who has defaulted in its repayment. The petitioners (auction purchasers), having participated in the auction, would be presumed to be fully aware of the requirements under the law with regard to deposit of the purchase price and also that in case of any default or failure on their part to make the payment of the sale price within the permissible time period under the relevant statutory rules, would entail forfeiture of the deposit already made by them.
“The underlying principle of least intervention by the tribunal/courts and the overriding objective of the SARFAESI Act and the Rules made thereunder, which are for speedy recovery of debt, cannot be lost sight of.
We do not see any patent arbitrariness or unreasonableness on the part of the respondent-Bank, which may persuade us to entertain the writ petition in respect of the reliefs sought,” the Court also observed while dismissing the petition.