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Jai Logistics rep. by its Partner G. Bhaskar Versus Authorized Officer Syndicate Bank

2010 (7) TMI 1118 - MADRAS HIGH COURT

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? - W.P.No.27079 of 2009 - Dated:- 12-7-2010 - D.MURUGESAN AND M. SATHYANARAYANAN JJ. For Petitioner : Mrs. P.T. Asha for M/s Sarvabhauman Associates. For Respondent : Mr. P. Sreenivasulu ORDER ( .....

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. 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 availed loan from the respondent-Syndicate Bank. As there were defaulted repayments, the bank proceeded under the provisions of the Securitisation and Reconstruction of Financial Assets .....

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rance over the property, the petitioner did not pay the balance of sale consideration and approached the respondent-bank seeking as to why the encumbrance was not notified in the sale notice. The petitioner was informed orally that the bank itself was not aware of the encumbrance created upon the property and consequently it was further assured that the earnest money deposit would be refunded. Contrary to the said assurance, vide the impugned letter dated 21.11.2009, the petitioner was informed .....

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e 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 af .....

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o the encumbrance before participating in the bid. Having participated in the bid, the intending purchaser cannot later on turn around and question the Official Liquidator on the ground that the encumbrance was not notified. In that case, the provisions of the Rules as applicable in the present case are not applicable to the Official Liquidator. But in the case on hand, once possession is taken over under Section 13(4) or under Section 14 of the SARFAESI Act, whenever the secured creditor contem .....

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