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2010 (7) TMI 1118 - MADRAS HIGH COURT

2010 (7) TMI 1118 - MADRAS HIGH COURT - TMI - 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 (Order of the Court was delivered by D. MURUGESAN, J.) This writ petition 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 Se .....

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rty 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 and Enforcement of Security Interest Act, 2002 (for short, "the SARFAESI Act"), which ultimately culminated into publication of the sale notice. The petitioner participated in the bid when the auction was conducted on 9.11.2009. They also paid the earne .....

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f 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 that as per the terms of the auction, the earnest money deposit stands forfeited. 3. While challenging the said order, the learned counsel for the petitioner would submit that had the respondent put the petitioner on notice as to the encumbrance, they would not h .....

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t 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. The learned counsel would rely upon the judgment of the Supreme Court in United Bank of India v. Official Liquidator and others, (1994) 1 SCC 575 and particularly, paragraphs 13 and 14 in this .....

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les 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 contemplates a sale of immovable property, they will have to follow Rule 8 of the Security Interest (Enforcement) Rules, 2002. Rule 8(6)(f) mandates the secured creditors to set out in the terms of sale notice any other thing which the authorised officer considers it m .....

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