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2017 (2) TMI 464 - MADRAS HIGH COURT

2017 (2) TMI 464 - MADRAS HIGH COURT - TMI - E-Auction - forfeiting the EMD payment made by the petitioner and quash the same and consequently direct the respondents 2 and 3 to enlarge the time for compliance of the balance payment payable by the petitioner in accordance to the E-Auction - Held that:- he e-auction advertisement does not constitute and will not be deemed to constitute any commitment or any representation of the bank. The property is being sold with will the existing and future en .....

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e notice in the instant case has been issued on 25.07.2016. Request letter for participation 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 .....

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e 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 other aspects, the writ petition is dismissed. The Bank is directed to refund the earnest money deposit of ₹ 6,60,00,000/-to the petitioner within a period of six weeks from the date of receipt o .....

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ondent 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 and 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. 2. The Authorised Officer / third respondent issued e-auction sale notice dated 25.07.2016 under Section 13(2) of the .....

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quired to deposit Earnest Money Deposit of ₹ 6,60,00,000/-. The petitioner company submitted its E-auction Bid Form on 03.09.2016 by depositing a sum of ₹ 6,60,00,000/-. The petitioner became the highest bidder in the e-auction sale held on 07.09.2016 having bid for ₹ 66,10,00,000/-. The petitioner was asked to deposit ₹ 9,92,50,000/- being the 25% of the bid amount on 07.09.2016 or by 08.09.2016. The Bank has informed the petitioner by their notice dated 07.09.2016 that .....

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e 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 EM .....

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by its Asst. General Manager on the file of this Court against [i] The Inspector General of Registration, No.100, Santhome High Road, Chennai; [ii] The District Collector (Administration), South Chennai, Saidapet, Chennai; and [iii] The Sub-Registrar, Office of the Sub-Registrar, Velachery, Chennai. The Bank has prayed for a Writ of Mandamus, directing the respondents therein to take necessary action and steps for cancellation, annulment of the fraudulent documents as held by the second responde .....

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titioner participated in the auction on the assurance of the Bank that they would take steps to clear the encumbrances and encroachments. It has contended that the Bank has agreed to extend the time for payment, however, without considering the request of the petitioner, the Bank authorities cancelled the sale. According to him, the Bank is not entitled to forfeit the Earnest Money Deposit. 7. The learned counsel for the respondents would submit that the petitioner was well aware of the encumbra .....

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in terms of Rule 8 of Security Interest (Enforcement) Rules, 2002. The petitioner submitted bid form to participate in the e-auction and deposited earnest money deposit and he became the successful bidder in the e-auction held on 07.09.2016. As per Rule 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, t .....

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lose 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 that in view of Sections 55(1)(a) and (b), Transf .....

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LOGISTICS vs. THE AUTHORIZED OFFICER, SYNDICATE BANK [2010 (4) CTC 627] has observed that the intending purchaser should be put on notice of the encumbrances relating to the property, the Court has set aside the order of forfeiture and the Bank was directed to refund the earnest money. A learned single Judge of this Court in CHEMSTAR CHEMICALS & INTERMEDIATES (P) LTD., vs. THE COMMERCIAL TAX OFFICER [2010 (6) CTC 635] held that the Bank is bound to disclose order of attachment of Tax Depart .....

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es / affecting the property, prior to submitting their bid. The e-auction advertisement does not constitute and will not be deemed to constitute any commitment or any representation of the bank. The property is being sold with will the existing and future encumbrances whether known or unknown to the bank. The Authorised Officer/ Secured Creditor shall not be responsible in any way for any third party claims / rights / dues. The sale notice contained other terms and conditions of the e-auction. T .....

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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 ar .....

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or insist the Bank to clear the encumbrance. 13. It is not in dispute that an auctioner can set his own terms and conditions for holding auction and the parties are bound by those conditions. The sale in question is governed by the provisions contained in Rules 8 & 9 of Security Interest (Enforcement) Rules, 2002. The Hon'ble Supreme Court in Civil Appeal Nos.6989 to 6990 of 2013 has held that Rule 9(3) of Security Interest (Enforcement) Rules, 2002 is mandatory in nature. The Supreme Co .....

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(Enforcement) Rules, 2002 is mandatory, we hold that the petitioner is not entitled to extension of time for the balance payment. 14.The learned counsel for the petitioner would submit that the petitioner is ready to make the payment of ₹ 9,92,00,000/- and willing to pay the balance 75% of the bid amount once the respondents cleared all the encumbrances on the property. The learned counsel for the petitioner relied on the judgment of the Hon'ble Supreme Court in JANATHA TEXTILES AND O .....

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