Subscribe to the Bombay Chartered Accountant Journal Subscribe Now!

August 2024

Allied Laws

By Dr. K. Shivaram, Senior Advocate
Rahul K. Hakani | Shashi Bekal, Advocates
Reading Time 7 mins

20 Central Bank of India vs. Shanmugavelu

AIR 2024 Supreme Court 962

2nd February, 2024

Auction of property — Highest bidder — Earnest money paid — Unable to pay the balance — Sale terminated by the bank — Earnest money forfeited by the bank — Banks not liable to refund earnest money. [R. 9(5) Security Interest (Enforcement) Rules, 2002; S. 73, 74, Indian Contracts Act, 1872].

FACTS

A property was set up for auction by the Appellant Bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 2022 (SARFAESI Act). The Respondent emerged as the highest bidder and purchased the property after paying 25 per cent as earnest money. However, he was unable to pay the remaining 75 per cent of the balance amount owing to a delay in acquiring the loan. Thus, the Appellant Bank cancelled the auction sale and refused to refund the earnest money as per the provisions of Rule 9(5) of the Security Interest (Enforcement) Rules, 2002 (SARFAESI Rules). Aggrieved by the refusal of refund money and cancellation of the sale, the Respondent filed an application before the Debt Recovery Tribunal. The Tribunal held that the Respondent

Read More
Download PDF

You May Also Like

From Published Accounts

Burden of Proof in Case of Cheque Bouncing Cases