Rs 2.16 crore refund ordered: Telangana HC slams bank for ‘unacceptable’ failure to notify auction purchaser of court orders

Noting that the bank does not have any explanation to offer in its defence, the judgment made a strong observation that: “The bank certainly cannot reap a double benefit from the guarantor as well as the auction purchaser by keeping the latter uninformed and ignorant of the subsequent developments in the subject property.”

The petitioner had deposited Rs 2,16,25,000, which is 25 per cent of the sale consideration, following the e-auction on January 14, 2023.

The petitioner, the successful auction purchaser, challenged the legality of a letter issued by the Union Bank of India (Respondent No. 2) on June 13, 2023, which sought to forfeit the petitioner’s initial deposit of Rs 2,16,25,000.

The court found that the bank had neglected to notify the auction purchaser of relevant orders passed by the High Court on March 16, 2023, and March 23, 2023.

The Bench held that the bank’s actions amounted to an unacceptable attempt to benefit unfairly. “We hence deem it fit to allow the petition to the extent of directing the bank to refund Rs 2,16,25,000 deposited by the petitioner towards 25% of the sale consideration pursuant to the e-auction conducted on 14th January 2023,” the court said.

While ordering the full refund of the deposited amount, the court disallowed the petitioner’s primary request — to direct the bank to complete the sale or execute a Registered Sale Certificate. The court noted that ongoing legal proceedings initiated by the guarantor (Respondent no. 3) before the Debt Recovery Tribunal (DRT) and the High Court were sufficient grounds to deny the completion of the sale.

“The proceedings initiated by the Respondent No. 3 guarantor before the DRT and thereafter in the High Court are sufficient grounds for disallowing the primary relief sought by the petitioner, that is for directing the bank to receive the balance 75% of the sale consideration or to execute a Registered Sale Certificate in favour of the petitioner in respect of the property.”

All connected applications have also been disposed of, and previous interim orders have been vacated, the judgment noted.

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