The Supreme Court dismissed IDBI Bank's appeals, holding that the bank was unjustified in canceling the auction sale of a property in Bogaram village, Telangana. The court found no fault with the auction purchaser’s inability to deposit the balance amount, attributing the delay to the appellant-bank's own actions. The cancellation of the sale without notice or hearing violated the principles of natural justice.

The court emphasized that under Rule 9(4) of the Security Interest (Enforcement) Rules, 2002, the time to deposit the balance sale consideration could be extended if agreed in writing. The court ruled that the bank could not cite the purchaser's failure to deposit the amount within 15 days as default since the bank itself contributed to the delay.

Para 2 - Appeal by IDBI Bank:
IDBI Bank challenged the High Court’s judgment allowing the auction purchaser's writ petition, seeking the issuance of a sale certificate.

Para 3 - Auction Background:
The respondents won an e-auction on 10.04.2018, depositing 25% of the bid amount. The auction was confirmed, but the sale certificate and deed were not executed due to the bank's refusal to accept the balance.

Para 4 - Writ Petition by Auction Purchasers:
The respondents filed a writ challenging the auction cancellation and sought a direction to issue the sale certificate after paying the balance amount.

Para 5 - High Court’s Judgment:
The High Court held that the bank unjustifiably withheld the sale certificate and directed the bank to execute the sale deed.

Para 6 - Bank’s Argument:
The bank argued that under Rule 9(4), the respondents' failure to deposit the balance within 90 days justified the cancellation.

Para 7 - Core Issue:
The court identified whether the respondents defaulted under Rule 9(4), allowing the bank to cancel the auction sale.

Para 9 - Sale Confirmation & Bank’s Refusal:
The bank refused to issue the sale certificate due to a guarantor's writ petition and an advisory from the Enforcement Directorate (ED).

Para 10 - Bank’s CBI Complaint Not Disclosed:
The bank had complained to the CBI before issuing the e-auction notice but did not disclose this in the auction advertisement.

Para 12 - Invalid Auction Cancellation:
The bank's cancellation letter did not cite any default by the respondents, and the plea of non-deposit was raised only during litigation.

Para 13 - Extension of Time for Balance Payment:
The court noted that Rule 9(4) allows time extensions for depositing the balance amount, which could be agreed upon in writing.

Para 16 - Respondents’ Good Faith:
The correspondence showed that the respondents were willing to deposit the balance, and the bank’s refusal caused the delay.

Para 18 - Bank’s Avoidance of Sale Certificate Issuance:
The court found that the bank avoided issuing the sale certificate and was solely responsible for the delay.

Para 20 - Violation of Natural Justice:
The auction cancellation was unilateral and violated natural justice principles as it was done without notice or hearing.

Para 21 - No Statutory Bar for Time Extension:
The court rejected the bank’s argument, holding that Rule 9(4) does not prohibit time extension for depositing the balance amount if mutually agreed upon.

Para 22 - Conclusion:
The Supreme Court upheld the High Court's ruling, directing the bank to issue the sale certificate and register the sale deed after receiving the balance amount.

Acts & Sections Discussed:

• Security Interest (Enforcement) Rules, 2002:
  • Rule 9(4): Time period for payment of the balance purchase price.
  • Rule 9(5): Consequence of default in payment (forfeiture and resale).

Ratio Decidendi:

The Supreme Court held that the balance sale consideration period under Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 is extendable with mutual consent in writing. The bank’s refusal to issue the sale certificate without valid reasons constituted a breach of natural justice. The auction purchaser’s failure to deposit the balance was not due to default on their part, but rather due to the appellant-bank's actions and delays.

Subjects:

Auction Sale, E-auction, Banking Law, SARFAESI Act

Natural Justice, Rule 9(4), Sale Certificate, SARFAESI Act, Security Interest Rules