MANU/DK/0009/2019

Equivalent Citation: I(2020)BC 47

BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL

KOLKATA
Appeal No. 140 of 2018
Decided On: 08.08.2019
Appellants: Nrskl Health Care Pvt. Ltd.
Vs.
Respondent: State Bank of India and Ors.
Hon'ble Judges/Coram:
R.S. Kulhari, Chairperson
Counsels:
For Appellant/Petitioner/Plaintiff: Radhey Shyam Tiwari, Advocate
For Respondents/Defendant: Debashis Chakraborty, Advocate
JUDGMENT
R.S. Kulhari, Chairperson
1 . This Appeal has been preferred under Section 18 of the SARFAESI Act, 2002
against the Order dated 25.6.2018 passed by DRT-1, Kolkata whereby the S.A. filed
by the appellant was dismissed.
2. The essential facts giving rise to this Appeal are, that the respondent Bank put the
property for auction belonging to one borrower M/s. IAG Company Limited. The e-
auction was scheduled for 10.10.2017. The appellant filed bid with EMD of Rs. 51
lakh on 4.10.2017. It is averred that while inspecting the documents of the property
the appellant came to know that mortgage was created in favour of the Bank on the
basis of certified copy of the documents on which there was no endorsement of the
Competent Authority hence it withdrew the bid vide letter dated 7.10.2017, However,
vide letter dated 9.10.2017 the said letter was withdrawn and sought for password.
Thereafter, the appellant participated in e-auction on 10.10.2017 and was declared as
the highest bidder of the property for Rs. 5.76 crores. The sale was confirmed in
favour of the auction purchaser who had further deposited Rs. 93 lakh to make Rs.
1.44 crores as 25% of the sale price. The balance amount of Rs. 4.32 crores was to
be deposited within 15 days but the same was not deposited and extension was
sought vide letter dated 23.10.2017 which was allowed by the Bank. The period was
extended till 28.12.2017 with the stipulation that in failure to deposit the amount,
sale of the property would be cancelled and EMD amount will be forfeited as per
terms and conditions of e-auction. In the meantime, some correspondence was made
with Registrar for endorsement on the documents. The appellant did not deposit the
balance amount till 28.12.2017 hence the Bank issued fresh sale notice and sold the
property to another purchaser.
3 . The appellant filed writ petition before Hon'ble High Court seeking certain
directions which was dismissed on the basis of alternative remedy. Thereafter, the
appellant filed S.A. before the Tribunal below seeking refund of Rs. 1.44 crores

01-09-2021 (Page 1 of 4) www.manupatra.com Zarir Bharucha

deposited with the Bank and to set aside the fresh sale conducted by the Bank on
29.5.2018. The Tribunal below vide impugned order dismissed the S.A. observing
that the amount has been forfeited as per terms and conditions of the auction notice.
Being aggrieved by the said order, this Appeal has been filed.
4. Heard the learned Counsel for the parties.
5 . Learned Counsel for the appellant submitted that there was a defect on the title
deeds of the property as no endorsement was made in the certified copy by the
Registrar. So no marketable title was with the Bank. Hence the proposal of bid was
withdrawn. However, having discussed with the Bank Officers and on their assurance
that the Bank would get the endorsement done, the appellant participated in the bid
and after declaring successful bidder 25% of the sale price was deposited. Thereafter,
the Bank did not get the endorsement done hence the appellant opted not to deposit
remaining 75% of sale price till the title deeds of property were made proper. The
Bank had also written a letter dated 16.12.2017 to the Registrar for endorsement
which indicates that the Bank has assured the appellant and thus, was bound to
rectify the defect in documents. The appellant has not committed any default in
payment or breach of any condition of the auction. Thus, the Bank has wrongly
forfeited the amount and sold the property to another auction purchaser. The Tribunal
below has not considered these aspects hence the impugned order is not sustainable.
In support of the contentions, learned Counsel has relied upon the judgment of
Hon'ble Supreme Court in Kailash Nath Associates v. Delhi Development Authority
and Another, MANU/SC/0019/2015 : 216 (2015) DLT 433 (SC) : I (2015) SLT 344 :
(2015) 4 SCC 136, decided on 9.1.2015.
6 . Per contra, learned Counsel for the respondent Bank contended that the property
was sold on "AS IS WHERE IS BASIS' and "AS IS WHAT IS BASIS" and there was
clear stipulation in the auction sale notice and the letter of confirmation of sale to the
effect that the original title deed of the property was destroyed by fire and equitable
mortgage was created with certified copy of the deed. After taking note of this
condition, the appellant offered bid and also furnished a declaration to the effect that
"in case of appellant was declared as successful bidder and fails to make the
payment, the EMD and any amount paid by it was liable to be forfeited and the
appellant was unconditionally bound to comply with the terms and conditions of the
sale". Since the appellant has not deposited the remaining amount despite extension
of time so, the amount was rightly forfeited by the Bank. Learned Counsel further
argued that though a letter was written to the Registrar but it was only on request of
the appellant so that necessary correction as required by the appellant may be carried
out. A clear stipulation with regard to certified copy was made in sale notice so there
was no question of any assurance given by the Bank to the appellant. Moreover, it
was an e-auction so otherwise also Bank was not in a position to entertain any of the
ensuing parties or any objection thereof as special case. The appellant has
participated in the bid after proper knowledge and investigation of the title deeds and
deliberately failed to pay the balance amount hence, the amount was rightly forfeited
by the Bank due to breach of conditions by the appellant. Learned Counsel has
referred the judgment of Hon'ble Madras High Court in CA Nos. 1953 to 1956 of 2008
in CA No. 1983 of 2007 in CP No. 526 of 2000, decided on 13.4.2009 in support of
the contentions.
7 . Having heard the learned Counsel for the parties and considering the material
available on record, it is apparent that the original documents of the property in
question were destroyed in fire and the equitable mortgage was created in favour of

01-09-2021 (Page 2 of 4) www.manupatra.com Zarir Bharucha

the Bank on the basis of certified copy. This is not the case of the appellant that it
was not a valid mortgage but the contention is that there was no endorsement of loss
of original documents on the certified copies. Thus, there is no dispute about the
validity of mortgage in favour the Bank.
8. The factum of destruction of original title deeds was clearly mentioned in auction
sale notice dated 20.9.2017, in confirmation of sale letter dated 10.10.2017 and also
in the letter of extension dated 23.10.2017 issued by the Bank. Thus it is clear that
the appellant had offered proposal of bid after having knowledge of this fact with
regard to title of property and after reading terms and conditions of the sale notice it
has given undertaking to the effect that it was unconditionally bound to comply with
the terms and conditions of the sale. So, it cannot be said that the Bank had
concealed any fact or misrepresented the parties and instead, the appellant opted for
bidding after having knowledge of all these facts.
9. Secondly, as stated by appellant, the lack of endorsement came to its knowledge
while inspecting the documents of the property and thereafter it withdrew the bid
proposal. So, again the appellant was cautious of this fact. Thereafter withdrew the
earlier letter, sought for ID and password, offered bid and was declared successful
bidder. As such, it took calculated risk to participate in the bid. The condition was
again reiterated in the sale confirmation letter. If the appellant was having any
objection, it would have refrained from depositing the amount of Rs. 93 lakh but it
voluntarily remitted the same. There is no evidence on record in support of the
contents of letter dated 9.10.2017 of the appellant to infer that any of the Bank
officers had assured the appellant for such endorsement on the title deeds of the
property. Otherwise also it was an e-auction so no special relaxation/assurance could
have been given to any of the bidders because it was not a private treaty in which
case such type of negotiation may be held.
10. So far as letter written by the Bank to the Registrar is concerned, the appellant
made a request to the Bank in the letter written for extension, so it was a gesture on
the part of the Bank to extend cooperation so that the grievance of the appellant may
be redressed. Thus, mere writing a letter to the Registrar is not sufficient to infer that
the Bank has agreed to get such endorsement done on the certified copies.
11. Thirdly, the property was sold on "AS IS WHERE IS BASIS' and "AS IS WHAT IS
BASIS" and the terms and conditions were clearly set out in the sale notice. The
Condition Nos. 9 and 10 were with regard to forfeiture of earnest money and other
amount in case of non-compliance of conditions. The appellant has further submitted
declaration dated 4.10.2017. Thus, it was the duty of the appellant to investigate and
ascertain about the property and its title before participating in the bid. Otherwise, it
was bound to comply with the terms and conditions of "AS IS WHERE IS BASIS' and
"AS IS WHAT IS BASIS". The Bank has categorically mentioned in the extension letter
dated 23.10.2017 that the remaining amount was to be deposited till 28.12.2017
failing which the sale of the property shall be cancelled and EMD to be forfeited with
specific note that no further extension of time will be granted. Thus it was a clear
notice to the appellant for forfeiture of the amount.
12. The appellant has not deposited the amount till 28.12.2017 thus failed to comply
with the terms and conditions of the e-auction and hence the Bank has rightly
forfeited the amount deposited by the appellant and put the property for fresh
auction. The Hon'ble Madras High Court has held in CA Nos. 1953 to 1956 of 2008 in
CA No. 1983 of 2007 in CP No. 526 of 2000 decided on 13.4.2009 that 'the purchaser

01-09-2021 (Page 3 of 4) www.manupatra.com Zarir Bharucha

at auction sale takes the property subject to all the defects of title and the doctrine of
caveat emptor applies to such purchaser' and also that 'if the property is sold on 'as
is where is and whatever there is basis' the auction purchaser having got sufficient
time to investigate the title ought to have been more vigilant while participating in
the auction'. The principle laid down in this judgment is applicable in the facts and
circumstances of this case. I respectfully agree with the proposition laid down by the
Hon'ble Supreme Court in Kailash Nath Associates v. Delhi Development Authority
and Another case but it does not render any assistance to the appellant as the same
is distinguishable on the facts. The appellant had breached the terms and conditions
of the auction sale notice which is a valid ground for forfeiture of deposited amount.
13. In view of the aforesaid, there is, no infirmity or illegality in the impugned order
and the Appeal is liable to be dismissed.
14. Accordingly, the Appeal is dismissed with no order as to costs.
© Manupatra Information Solutions Pvt. Ltd.

01-09-2021 (Page 4 of 4) www.manupatra.com Zarir Bharucha