Facts about auction by the Bank must be made known to the parties

Judgment dated 11.4.2023 of the Supreme Court of India

Auction of assets of borrower under SARFAESI Act, 2002 by the Bank (secured creditor)  – In the first auction, the appellant deposited Rs.50,00,000/- for earnest money and 25% of auction amount not knowing about pending case of borrower before DRT – Informed the Bank that balance amount will be paid after case of original borrower before DRT is settled –   Bank issued forfeiture notice and started re-auction proceedings – Reauction was challenged by the first auction purchaser – During pendency of writ petition the re-auction was held and second auction purchaser deposited the amount – Direction of the High Court to execute sale-deed for second auction purchaser and liberty to the appellant to pursue remedy for refund of his deposits – HELD that the facts must be made clear to the parties participating in the auction since there is always a high variance between market realizable value and distress value of mortgaged property when put to public auction under the Act of 2002. 

Civil Appeal No(s). 2724   of 2023 (arising out of SLP(Civil) No(s). 17470 of 2019) Mohd. Shariq Vs. Punjab National Bank and others