BIDDING BATTLE: IDBI BANK'S AUCTION CANCELLATION SPARKS LEGAL SHOWDOWN!
Category: Banking Law
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FACTS OF THE CASE
In this case there is a specific property in question which is 2 guntas of land located in Medchal Malkajgiri district in Telangana. A notice was issued on 17.03.2018 for e auction and the auction was conducted on 10.04.2018 to which the respondents were the highest bidders and agreed for the price of Rs1,42,50,000 to which they had paid twenty-five percent of the total amount which is Rs 36,00,000 on the same day. The bank refused to accept the remaining amount within 15 days after the auction and did not specify any reason and thus cancelled the auction settlement on 24.12.2019 and refunded the amount that had been given initially, although the respondents did not withdraw it. The respondents approached the High Court to issue the auction certificate to them on paying the full amount and to challenge the bank retreating the auction settlement. The High Court on 19.09.2022 ruled in favour of the respondents.
ISSUES OF THE CASE
1)Can the bank withhold the sale certificate?
2)can the bank cancel the auction by itself?
LEGAL PROVISIONS
SUBRULE 4 OF RULE 9 OF THE RULES-
it says that the complete payment is to be made within 15 days from the date of confirmation of sale or else the property can be resold to another.
NATURAL JUSTICE-
An opportunity to be heard by the other party before making a decision.
CONTENTIONS BY THE PETITIONER
The bank argued that the respondents were negligent in making the payment of the remaining amount and repeatedly asked to extend the days beyond 90 days which led them to cancel the certificate of sale.
CONTENTIONS BY THE RESPONDENT
They argued that they were willing to pay the due amount within the time frame but the bank was unable to accept it because of the CBI investigations and it went against the principles of natural justice as the bank had refused to issue the sale certificate.
JUDGMENT
The Judgement held that there was no stay issued by the court that forbid the issuing of a sale certificate and the judgement was favourable to the respondents as the court found them ready to pay the remaining amount of the auction settlement as they were unable to pay due to CBI and ED inquiries and was not at fault for seeking extension.
ANALYSIS
The case highlights that contact was be followed through by both the parties and it also sheds light on the principles of natural justice and no party can decide the case on its own. There must be ensured clear communication between the parties for a successful fulfilment of any contract.
CONCLUSION
The case is a true standing point for fairness and to point out every party in a contract to adhere to due process of law and fulfil all extents of principles of natural justice by ensuring that all the actions of the parties are properly justified.
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WRITTEN BY: ADINA EVANGELINE G
