'Motivated Exercise At Behest Of Defaulting Borrowers': Delhi High Court Imposes 1L Cost On PIL Questioning Auction Sale Of Mortgaged Assets

The Delhi High court recently imposed Rs. 1 lakh as cost on a litigant for filing a frivolous PIL with the objective of obstructing the sale of a property that was mortgaged by the borrowers (two private developers) with a financial institution to secure their loan.

The Petitioner had sought action against the financial institution for allegedly sourcing huge amount of money to the illegal group of companies as financial favour. However, during the hearing, the Court noted that the petitioner questioned the manner in which the mortgaged asset was sold by the Financial Institution to recover the loan.

A similar challenge to the auction sale of the mortgaged asset at the behest of the borrowers had already failed, it was informed.

In this backdrop, the Bench comprising Acting Chief Justice Vipin Sanghi and Justice Navin Chawla observed,

It noted that though the prayers made in the writ petition sought to assail the transaction by which loans were advanced to the said borrowers, the submissions of the petitioner related to the manner in which the Financial Institution had sought to make recovery of a part of the loaned amount by publicly auctioning the asset of the borrowers which was mortgaged to secure the loan.

"The petitioner's submission that the property was sold at a price lower than the market price, cannot be accepted since the sale was a public sale through a public auction. In any event, that is a matter which does not concern the petitioner," the Court added.

Accordingly, it dismissed the petition with Rs. 1 Lakh costs to be deposited with the Delhi State Legal Services Authority within 2 weeks.