While Returning Deposit Of Auction Purchaser, Should Bank Pay Same Interest Rate Which Is Charged From Borrower? Supreme Court To Decide

The Supreme Court is set to examine whether while returning money deposited by the highest bidder, in an auction sale conducted by the bank, the rate of interest should match with the rate that the bank is charging from the borrower.

The matter was placed before Justices Sajiv Khanna and S.V.N. Bhatti.

In the present case, the petitioner was the highest bidder in an auction sale of a secured interest by the bank (respondent) in exercise of its rights under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Before the Delhi High Court, the petitioner pleaded that being the highest bidder, the sale certificate was issued in his favour after he had deposited entire auction money. However, physical possession of the secured interest/auction property was not handed over to him.

In this respect, he also moved applications before the Bank for handing over physical possession of the property to him but to no avail.

Per contra, the Bank submitted that the physical possession of the auctioned property could not be delivered as the borrowers had moved the DRT (under Section 17 of the SARFAESI Act) as well as the Consumer Forum. It must be noted that as per Section 17, the application against measures to recover secured debts, can be filed before the Debts Recovery Tribunal within forty-five days from the date on which such measure had been taken.

Notwithstanding the same, the counsel, representing the bank, proposed that the entire amount would be returned to the petitioner along with interest @ 6% per annum till the date of actual payment. Taking record of this statement, the High Court disposed of the petition. Aggrieved from the same, petitioner approached the Top Court.

It was contended that while returning the money deposited by the petitioner, the Bank should pay the same rate of interest which they are charging from the borrower.

The Court, while issuing notice in the present plea also directed the bank to pay the deposited amount along with the same rate of interest.

“In the meanwhile, the respondent-Bank will return the money along with interest at the rate of 6% per annum, as directed by the High Court in the impugned order. The payment will be accepted by the petitioner without prejudice to his rights and contentions.”

Case Title: Sunil Kumar Kaushal V. Chief Manager & Ors., Petition for Special Leave to Appeal (C) No. 25434/2023

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