• Auctioned property not handed over by bank after payment

3 months back, we purchased a property which was on an auction held by the bank, after clearing all the payments, the bank is unable to handover the property
What is the legal action to be taken against bank for delaying the handing over of the auctioned property.
After approaching the bank manager, he has said that the application has been handed over to the District Magistrate, which also being delayed
After buying the auctioned property we went to take over the property along with bankers and local police, the previous owner said that the property still belongs to him and did not accept the auction, he is saying that only the factory machinery has been auction not the land and the building
But the bank has separately auctioned the machines and the land+building

What should we do ? What are further legal actions to be taken ? Pls advice
Asked 7 months ago in Civil Law

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15 Answers

Allahabad HC has  in case of Rakesh Kumar Kaushal
Respondent :- State Of U.P. Thru. Prin. Secy. Finance & Anr. held 1) the Recovery Management Policy [deleted] there is a provision of refunding the amount of EMD/sale proceeds, if the Bank is not able to deliver physical possession of the property beyond six months from the date of auction. We are satisfied that the reasonable period for giving physical possession of the auction property to the auction purchaser would be six months, keeping in view that under section 13(4) the District Magistrate is under a statutory obligation to decide the application of the Bank within a maximum period of 60 days, and even taking into account certain delay in moving the application and other administrative delays, the possession of the property ought to have been handed over to the auction purchaser at least within a period of six months from the date of the auction.


2) in aforesaid case HC directed bank to refund auction money paid with interest at 9 per cent per annum as bank failed to deliver possession of property for 18 months 

Ajay Sethi
Advocate, Mumbai
76852 Answers
4611 Consultations

5.0 on 5.0

- As per law, the Bank is bound to disclose , to the buyer any material defect in the property , and seller's title of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover; 

- And further to produce to the buyer on his request for examination all documents of title relating to the property which are in the bank's possession or power;

- Since, after selling the auctioned property , the bank is delaying to handover the possession of the said property , hence bank is also liable to refund the total amount paid by you with interest , in case failure to handover the same ,and when you opt to cancel the agreement. 

- You should send a written notice/legal notice to the bank after stating the payment done by you , and failure to hand over the possession , and thereby ask the bank to handover the possession of the said property after clearing all the disputes over the same .

- Many judgement are there against the bank , where Court directs the bank to refund the amount with interest to the buyer of the auctioned property due to delay of possession etc.

Madras High Court

V.Sambandan vs The Punjab National Bank on 4 January, 2017

Mohammed Shahzad
Advocate, Delhi
4063 Answers
43 Consultations

5.0 on 5.0

If this is the situation than kindly check with bank under which act they had auctioned the property.

There are two ways to auctioned property under SARFAESI Act and another act is Recovery of Debts due to Banks and Financial Institutions Act, 1993 (RDDBFI). Because both the acts provisions and clauses are different.


Once you come to know they under which act the auction took place than to you can file the case to DRT.

Ganesh Kadam
Advocate, Pune
10652 Answers
94 Consultations

4.9 on 5.0

It is the duty of the bank to clear encumbrance and fix a date to hand over the vacant possession of the property to you. Check the terms and conditions of tender-cum-e-auction sale. It is always advisable to buy property where bank has physical possession.In case of notional or symbolic possession, winner of bank auction process will struggle to get the possession. After auction bank will be totally non-cooperative. In some cases, it may take years to get physical possession or you may need to file a court case to get physical possession.

So the bank failed to deliver possession of property within 6 months from the date of the auction file application to bank to refund auction money paid with interest at 12 per cent per annum and approach the high court for the same.

Ajay N S
Advocate, Ernakulam
3471 Answers
69 Consultations

5.0 on 5.0


sue the bank for specific performance immediately.


Swarupananda Neogi
Advocate, Kolkata
2147 Answers
4 Consultations

4.7 on 5.0

You can file complaint in consumer court as well as DRT

Prashant Nayak
Advocate, Mumbai
20494 Answers
38 Consultations

4.4 on 5.0

Its a fit case to approach High Court and get a direction to the bank to execute sale deed in your favour as you have acquired right by way successful bidder.

Jamal Sait
Advocate, Bangalore
157 Answers
2 Consultations

4.9 on 5.0

Dear Sir,

It seems, the bankers have taken only notional possession of the same and not actual and physical possession of property. You may get issue a legal notice and file a case before Consumer Forum and also file complaint before Magistrate under section 200 CrPC. It can be deemed as criminal offense. You have so many options and you can initiate all of them simultaneously. You may also lodge a complaint with Banking Ombudsman.

Kishan Dutt Kalaskar
Advocate, Bengaluru
5519 Answers
192 Consultations

4.8 on 5.0

Lodge an fir. File a case in the consumer forum against the bank for deficiency in services and not handing the possession.

Rahul Mishra
Advocate, Lucknow
9653 Answers
17 Consultations

5.0 on 5.0

1. File a separate Civil Court suit for Declaration and Directions, by making the Bank & original owner as Parties to the dispute.  Also seek relief for Interest & compensation from Bank, on the entire amount paid to the Bank.

2. Based on the Auction Sale Certificate, you should be able to achieve the above.

Hemant Agarwal
Advocate, Mumbai
4942 Answers
24 Consultations

5.0 on 5.0

You should have ensured the details and ascertained he facts of the proeprty and the litigation attached to it before entering into the auction sale.

Now you may have to approach court against bank with a suit for specific relief for directing the bank to handover vacant possession of the property.

It may take years for disposal.

You discuss with your advocate on further issues and move on or you may have to wait 

T Kalaiselvan
Advocate, Vellore
66857 Answers
882 Consultations

5.0 on 5.0

you can approach the bank or debt recovery tribunal and claim refund along with interest(approximately 9% per annum).

Mohammed Mujeeb
Advocate, Hyderabad
17231 Answers
11 Consultations

4.5 on 5.0

Police was there and DM had already ordered the recovery of possession and than only auction was to be initiated. If this was not done by bank and without taking possession auctioned the property than you are fault to took part in auction.

Now what you will do, bak got the amount, now have to file civil suit agasint bank for possession. If govt. bank than file writ.

Previous owner acceptance has no relevance, police and bank employees acted loose otherwise, he would have been arrested if any resistance to deliver possession.

No stay from any court in favor of owner and after auction, you are actual owner, File FIR of criminal trespass against owner.

Yogendra Singh Rajawat
Advocate, Jaipur
20038 Answers
28 Consultations

4.5 on 5.0

Dear Sir,

Three risks to consider before buying property in an auctionwritten by Ashwini Kumar Sharma, published in Live Mint.December 24, 2019


KD. Saravanan, 44, a general manager with a private firm in Madurai, Tamil Nadu, always wanted to buy a house in his native village Gudiyatham, Vellore. He saw an opportunity when he got to know that State Bank of India was auctioning a house there. &ldquoThe bank representatives approached me regarding its availability and auction," he said. In May 2018, Saravanan paid about Rs 13 lakh to buy the house that SBI was auctioning to recover the dues from the previous owner under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002. About 20 months later, he is still waiting for the possession of the house.


According to the Act, when a borrower fails to repay her loan, the lender can take control of the assets allocated as security for the loan, without any intervention by any court of law. Once the lender acquires the property, it either sells or leases it out, or assigns the right over the property to another entity. After the sale of the property, the lending institution keeps the outstanding dues, and gives the remaining money, if any, to the defaulting borrower.


In Saravanan&rsquos case, however, the family living in the house claimed to be its owner and refused to vacate. &ldquoInitially, the bank said that once I make the full payment, they would hand over the possession. Now, they are not taking any interest or action," said Saravanan. Mint has seen the auction notice Saravanan received and his property documents. Our email to the bank was unanswered till the filing of this report.


Saravanan&rsquos is not an isolated case. There are several cases where people who have bought properties in an auction have faced problems such as not getting the possession and the previous owner (the borrower who defaulted) challenging the auction. Also, the buyer of an auctioned property is not considered a consumer and, therefore, can&rsquot file a complaint in a consumer court.


Here are three risks that home buyers should consider before participating in a property auction.


It isn&rsquot banks&rsquo liability


Condition of property: Properties are usually auctioned in their current condition, which is described in legal parlance as &ldquoas is where is" or &ldquoas is what is basis". &ldquoThe terms &lsquoas is where is&rsquo and &lsquoas is what is basis&rsquo are used interchangeably and imply that the property is being conveyed in its present form physically and legally, including encumbrances (if any)," said Kunal Arora, joint partner, Lakshmikumaran and Sridharan Attorneys, a law firm.


In other words, the buyer assumes all the risks associated with the property. &ldquoBuyers are required to conduct thorough checks regarding the title and possession as once the property is conveyed to the buyer, all the risks and liabilities are assumed by the buyer," said Arora.


So before taking part in an auction, visit the property, evaluate its structural condition, the quality of construction, and assess the repair or renovation it requires.


Title of property: Often people assume that the properties being auctioned by banks or financial institutions will have a clear title. Typically, the auction notice has a clause, which reads something like this: to the best of the knowledge and information of the authorized officer, no encumbrances exist on the property, and that the said officer shall not be responsible for any unknown existing and future encumbrances or for any third-party claims, rights or dues.


But don&rsquot make the mistake of relying only on the information provided by the institution. In case someone makes a claim after you buy the property, it is unlikely that the bank or institution will come to your rescue. So make independent enquiries regarding the encumbrances, the title of the property, the claims and the rights of the previous owner or any other entity, and any dues before submitting your bid.


&ldquoWhile the ownership rights conveyed to the bidders under the said law are absolute and enforceable, issues pertaining to title, possession and other encumbrances may still arise. This primarily is due to the low level of diligence regarding the status of the property title and other issues prior to creation of a security interest by such banks," said Arora.


Possession Problem


In case of an immovable property like a plot, house or apartment, possession is important. In several cases, the bank or institution only has symbolic possession of the property (has the required paperwork) but doesn&rsquot occupy it or have physical possession.


&ldquoSymbolic possession is when the bank has the legal right over a property, even though the previous owner continues to have physical possession (occupancy) in the property. Under the law, banks are required to take physical possession and then transfer the rights to the buyer. However, practically, banks often complete such transactions without formal physical possession," said Arora.


In such cases, buyers may find it difficult to get the previous owner to vacate the property just like it happened in Saravanan&rsquos case.


No consumer rights


When you buy a property from a developer, and find that the quality of construction is not what was promised initially, you can file a case against the developer in the consumer court, asking for compensation.


This remedy is not available when you buy an auctioned house. &ldquoA buyer can&rsquot approach a consumer court in such cases. Since there is no &lsquosale&rsquo of goods and services, the buyer does not qualify as a &lsquoconsumer&rsquo," said Arora.


You may find auctioned properties attractive because they are, typically, available at a discount, but they are not risk-free. So do your due diligence before bidding for one. If required, take the help of a lawyer.



Netravathi Kalaskar
Advocate, Bangalore
4953 Answers
26 Consultations

4.8 on 5.0

1. You should send legal notice to bank for refund of money paid for auction with interest.

2. Also demand compensation for harassment and damage suffered due to delay in possession of purchased property. 

3. If they refuse to refund the money file recovery suit along with breach of contract case against bank. 

Mohit Kapoor
Advocate, Rohtak
9250 Answers
3 Consultations

5.0 on 5.0

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