• Auction of residential property - bank not completing sales due to stay on auction

Dear Sir/s
In Jan 2015 I bid for a residential property auctioned by bank for INR 91,00,000/- . As a winning bidder I promptly deposited the 25% amount ,which comes to 22,75,000/- in the banks account immediately after the auction was complete.( Out of this amount , INR 9,00,000/- was deposited earlier as EMD to participate in the bid)
After the transfer of money was done next day bank immediately informed me the the property owner has bought a stay on the auction and the matter is pending for decision of DRT. I was very naive and assumed that the decision will happen soon and I had kept my finance ready to transfer the remaining amount. 
However till date ( 2021), the bank has not proceeded with the completion of the sale transaction of the property. I have kept on following the the bank on the progress of the case with DRT but that case was prolonged for a long long time . The bank did not give me the direct details of the case in writing or the points on which the case is being contended by the property owner.
Later I found on DRT2 Mumbai website that the bank is in dispute with the property owner since June 2014 i.e even before the auction was done for the property. And after the auction process was complete I deposited the 25 % amount , the bank disclosed to me that the property owner has bought a stay on the auction.
Now I am not in a position to wait for the bank to complete the cases and resolve it as it may take longer. Also in the mean time the condition of the property has detoriated extensively due to water seepage and lack of maintenance. The property value is thus depreciated in my opinion as it will need extensive repairs.
Due to this delay, I have lost my opportunity to purchase any other property for my use due to my money locked with this bank and finances blocked to complete the transaction. 
Note that all my communication with the bank in regards to the above entire case has been on mails and tele calls only for e.g. like receiving acknowledgement from bank that they have received the initial amount, follow ups with bank over the progress of the case etc. In due course of the banks case with the property owner, I was also told verbally by the bank officer that I can withdraw from the auction if I wish any time and the bank will refund me my money. Due to this assurance I decided to wait a little longer for the bank to complete the case. However this is not happened.

Now I wish to withdraw from this auction as the bank has not been able to complete the sale process and want a refund from the bank with interest . In this regards I have sent a mail to the bank indicating that I want to withdraw from this auction and want a refund. But the bank is not responding to the same.
Please advise what should be my stand and what is my legal entitlement ? Can I withdraw from the auction and get demand from the bank with interest? How should I proceed?
Asked 6 months ago in Property Law
Religion: Hindu

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5 Answers

File intervenor application in DRT in pending case 

 

2) seek orders from DRT to refund your money with interest 

 

3) rely upon correspondence exchanged with bank wherein they agreed to refund your money 

Ajay Sethi
Advocate, Mumbai
84049 Answers
5477 Consultations

5.0 on 5.0

File an intervention application in the case going on between the owner and the bank 

As an auction purchaser if you had any grievance against the bank then you ought to have filed a petition before the DRT u/s 17 of Sarfaesi act within 45 days of the bank ceasing to take any action for completing the auction sale in your favour 

In this case the bank did not even disclose the pending encumbrance with the owner and about the stay order against auction sale. 

So you will have to intervene in the existing matter since the bank violated the stay order and conducted the auction sale which is a contempt of Court 

The bank is illegally sitting with your 22.75 Lacs and has been enjoying interest on the same 

When there was a stay the bank under no circumstances could have conducted the auction sale 

You can also approach the High Court and file a contempt petition against the bank 

The above is only a preliminary view. I am sure something more will emerge after going through the papers 

Yusuf Rampurawala
Advocate, Mumbai
6432 Answers
54 Consultations

5.0 on 5.0

  1. Yes. You are legally entitled to claim refund with interest  
  2. However, if the bank is refusing this refund, you have two civil  legal remedies and one criminal remedy to choose from: a) civil remedy of moving consumer court ---- here,  you will petition the consumer court for deficiency in services and unfair trade practice against the concerned bank & claim the refund with interest and compensation and costs, as a remedy. b) civil remedy of moving the civil court, for specific performance--- here, you can petition the civil court ordering the bank to perform it's contractual obligation ie to deliver you the property. The bank being in no position to do that, will be liable not only to refund you, but hefty compensation can be claimed, along with costs. c) criminal remedy of filing a police complaint against the bank for fraud---here, the bank officials will be prosecuted and punished; but the scope of compensation to you is not there. Only refund. 
  3. Which of these remedies suggested in 2 best suits your purpose,  can best be advised to you, only after an exhaustive consultation session with you. As a counsel (advocate), I'm willing, not just to advice you, but also undertake the appropriate  litigation and take it to it's logical conclusion. 
  4. I'm based in Mumbai /NaviMumbai just as you are; so it shouldn't be much difficult for you to visit me for exhaustive consultation. 
  5. ९८२०८९७८८४ (Nine eight two zero eight nine seven eight eight four) 

Netra Mohanchandra Pant
Advocate, Navi Mumbai
1420 Answers
5 Consultations

4.4 on 5.0

It is not matter of just refund of deposit, it is fraud by bank on you. By active concealment of full knowledge of  fact of pending dispute in DRT, the bank has played fraud on you. Issue lawyer’s notice  alleging fraud and claiming compensation as damages. They did not disclose pending suit in their notice  calling bid for auction, that is the fraud. You are entitled to get refund and heavy compensation.

Ravi Shinde
Advocate, Hyderabad
1431 Answers
16 Consultations

5.0 on 5.0

You send a legal notice to the bank mentioning the events that took place from the beginning till this date and vent out your grievances due to the bank's failure to render relief despite passage of substantial period of time from the date of bidding and payment of 25% of the bid amount. 

You communicate your decision to cancel the bidding and withdraw the same  and instruct bank to refund the amount paid so far with interest. 

Failing to comply with your demand,  you may drag the bank to consumer forum to get your grievances redressed. 

T Kalaiselvan
Advocate, Vellore
74146 Answers
1202 Consultations

5.0 on 5.0

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