Kerala High Court
The Chief Manager /Authorised Officer vs V H Mohamed Basher on 4 July, 2025
Author: Anil K.Narendran
Bench: Anil K.Narendran
WA NO. 2215 OF 2023 1 2025:KER:48478
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN
&
THE HONOURABLE MR.JUSTICE MURALEE KRISHNA S.
FRIDAY, THE 4TH DAY OF JULY 2025 / 13TH ASHADHA, 1947
WA NO. 2215 OF 2023
AGAINST THE JUDGMENT DATED 18.12.2023 IN WP(C) NO.20391 OF
2023 OF HIGH COURT OF KERALA
APPELLANT/RESPONDENT:
THE CHIEF MANAGER /AUTHORISED OFFICER,
M/S STATE BANK OF INDIA, STRESSED ASSETS RECOVERY
BRANCH 7TH FLOOR, VANKARATH TOWERS, PALARIVATTOM
ERNAKULAM DISTRICT, KERALA STATE, PIN - 682024.
BY ADV.SRI.JITHESH MENON
RESPONDENT/WRIT PETITIONERS:
1 V H MOHAMED BASHER,
AGED 61 YEARS,
S/O HAMEED, VALIYAKATH HOUSE, EDATHURUTHY P.O.,
THRISSUR DISTRICT, PIN - 680703.
2 SHAKEELA BASHEER,
AGED 54 YEARS,
W/O V H MOHAMED BASHER, VALIYAKATH HOUSE, EDATHURUTHY
P.O., THRISSUR DISTRICT, PIN - 680703.
BY ADV.SRI.VISHAK K. JOHNSON
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 25.06.2025,
THE COURT ON 04.07.2025 DELIVERED THE FOLLOWING:
WA NO. 2215 OF 2023 2 2025:KER:48478
JUDGMENT
Muralee Krishna, J.
This writ appeal is filed under Section 5(i) of the Kerala High Court Act,1958, by the respondent in W.P.(C) No.20391 of 2023, challenging the judgment dated 18.12.2023 passed in that writ petition.
2. The respondents participated in the auction sale of the immovable property of M/s.Pushpa Diams, conducted by the appellant, invoking the provisions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act' in short). They successfully bid at the auction for a sum of Rs.1,11,10,000/- and as stipulated deposited Rs.28,10,000/-, which is inclusive of the EMD, being 25% of the purchase price. The balance sale consideration of Rs.83,00,000/- has to be remitted by the respondents on or before 19.12.2021, i.e., within 15 days from the date of the sale confirmation. But the respondents could not remit the balance sale price within the stipulated time of 15 days. On 28.02.2022, the respondents requested the appellant to grant two months more time for payment of the balance sale price. But, by the letter dated 05.04.2022, the appellant informed the respondents that the e- auction sale held on 04.12.2021 in their favour is cancelled.
WA NO. 2215 OF 2023 3 2025:KER:48478 Thereafter, the respondents deposited the balance sale
consideration on 13.05.2022, which was not accepted by the appellant. The respondents then filed W.P.(C)No.13868 of 2022 before this Court seeking a direction to confirm the sale in their favour after accepting the balance sale price. By Ext.P1 judgment dated 15.06.2022, this Court disposed of the writ petition directing the appellant to confirm the sale proceedings in favour of the respondents and issue and register the sale certificate. In pursuance to the said direction, the appellant issued Ext.P2 sale certificate in favour of the respondents. However, challenging Ext.P1 judgment, the borrowers filed writ appeal No.1045 of 2022 before the Division Bench of this Court and by Ext.P3 judgment dated 02.09.2022, the Division Bench allowed the writ appeal and set aside Ext.P1 judgment, declaring that all the consequential actions taken in pursuant to the Ext.P1 judgment are void. Thereafter, the respondents filed SLP (C) No.39363 of 2022 before the Apex Court, which was dismissed by Ext.P4 order dated 21.02.2023. The respondents then filed Ext.P5 representation dated 08.03.2023 before the appellant seeking release of the amount of Rs.1,11,10,000/- deposited by them. Complaining inaction on the part of the appellant in releasing that amount, the respondents filed W.P.(C)No.20391 of 2023 before this Court. By WA NO. 2215 OF 2023 4 2025:KER:48478 the impugned judgment dated 18.12.2023, passed along with some other writ petitions filed by the respondents, the learned Single Judge directed the appellant to refund the purchase price paid by the respondents within a period of two weeks. Being aggrieved, the appellant is now before this Court.
3. Heard the learned counsel for the appellant and the learned counsel for the respondents.
4. The learned counsel for the appellant would argue that as per the provisions under Rule 9 of the Security Interest (Enforcement) Rules, 2002, ('the Rules, 2002' in short), the purchaser of an immovable property shall deposit 25% of the sale price, which is inclusive of the earnest money deposit if any, to the authorised officer immediately after the sale. The balance purchase price shall be paid on or before the 15 days of confirmation of the sale or within the extended period as may be agreed upon in writing between the purchaser and the secured creditor, which shall in no case exceed three months. In case of default in paying the balance purchase price, within the period, the secured creditor is entitled to forfeit the deposit. In this case, since the respondents failed to pay the balance purchase price within time, the appellant is entitled to forfeit the 25% of the purchase price deposited by the respondents. This fact is made WA NO. 2215 OF 2023 5 2025:KER:48478 clear in Ext.P3 judgment of the Division Bench of this Court. Without considering these aspects, the learned Single Judge allowed the writ petition.
5. On the other hand, the learned counsel for the respondents would argue that Rule 9(5) of the Rules, 2002 does not apply to the instant case. In the earlier round of litigation between the parties, the issue was with respect to the confirmation of sale after the period mentioned in Rule 9(4) and whereas the present issue is the return of the money deposited by the respondents.
6. Rule 9 of the Rules, 2002, read thus:
"9. Time of sale, Issue of Sale Certificate and delivery of possession, etc.-- (1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of Rule 8 or notice of sale has been served to the borrower:
Provided further that if sale of immovable property by any one of the methods specified by sub-rule (5) of Rule 8 fails and sale is required to be conducted again, the authorised officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.
(2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor:
WA NO. 2215 OF 2023 6 2025:KER:48478 Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of Rule 8:
Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price.
(3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent.
of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorised officer conducting the sale and in default of such deposit, the property shall be sold again.
(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months.
(5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited to the secured creditor and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold.
(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the Form given in Appendix V to these rules.
(7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if he thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon WA NO. 2215 OF 2023 7 2025:KER:48478 together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him:
Provided that if after meeting the cost of removing encumbrances and contingencies there is any surplus available out of the money deposited by the purchaser such surplus shall be paid to the purchaser within fifteen days from the date of finalisation of the sale.
(8) On such deposit of money for discharge of the encumbrances, the authorised officer shall issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly.
(9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above. (10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not."
7. The respondents herein successfully auctioned the property for a sum of Rs.1,11,10,000/- on 04.12.2021. They deposited 25% of the purchase price, which will come to Rs.28,10,000/-. However, they did not deposit the balance purchase price within 15 days. They filed a request for extension of time to deposit the balance purchase price only on 28.02.2022. The period of three months mentioned in Rule 9(4) of the Rules, 2002, expired on 04.03.2022. On 05.04.2022, the appellant informed the respondents that the sale was cancelled due to non-
WA NO. 2215 OF 2023 8 2025:KER:48478 payment of the balance purchase price. It was only on 13.05.2022, the respondents deposited the balance purchase price and moved this Court by filing W.P.(C)No.13868 of 2022. Though the sale was directed to be confirmed in Ext.P1 judgment, by Ext.P3 judgment in the writ appeal, the Division Bench set aside that judgment. In Ext.P3 judgment, the Division Bench categorically held that Rule 9(5) of the Rules, 2002, makes it clear that if the balance purchase price as contemplated in sub-rule (4) is not paid, the deposit shall be forfeited and the property shall be resold. Therefore, the imperative expression 'shall' is employed to make it clear that the provisions of sub-rules (4) and (5) are mandatory, which cannot be overlooked by the statutory authorities under any circumstances. This judgment of the Division Bench is confirmed by the dismissal of the Special Leave Petition filed by the respondents before the Apex Court by Ext.P4 order. In Ext.P3 judgment, the Division Bench found that by Ext.P1 communication dated 04.12.2021 produced in W.P.(C) No.13868 of 2022, the sale confirmation was informed to the respondents, and even then they failed to pay the balance purchase price within the time stipulated in Rule 9(4) of the Rules, 2002.
WA NO. 2215 OF 2023 9 2025:KER:48478
8. Having considered the pleadings and materials on record, and the submission made at the Bar, in the light of discussions made in the preceding paragraphs, we find that the learned Single Judge failed to appreciate the finding of the Division Bench in Ext.P3 judgment in its proper perspective and also the mandate under sub rules (4) and (5) of Rule 9 of the Rules, 2002. To a query made by this Court, the learned counsel for the appellant submitted that after the impugned judgment, the appellant returned the balance purchase price of Rs.83,00,000/- deposited by the respondents. Having considered the entire facts and circumstances, we find that the impugned judgment is liable to be set aside.
In the result, the writ appeal is allowed by setting aside the impugned judgment dated 18.12.2023 in W.P.(C)No.20391 of 2023 and the writ petition stands dismissed.
Sd/-
ANIL K. NARENDRAN, JUDGE Sd/-
MURALEE KRISHNA S., JUDGE DSV/-