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:
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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.
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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
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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
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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:
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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
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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-
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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.
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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/-
