Basanti Lata Nayak & Others vs The Authorized Officer
2023 Latest Caselaw 173 Ori

                  IN THE HIGH COURT OF ORISSA AT CUTTACK
                                   W.P.(C) No.23008 of 2014

           Basanti Lata Nayak & Others                 ....            Petitioners
                                                     Mr. S. Satapathy, Advocate

                                    -versus-
           The Authorized Officer, Stressed ....                   Opposite Party
           Assets Management Branch


                      CORAM:
                      THE CHIEF JUSTICE
                      JUSTICE M. S. RAMAN

                                         ORDER

04.01.2023 Order No.

05. 1. The prayer in the present petition is for a direction to the Opposite Party-Bank to return to the Petitioner the Earnest Money Deposit (EMD) of Rs.13,10,000/- which was made by the Petitioner at the time of participating in the E-auction conducted by the Bank.

2. Admittedly, the Petitioner was the successful bidder. He whoever failed to make payment of the bid amount which resulted in forfeiture of the EMD by the Bank.

3. It is sought to be argued by learned counsel for the Petitioner that without actually the Bank taking physical possession of the property in question, it could not have put it up for sale through E-auction. In support of such contention he placed reliance on a judgment of the Single Judge of the Karnataka High Court dated 1st June, 2015 in Writ Petition No.15546 of 2011 (E.Ali v. The Syndicate Bank). Although in the said case it was observed that there is a statutory

requirement for the Bank to take possession of the property before putting it up for sale through public auction, there is no reference made to the actual statutory provision.

4. Learned counsel for the Petitioners drew attention to Section 13(4)(a) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act) which states that the secured creditor may take recourse inter alia to taking possession of the property for realizing the secured assets by sale.

5. However, the Court notes that the said provision does not make it mandatory for the Bank to take possession of the property before putting it up for sale through public auction. Further the expression 'take possession' does not necessarily mean taking physical possession. It could include constructive possession.

6. Consequently, the Court is unable to agree with the submission that there was justification for the Petitioner not to have paid the bid amount despite being the successful bidder. Forfeiture of the EMD, as a result the failure of the Petitioner to pay the bid amount, was consequential and cannot be said to be arbitrary or illegal. Consequently, the Court declines to grant the relief prayed for.

7. The writ petition is, accordingly, dismissed.

(Dr. S. Muralidhar) Chief Justice

(M. S. Raman) Judge MRS/Laxmikant