Rights of an auction purchase under sarfaesi
Amit
(Querist) 25 February 2015
This query is : Resolved
The details are , In March’2012 , I had bought a flat in Mumbai , from Indian Overseas Bank (IOB) through an auction under SARFAESI act.
1. Had paid 25% amount within stipulated time of 48 Hrs.
2. And remaining 75% within 15 days.
3. Made the payments through cheque for all Encumbrances to Co Op Society till Mar’2012. Which society rejected since i was not a member of society.
So, from a process point of view I had complied with each process in this Auction. And bank had provided ‘Confirmation of Sale’ latter to me.
But on the 15th day (from date of auction) , Bank had returned my 75% money back to my account stating that the Defaulter had got a stay from DRAT/DRT and court had asked to keep ‘Status Quo’ in this matter. Initially bank had mentioned time for 4 months to settle this matter in court but it’s been almost 3 years now, but it’s not been settled yet.
Current status of this case is that DRAT had asked defaulter to pre-deposit 20 Lacks in Oct'13. Against which defaulter had approached High court for relaxation for pre deposit of 20 Lacks, But recently that appeal was disposed of by High court in Nov'14. After that Bank didn't informed me about the status of this case and 1.5 months were over. In between, somehow defaulter had managed 20 Lacks and deposited that amount to DRAT and high court had asked DRAT to consider this matter on marit basis. Now, this matter is with DRAT.
Recently , i feel that Bank officials are also not interested in me since they feel that property is not worth of amount in which it was sold 3 years back and favoring defaulter. They are also trying to negotiate and settle this matter outside court.
From a Buyer’s perspective ,What type of damages I can claim or eligible for ,
1. I am paying rent every month (Rs 22,000) since March’12 due to not having possession of this property.
2. 25% of money is still laying with bank since March’12.
3. Encumbrances (Dues of society maintenance) on this property was close to 1 Lack in March’12 and it is increasing every month due to non-payment.
4. I have to block 75% of money ,as at any given point of time i have to pay it to Bank, if this decision goes in favor of Bank.
Now,
1. Do i have any right to challenge , if bank goes and settles this matter outside court ?
2. Which court shall i approach DRAT or High court ?
3. What type of damages I can claim or eligible in this case as an Auction purchaser ?
4. Shall i take back my money with reasonble interest , may be Fixed Deposite rate and look out for some other option ?
P. Venu
(Expert) 25 February 2015
Action for damages could be possible only after the matter is finally settled.
Rajendra K Goyal
(Expert) 25 February 2015
The Bank has not entered into out of court settlement. If it happens against your satisfaction, you can claim your damages which would be decided on merits by the court.
RAJU O.F.,
(Expert) 25 February 2015
Bank was wrong for allowing 48 hours for remittance of 25% of bid amount. As per SARFAESI Rule said amount had to be paid immediately after the auction, failing which property had to be re-auctioned same day.
In the instant case, borrower availed his legal remedies and secured back the property. If bank do not issue sale certificate in your favour ( because of court orders) and you could not obtain possession of the said property, it is better to get back the money deposited by you with reasonable interest ( the money was with the bank and they were using it for their lending at interest. If you are not impleaded in DRT/DRAT proceedings, get impleaded in the pending SA matter and agitate your grievances.
R.K Nanda
(Expert) 25 February 2015
agree with experts.
Amit
(Querist) 26 February 2015
Thanks Experts for our view( Mr. Venu, Mr Goyal , Mr RAJU & Mr Nanda).
Further query based on your response,
1. Bank officials are also not replying to any of my queries / concerns. They have not informed the status of this case. It really dilutes the interest in such transactions.
2. Bank says you wouldn't be eligible for any damages as this property was sold "As is where basis".
3. If bank is entertaining the defaulter instead of their real customer -Auction purchaser , Isn't it a bad business practice ?
malipeddi jaggarao
(Expert) 27 February 2015
Engage an advocate and implead yourself as interested party in all pending cases and bring these facts before the concerned courts.
RAJU O.F.,
(Expert) 28 February 2015
Borrowers always manage with the bank officials; so long as borrower keeps the official pleased then, the other side will suffer. There is a saying that by auction sale of property, you purchase litigation also. Those who can withstand all these will not have any difficulty.
Please proced as I advised earlier.
T. Kalaiselvan, Advocate
(Expert) 28 February 2015
Do not call yourself as real customer of the bank because the defaulter too was a customer of the bank. Further the bank cannot go beyond the court's stay order to sell the property to you. It is advised that you take back the amount held in bank's deposit along with nominal interest till date. Your claim for buying the property will stand vitiated.
