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bharat babu (NA) 01 December 2019

Need advise on auction sale purchased house

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Dear All,

Recently I have participated in an auction sale property and I was the single bidder for the action sale.. Basis that, bank has issued sale letter and gave us the physical possession of the property and we are staying in that house... Now the application for change of ownership under Odisha State Housing Board (OSHB) is in progress…Recently we have received pending electricity bill of amount 1 lakhs 50 thousand and this thing was completely unaware by us. Now the bank is telling is that, we the highest bidder is the responsibility to pay these pending dues..

Auction sale terms and conditions:

I have copied the auction sale clause for your reference,

Reviewing the section VI, “”The bank will not be liable for past, present and future statutory/Institutional or any other dues already accrued on the assets prior to and/or after sale””….

Section V, revealed that the sale of the asset(s) is on “AS IS WHERE IS AND WHAT EVER THERE IS BASIS”

Point in the sale letter

After paying full bid amount bank has issued a sale letter and relevant point is mentioned is copied as below,

“””The sale of the scheduled property was made free from all encumbrances known to the secured creditors listed below on deposit of the money demanded by the undersigned…

Descripttion of the property

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

At last also mentioned as “List of encumbrances NIL”

Information gathered through internet and recent judgement

In internet source I read the article about this matter and copied as below,

“”In a recent order, the Supreme Court (referred to as SC hereupon) has ruled that the buyer of an auctioned property will not be liable to pay off the outstanding dues of the previous owner. The judgment pertained to a Southern Power Distribution Co vs Gopal Agarwal case. In this case, Agarwal bought a property from the City Union Bank which was previously owned by a company that defaulted on its loan to the bank. As a result of which, the property was re-possessed and auctioned’’’.

Now in summary,

Reviewing the various informations available in internet, and some where it mention that, for auction sale properties all pending dues (such as electricity bill and holding tax etc) has to settle by the highest bidder and bank or previous owner is not responsible for that.

On the otherhand supreme court judgement revealed that the pending all dues is the responsibility of the Bank (selling organization).

My Query:

I have requested to the Bank to clear the pending dues and in return bank has replied as “as per the advertisement clause, any type of dues pending against the said house is the only responsibility of the successful bidder”.

I read in web search and its listed that, bank was supposed to take NOC from different authority (electric board and holding tax board), then only they are supposed to comment as “the scheduled property was made free from all encumbrances….) in the sale letter.

Now reviewing the various points, and reviewing the supreme court judgement, it should be the responsibility of the Bank to settle the pending dues. Whereas their advertisement, tender paper is saying that to pay by the highest bidder.

Now thing is that, if we not pay any partial dues, then electricity authority may disconnect the lines..

Dear Experts, Now I am now in completely dilemma what to do? Should I fight for this through court? Do I have any valid point to fight? Please please advise me this. Many thanks in advance..

Learning

7 Replies

G.L.N. Prasad (Retired employee.) 02 December 2019

First focus on immediate necessity. Please pay the bill and later approach to consumer forum for remedy, as Govt., can proceed against present owner treating such dues as revenue recovery. Please think whether you have secured the building for less than market value and seek remedy from local advocate. It is the duty of the Bank to get the latest position of revenue arrears and pay them before auctioning the house. Those charges can be legally recovered by the Bank, if the auctioned amount is more than the outstanding loan. First issue a notice informing them and demanding for such payment, as they have suppressed material facts of arrears in the advertisement.

bharat babu (NA) 02 December 2019

Dear Prasad Sir,

Many thanks for your valuable inputs and we are agrreable that we need to settle the pending arrears, or else they may disconued the electricity and we will suffer.

After that we will move to consumer forum for remedy... Can you please advise to chich authority you are refferring as "Consumer forum"?

As per your point on market value, actually its not cheaper as per market value, adn we preferred to buy because it was difficult to find property in that locality..

Your point: Those charges can be legally recovered by the Bank, if the auctioned amount is more than the outstanding loan.

My Response: To the best of knowledge the loan pending arrear dues was some where 75 lakhs, and the auction sale amount was 1 crore, 35 lakhs..Reviewing that, we feel that there must be some margin kept by the Bank..

Your point: First issue a notice informing them and demanding for such payment, as they have suppressed material facts of arrears in the advertisement.
My Response: Already we have sent them a normal letter (first letter) to clear the pending dues.. But in response in return bank they have replied as “as per the advertisement clause, any type of dues pending against the said house is the only responsibility of the successful bidder”.

Now seems to be we need to rephrase again and send them again another one letter .If not then need to go to court..

G.L.N. Prasad (Retired employee.) 02 December 2019

Mr.Bharat Babu,

1)The most important point in your favour is that the property fetched Rs.1 cr and the outstanding amount was around Rs.75 lakh and the surplus has to be refunded to the borrower.

2. Contact a local advocate and issue a legal notice demanding payment of electricity charges as per bill out of the surplus amount available after adjusting the borrowed amount, as the charges were pending.

There must be definitely similar cases in the past, and your advocate may go through earlier findings. Though there may be terms and conditions, it is not applicable to uncertain or unspecified amounts

You must act immediately. You can also issue a notice to the electricity dept., enclosing the copy of sale letter, and state that the amount can be recovered from consumer and bring attachment to his surplus amount with the bank.......... and you have taken possession of the house only on........... The date of taking possession by the bank is also relevant, as they have to pay the bills from that day as they were in possession from that date till it is handed over.

Please do not delay, and attack through all directions and reduce everything in writing. All these above steps hardly cost Rs.500/

1 Like

P. Venu (Advocate) 02 December 2019

Yes, the most practical way is to clear the outstanding liabilty and take steps to realise the same from the Bank. In my understanding, the amount outstanding loan is not of much relevance in the given context. The successful bidder is not liable for the payment of outstanding electricity bill unless this aspect was clearly mentioned in the auction notice.

1 Like

G.L.N. Prasad (Retired employee.) 02 December 2019

The bank who is having surplus amount after adjustment, as they were in possession, has to recover statutory dues like taxes, insurance,electricity, water etc. and hence the surplus amount available with bank that has to be finally adjusted has to be appropriated towards statutory dues and can not be imposed on buyer who was not aware of such dues and is not liable to pay for that service which he never used. The auction conditions are one sided supporting bank and need not have statutory weight.

1 Like

bharat babu (NA) 02 December 2019

Dear Prasad Sir and Venu Sir,

First of all I would like to thank you for your valuable input and now I am hopeful that there is some window for me to send letter / file a case against bank for these pending dues..

I am sure that, bank has always advertised the cost by adding all these pending dues..

Now I would like to proceed as below,

1; First will write a letter to electricity department and municipalty offcie, enclosing the copy of sale letter that I have recently got possesion this property through auction sale from bank..And will inform that I the previous owner and bank was the possession of the house until they hand over the house..

2. I will send a letter to the bank for these pending dues was incured during their ocupancy period and this pending bill was not known to us...I will check if they have asked for NOC letter from electricity office or any intimation before making any auction sale?

3, During this period I will arrange for an advocate and DRAFT for filing at court against bank...

Once again thank you for providing timely advise..

Dr J C Vashista (Advocate) 09 December 2019

Too long a story, no time/energy to oblige.

If you feel for proper opinion and guidance it is advisable to consult a local prudent lawyer with relevant records for proper analyses, professional advise and proceeding.

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