Bank violated the mandatory provisions of SARFAESI Rules by not disclosing known encumbrances - Bank is liable to refund sale consideration to petitioner.

Citation

2017-3-L.W. 625

IN THE HIGH COURT OF JUDICATURE AT MADRAS

28.04.2017/W.P.No.39199 of 2016

S.Manikumar, J., and M.Govindaraj, J.

S.Shanmuganathan.        ...Petitioner

Vs.

The Authorized Officer, Indian Overseas Bank Asset Recovery Management Branch, Canteen Block, First Floor, Central Office Buildings, No.763, Anna Salai, Chennai - 600 002.                         ...Respondent

Security Interest (Enforcement) Rules (2002), Rule 8(6)(a),(f), 9 Contract act, Section 18(2), SARFAESI proceedings, auction sale, encumbrance, duty to disclose

SARFAESI proceedings-Petition to refund sale consideration deposited with the Bank with interest in an auction sale Para 12

Purchaser should be put on specific notice

about all encumbrances to enable him to

take a conscious decision with regard to

his participation in the auction and the

amount to be quoted in his bid-Auction

notification is defective and improper in

case the encumbrances and known

litigations are not disclosed.        Para 16

Bank failed to disclose it in the auction notification - Failure to adhere to such

duty would come within Section 18(2) enabling the other party to avoid the contract Paras 17, 18

Bank violated the mandatory provisions of SARFAESI Rules by not disclosing known encumbrances - Bank is liable to refund sale consideration to petitioner