The Madras High Court has directed a nationalised bank to refund sale consideration of ₹55.50 lakh, along with 9% interest from 2012, to an auction purchaser of a house since the successful bidder had not been able to take possession of the property till date because it was subsequently found to be located on a land classified as a water body.
Third Division Bench of Justices R. Mahadevan and Mohammed Shaffiq criticised Indian Bank for not taking the responsibility of handing over the property, free of all encumbrances to the auction purchaser D. Karthikeyan and instead making him run from pillar to post seeking refund of the amount that he deposited with the bank 11 years ago.
Disposing of his 2019 writ petition, the judges agreed with the petitioner’s counsel Naveen Kumar Murthy that his client had suffered huge losses in the last 11 years for he would have got handsome returns, through appreciation of property prices, if he had invested the same amount of money to purchase any other property without any encumbrance.
Recalling the history of the case, he said a couple had taken a loan from Indian Bank long back by providing their 1,075 sq.ft house constructed on 3,250 sq.ft land at Jesudasan Street, Radha Nagar, Chromepet, Chennai. The borrowers failed to repay the dues of ₹20.33 lakh as on August 31, 2002 despite issuance of notices.
Hence, the bank took possession of the property in 2004 by invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and attempted to sell it through auction. After two failed attempts, the property was finally sold to the present writ petitioner in 2012 for a total consideration of ₹55.50 lakh.
On May 2, 2014, the authoised officer of the bank requested the Collector to assist him in taking possession of the property under SARFAESI and the Collector, in turn, directed the Alandur tahsildar to file a report after inspecting the property. The tahsildar reported that the house was situated on a two acre water body that had been encroached by 17 individuals.
Though the bank denied the claim and contended that the house was situated in a residential area, the judges said its failure to inform the auction purchaser about the encumbrances in the property would amount to breach of trust and a violation of his right to know about the encumbrances before deciding to invest his money.
