HC Grants Refund to Auction Purchaser Over Non-Disclosure Under SARFAESI

Case Details: M. Kishore Akash vs. Branch Manager - [2026] 186 taxmann.com 144 (HC-Madras)

Judiciary and Counsel Details

• Hemant Chandangoudar, J.
• R.J. Karthick for the Petitioner.
• C. Karthik, Standing Counsel for the Respondent.

Facts of the Case

In the instant case, the Borrower had defaulted in repayment of the loan, whereupon the respondent, secured creditor Bank, proceeded under the SARFAESI Act and auctioned the secured asset (vacant land). The petitioner–auction purchaser was declared successful, paid the entire sale consideration of about Rs. 31.47 lakhs, a sale certificate was issued in his favour, and he deposited about Rs. 2.74 lakhs towards registration expenses.

The petitioner asked the Bank to register the sale certificate, but registration could not be completed due to objections. On approaching the Sub-Registrar for registration, the petitioner was informed of a decree in a civil suit declaring that the plaintiff therein is the owner of the property and that the sale deed in favour of the borrower is null and void.

The petitioner immediately sought a refund of the entire amount from the Bank, which was not acceded to, leading to the present writ petition.

It was noted that though the Bank had entered an appearance in said suit, it did not disclose the pendency of the suit in the sale notice, nor did it inform the petitioner in any manner.

High Court Held

The High Court held that, since the Bank had failed to disclose the pendency of the suit and the decree passed therein, it had violated the provisions of the SARFAESI Act and the Rules. Consequently, the petitioner was entitled to a refund of the entire amount deposited, along with reasonable interest.

List of Cases Reviewed

• S. Shanmuganathan v. Authorised Officer, Indian Overseas Bank [2017] 81 taxmann.com 254/141 SCL 452 (Madras) (para 13) followed

List of Cases Referred to

• S. Shanmuganathan v. Authorised Officer, Indian Overseas Bank [2017] 81 taxmann.com 254/141 SCL 452 (Madras) (para 5)
• Ambalavanan v. Canara Bank [Review Application (Writ) No. 302 of 2015, dated 1-4-2016] (para 16).