Sale of Mortgaged Property to the Auction Purchaser Was Upheld as the Borrower Knew and Was Present at Time of the Auction | SC

Case Details: Bombay Mercantile Cooperative Bank Ltd. v. U P Gun House - [2024] 158 taxmann.com 683 (SC)

Judiciary and Counsel Details

• • Sanjiv Khanna & Dipankar Datta, JJ.
  • M. Shaz Khan, Adnan Yousuf, Waseem Ahmed, Advs. & Talha Abdul Rahman, AOR for the Appellant.
  • Shubhranshu Padhi for the Respondent.

Facts of the Case

In the instant case, owing to the failure of the borrower to repay the outstanding amount, the bank put the secured asset to auction as per provisions of the Act. One ‘A’ was declared the highest bidder in the auction and it deposited the total bid amount, which was duly accepted by the bank.

Subsequently, the bank handed over possession of property to the auction purchaser and a sale deed was executed in his favour.

The Borrower challenged the service of notice for auction, which plea had been accepted by DRT, by quashing the auction. DRAT and the High Court upheld the said order.

Supreme Court Held

On appeal, the Apex Court noted that the borrower knew about the auction and had accepted having read a notice for sale published in the newspaper. The Borrower also accepts and admits that he was also present at the time of the auction.

In view of the facts of the case, it was found that the borrower was fully aware of the auction notice.

Further, the auction purchaser had constructed flats on the property and transferred the same to various third parties. Thus, the sale by the appellant in favour of the auction purchaser was to be upheld and confirmed.