Shankar. V vs. The Reserve Bank Of INDIA

Facts

The petitioner was the successful auction purchaser of two properties. As per the auction terms, 25% of the bid amount was paid, with the remaining 75% due by January 31, 2021. The petitioner requested an extension, and the respondent bank granted it until March 12, 2021, warning of forfeiture of the initial payment if the balance was not paid. The petitioner challenged the bank's communication dated March 29, 2021, which appears to be the intimation of the extended deadline and potential forfeiture. The petitioner sought a further extension to deposit the remaining bid amount and receive the sale certificate.

Held

The Court, while acknowledging that such matters are typically relegated to alternative remedies under the SARFAESI Act, decided to entertain the writ petition as a peculiar case. This decision was influenced by the prevailing COVID-19 pandemic situation and the overall difficulties faced by individuals. The Court directed the petitioner to pay the balance 75% of the auction amount along with interest at 12% per annum and Goods and Services Tax (GST) by July 19, 2021. The Court reasoned that this approach balances the bank's need to realize funds with the petitioner's difficulties. The ratio decidendi is that exceptional circumstances, such as a pandemic, can warrant judicial intervention in matters typically governed by specific statutes, to provide equitable relief. If the petitioner fails to comply with this direction, the writ petition will stand dismissed automatically, and the bank will be at liberty to proceed as per the lending conditions. The Court expressly left undecided the issue of whether the initial 25% payment should be forfeited, as the order focuses on facilitating the completion of the sale.

Key Issues

1. Whether the Court should entertain a writ petition challenging an order related to auction sale proceedings under the SARFAESI Act, 2002, or relegate the petitioner to alternative remedies? Petitioner's contention: The petitioner argued that due to the prevailing pandemic situation and the difficulties faced by all sections of people, the Court should grant indulgence. The petitioner sought an extension of time to deposit the remaining bid amount and consequently prayed for the issuance of a sale certificate. Respondents' contention: The respondents (Tamil Nadu Mercantile Bank Ltd.) did not explicitly argue against entertaining the writ petition but had previously granted an extension with a forfeiture clause. Their counsel appeared and participated in the proceedings.