25% OFF on all LCI Courses. Offer valid till 5th Oct. Use Code: DUS25
LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Ajesh Anand (Advocate)     24 August 2010

Under SARFAESI Act,2002 auction sale by inviting bids

In an action under SARFAESI Act,2002, Sale notice is published in newspapers inviting bids Bids to be opened on 29th day from publication. The question is sale when made. Whether on payment of of the 25% or payment of the entire bid amount or opening and acceptance of bids ?

Please reply with relevant case law if possible



Learning

 9 Replies

Daksh (Student)     24 August 2010

Dear Mr.Anand,

As a matter of fact the sale has to be made subsequent to the fulfilment of the terms and conditions of the bid once bid is found correct and is accepted by the bidder.

Best Regards

Daksh

Ajesh Anand (Advocate)     24 August 2010

The question has arisen on the point that Rule 9(1) of Enforcement of Securities Rules under SARFAESI Act 2002 provides that No sale shall be made of the secured asset before the expiry of thirty days from the date of publication of the action notice. The notice published on 16Jan notifying the bids shall be opened on 15th Feb.

The objection is that the notice is bad in violation of Rule 9 as sale shall be complete on acceptance of the bid.

I am of the view that the sale shall be effected only on deposit of the bid  amount.

R.Ranganathan (Director)     25 August 2010

Here on 15th Feb the 30 days period is completed. So on the opening and acceptance of the bid the sale will be effected. There is no violation of the rule 9

AMARJEET (DEPUTY MANAGER)     25 August 2010

THE ANSWER LIES IN THE ADVTMNT WHETHER 25% OF ACCPTED BID AMT WILL BE DEPOSITED WITHIN HOW MANY DAYS DEPENDS ON THE LAID DOWN TERMS CONDITIONS CONTAINED IN THE ADVTMNT. AS FAR AS MY KNOWLEDGE IS CONCERNED SALE IS EFFECTED ON PAYMENT OF 25% ONLY AND COMPLETES ON PAYMENT OF 75% THAT TOO AGAIN WITHIN THE STIPULATED TIME FRAME AS PER THE TERMS ONLY.

R.Mohan Sankar ( none)     25 August 2010

I think that the sale would be completed as soon as the balance bid amount is paid by the auction purchaser. Because the sale certificate would be issued only after the remittence of the entire bid amount .Further the borrower is having a legal right to redeem the mortgaged property until issuance of the sale certificate by the recovery officer. 

R.Ranganathan (Director)     26 August 2010

Sale certificate is only a process to complete the sale. Once the auction is completed and the highest bidder is awarded the sale, then it is only a question of payment of the balance 75 % amount. 25 % amount is paid at the time of bidding i.e. the auction purchasers are asked to pay 25 % amount alongwith the tender. The borrower cannot have any right to redeem the mortgaged property once the auction is completed by asking the highest bidder to pay the balance 75 % amount.

DEFENSE ADVOCATE.-firmaction@g (POWER OF DEFENSE IS IMMENSE )     26 August 2010

Law is reason and nothing specific whatever explaination given.

If the property is saleable to more value by the debtor than there are many routes to object.

Even the debtor should take objection at every earlier stage , since there are no of irregularity.

The debtor can also raise counter claim depending on the facts and circumstances of case.

There is no end to ligitation , which goes on even after sale letter is given and the buyer also made party.

Manukant Sharma (Consultant)     06 April 2012

Dear Mr. Ajesh Anand,

It is a important question relating  the process of sale under SARFAESI Act, 2002. I believe that after receiving the 25% of Bid amount, The sale is confirm being declaration of Successful Bidder and bid cancel only in a case of failure of deposit rest 75% amount by the bidder.

Sec 75 of Indian Contract Act 1872 also govern in this case 

Ananth (Sr.Executive)     07 July 2014

Hi Forum

I need a help for the below situation going around with me  -
I bought a property under home loand for 990000/- in 2006. (Loan from bank on my salary) 
Due to financial instability i could not pay the EMIs long time and received a notice that the property will be auctioned, in 2012.
The poperty was auctioned for 5,75,000/- (50% less than debt outstanding by the same bank. Now i have received a notice from DRT that i need to pay an outstanding of 8,53,000 (remaining after the sale consideration that i owed to bank along with interest).

Please confirm if this is not a cheating and illegal property dealing by the bank ? can this case be nullified under any section or act ? Either the valuation initially done was wrong or the sale for such a low price is suspicious. On top of it, they are asking to pay the remaining amount.


Pl help


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  



Post a Suggestion for LCI Team
Post a Legal Query