Gubbala Tulasi Kumar & Anr vs Bank of Baroda & Ors

Heard learned counsel for the parties.

Leave granted.

On 30.06.2016 when notice was issued it was ordered as follows:

"The only grievance of the petitioners is that they are entitled to get interest with regard to the amount so deposited as auction-purchasers, in view of the delay involved, and the High Court ought to have dealt with this aspect.

In view of that, issue notice only in respect of interest in question."

The undisputed facts are that the bank/respondent auctioned the properties of Respondent nos. 2 to 5 who had taken a loan of Rs.8 crores from the bank. Proceedings under the SARFEASI Act, 2002 were initiated and auction took place in which the appellants were declared as the highest bidders and they deposited Rs.5,09,43,000/- with the bank. The borrowers later objected to the auction and the auction has been set aside on the ground that the entire property could not have been auctioned in one go. The High Court has ordered refund of Rs.5,09,43,000/- but has not awarded any interest to the auction purchasers on the said amount. We do not understand why auction purchasers should suffer for the fault of the bank in auctioning the property in one go. Even otherwise, this amount which was deposited by the auction purchasers with the bank, remained with the bank. The bank is a commercial entity. If the bank keeps this amount in a non-interest bearing account that is the fault of the bank and the auction purchasers cannot suffer for the same.

Therefore, we allow the appeal and the auction purchasers shall be entitled to interest @ 9% per annum from the date of deposit of the amount i.e. Rs.5,09,43,000/- till the date the principal amount was paid by the bank to the appellants. The Bank is directed to pay this amount within six weeks from today to the auction purchasers.