Rule 9(4) Of Security Interest (Enforcement) Rules| Period To Deposit Balance Sale Consideration Extendable With The Consent In Writing Of The Parties: SC
The Supreme Court observed that Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 will only come into play when there is a default on the part of the auction purchaser to deposit the amount and will not apply where there is no default or that the default, if any, lies upon the auctioneer.
The Court said that the period to deposit the balance sale consideration is not sacrosanct and is extendable with the consent in writing of the parties.
The Court was hearing two Appeals preferred Appellant-IDBI Bank challenging the judgment and order passed by the High Court and the order passed in Review arising from the Writ Petition.
The bench of Justice Pankaj Mithal and Justice R Mahadevan observed, “the period to deposit the balance sale consideration, as provided under the Rules, is not sacrosanct and is extendable with the consent in writing of the parties and that Rule 9(4) will only come into play when there is default on part of the party i.e. the auction purchaser to deposit the amount and will not apply where there is no default or that the default, if any, lies upon the auctioneer…”
Brief Facts-
The Respondents, who were the Petitioners in the Writ Petition, won an auction for 2 guntas of land. They paid 25% of the amount on the auction day. However, they could not pay the remaining amount within 15 days, partly because the appellant-Bank refused to accept it. However, the Bank cancelled the auction and refunded the deposit, but the Respondents did not cash the refunds. The Respondents then filed a Writ Petition challenging the auction cancellation and sought the issuance of a sale certificate upon paying the remaining amount. The High Court ruled in their favour and said that the Bank was unjustified in withholding the sale certificate, as the Respondents were ready to pay the balance.
The Court observed, “…validity of an order can only be adjudged on the basis of the reasoning contained in the order and the said reasoning cannot be supplemented in any manner much less by means of a counter affidavit or a supplementary affidavit when the parties have entered into a litigation.”
The Court said that since there is no default on the part of the respondents, non-deposit of the said amount within the stipulated period would not be fatal within the meaning of sub-Rules (4) and (5) of Rule 9 of the Rules.
Accordingly, the Court dismissed the Civil Appeals.
