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file photoVijayawada: High Court pulls up officials in a recent judgment Canara Bank To forfeit the amount paid as part of the sale consideration of a property, without complying with the norms.
Observing that banks and financial institutions should not behave like property dealers while recovering their money, the High Court said that they should act in a fair manner and in accordance with the statutory provisions.
a syed Hidayatullah From Chilakaluripet In Guntur The district moved the high court after the latter rejected their representation for refund of their money paid by Canara Bank as part of the sale consideration of the auctioned property.
Hidayatullah participated in the auction conducted by Canara Bank in 2019 and his bid was accepted. As per norms, he paid 25% of the sale consideration at the time of auction. However, later he failed to pay the balance due to his ill health and the same was reported to the bank.
Considering his request, the bank extended the time for final payment. Meanwhile, Hidayatullah sought some clarifications on the land he had bought as the total extent was less than what was declared in the auction notice. He also argued that the bank did not provide information about the size of the property and the path between the two big buildings, which are also part of the total expansion.
Despite his arguments, he paid ₹15 lakh on the last date of the extended period.
However, the bank forfeited the amount paid by him on the grounds that he failed to meet the obligations within the stipulated time. Later, the bank entered into a ‘one time settlement’ with the original borrower, who defaulted on payment for a lesser consideration, and returned the title deed of the land to him.
Hidayatullah argued that the bank has already settled the loan account of the original borrower before the last date of payment, which is illegal.
On the other hand, the bank argued that in case of non-payment of the entire amount within the stipulated time, it has full right to forfeit the amount paid by the petitioner.
Justice DVSS Somayajulu said that though the bank has the right to forfeit the amount if the auction buyer fails to pay the full amount, it has to do so only after the stipulated time. The High Court said that till the last date of payment, the advance amount paid belongs only to the auction buyer and the bank cannot use that money to settle the original borrower’s account.
Finding fault with the actions of Canara Bank officials, the High Court directed them to refund the amount paid by the petitioner.
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