No relief to original owner once property is auctioned: HC

NT Correspondent

Bengaluru: After filing to avail of the bank’s offer, a property owner whose properties are auctioned off cannot claim that he was willing to pay the auction amount, the High Court has said.

The property owner contended that his mortgaged property was sold off by the bank for less than the market value and he was willing to pay for it. But since the auction had already taken place, no relief can be granted to him, the Court said.

“The property was put on auction on 29-09-2021 which is the 4th time in line. Every time the petitioner had notice of the auction and did not come forward to pay the reserve price and clear the property from it being auctioned. The defence of the Bank is that opinions of two independent valuers are taken and sale notices were affixed at conspicuous places in the asset and paper publications were also made. I conclude this only to observe that the petitioner had notice of the auction that was taking place. Even then the petitioner did not protest or come forward with any offer to the Bank for clearance of the loan and therefore, the property was auctioned,” the Court said in its recent judgment.

TS Nataraj, Harsha N and N Seema approached the HC after the State Bank of India auctioned off their property in Sree Mahadeva Rice Mill, Tumakuru. They had taken a credit limit of Rs.2 crore and term loan of Rs.30 lakhs from the bank. From 2017-18 onwards they failed to repay the loan installments and on December 29, the loan was considered ‘non-performing asset’ by the bank.

They were asked to discharge the liabilities under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. They were also offered an OTS of Rs.1,72,49,708. Their property was put up for auction. When there were no offers for the reserve price, it was reduced to Rs.5.78 crore.

After four failed auctions, the sale was concluded on September 29, 2021. The owners approached the court claiming that the original reserve price of Rs.12.75 crore was reduced and undervalued Rs.5.78 crore. They said they were willing to compensate the buyer and pay the reserve price. However the Court said they had missed their opportunity.

“For close to 4 years the petitioner was given the opportunity to redeem the mortgage by paying the amount. OTS (one time settlement) was also offered to the petitioner but he did not avail it. Once having failed to avail all the benefits that the Bank wanted to grant, it cannot be seen that the petitioner now after the sale certificate is issued, to contend that he is ready and willing to pay the auction amount, as also compensate the auction purchaser.”

Dismissing the petition, the HC said, “The Apex Court clearly holds that once the certificate of sale is registered, the right of the borrower to redeem the mortgage stands extinguished and thereafter there is no mortgage existing in the eye of law.”