Supreme Court to Examine Interest Rate Parity for Auction Purchasers' Deposit Returns [Read Judgement]
Supreme Court to Examine – Supreme Court – Auction Purchasers’ Deposit Returns – Deposit Returns – Purchasers’ Deposit Returns – Purchasers’ Deposit – TAXSCAN
Supreme Court to Examine – Supreme Court – Auction Purchasers’ Deposit Returns – Deposit Returns – Purchasers’ Deposit Returns – Purchasers’ Deposit – TAXSCAN
The Supreme Court, with Justices Sajiv Khanna and S.V.N. Bhatti presiding, is set to address whether the interest rate on funds returned to the highest bidder in a bank-conducted auction should match the rate charged to borrowers.
The petitioner, the highest bidder in a bank-orchestrated auction under the SARFAESI Act, faced hurdles in obtaining possession post-auction.
At the heart of the issue lies in the contrast between the petitioner's anticipation of acquiring possession after the auction and the bank's argument that legal obstacles hindered an immediate transfer. The central concern, however, relates to the interest rate applicable when the auctioned funds are returned to the petitioner. The petitioner contends that this interest should match the rate imposed on the defaulting borrower.
The petitioner contended before the Delhi High Court that, despite being the highest bidder, the sale certificate was issued in their favour after depositing the entire auction amount. However, possession of the secured interest/auction property was not handed over to them. The petitioner also made requests to the bank for the physical possession of the property, which remained unfulfilled.
Further the petitioner contended before the apex court that while returning the money deposited by the petitioner, the Bank should pay the same rate of interest which they are charging from the borrower.
During the legal proceedings, the bank's representative suggested returning the entire sum to the petitioner along with interest at a 6% per annum rate, in accordance with the High Court's order. Recognizing this commitment, the High Court resolved the petition. However, dissatisfied with the disparity in interest rates, the petitioner sought relief from the Supreme Court.
Upon issuing a notice, the Supreme Court instructed the bank to fulfil the repayment of the deposited amount, aligning with the 6% per annum interest rate previously specified by the High Court. This instruction serves as an interim measure, underscoring the significance of maintaining parity in interest rates between the petitioner and the defaulting borrower.
The bench stated as follows “rower. Issue notice returnable in the month of February 2024. Notice will be served by all modes, including dasti. In the meanwhile, the respondent-Bank will return the money alongwith interest at the rate of 6% per annum, as directed by the High Court in the impugned order. The payment will be accepted by the petitioner without prejudice to his rights and contentions.”
To Read the full text of the Order CLICK HERE
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