Telangana High Court Orders Union Bank of India to Refund Rs 2.16 Crore to Auction Purchaser

In a major ruling on an e-auction dispute, the Telangana High Court on Tuesday ordered Union Bank of India to refund Rs 2.16 crore to the petitioner, the auction purchaser, within four weeks.

The Division Bench of Justice Moushumi Bhattacharya and Justice Gadi Praveen Kumar, while disposing of a writ petition, criticized the bank for failing to inform the purchaser about High Court orders that affected the property.

The court noted that the bank had no explanation for its failure and stated: “The bank cannot gain twice—from the guarantor and the auction purchaser—by keeping the purchaser uninformed about developments in the property.”

The petitioner had deposited Rs 2,16,25,000, which was 25% of the sale price, after the e-auction on January 14, 2023. The petitioner challenged a letter issued by Union Bank of India on June 13, 2023, which tried to forfeit the initial deposit.

The court found that the bank had failed to notify the auction purchaser about relevant High Court orders passed on March 16 and March 23, 2023.

The Bench said the bank’s actions were an unfair attempt to benefit itself. It ordered the bank to refund Rs 2,16,25,000, the amount deposited by the petitioner as 25% of the sale price from the January 14, 2023 e-auction.

However, the court rejected the petitioner’s main request to direct the bank to complete the sale or issue a Registered Sale Certificate. The ongoing legal proceedings by the guarantor before the Debt Recovery Tribunal (DRT) and the High Court were sufficient reason to deny this request.

“The proceedings by the guarantor before the DRT and High Court are enough to deny the petitioner’s request to pay the remaining 75% of the sale price or to issue a Registered Sale Certificate,” the court said.

All related applications were disposed of, and previous interim orders were canceled, the judgment noted.