The Bench of Justice N. Nagesh of Kerala High Court observed that the right of redemption for borrowers ends upon the publication of the auction notice, but this does not prevent parties from entering into a One Time Settlement.
The Single-judge bench noted that auction purchasers of secured assets do not acquire any rights or interests in the property until the sale is confirmed and a Sale Certificate is issued. The court emphasized that the right of redemption for borrowers ends upon the publication of the auction notice, but this does not prevent parties from entering into a One Time Settlement. The bench further noted that the petitioners could not compel the bank to issue Sale Certificates as the sale was not confirmed in their favour.
The petitioners in these writ petitions were auction purchasers of secured assets put for sale by the bank. They deposited the entire auction amount, but the bank granted a One Time Settlement facility to the borrowers and cancelled the sale in favour of the petitioners. The petitioners challenged this cancellation, arguing that they had paid the full sale price and should be issued a Sale Certificate.
The Debts Recovery Tribunal initially stayed the confirmation of the auction sale and later dismissed the petitions, stating they had become infructuous due to the One Time Settlement. The petitioners contended that the cancellation of the sale was unlawful and exposed an improper relationship between the bank and the borrowers.
The High Court noted that while the right of redemption for the borrowers ends upon the publication of the auction notice, auction purchasers do not acquire any rights until the sale is confirmed and a Sale Certificate issued. Since the sale was not confirmed in favour of the petitioners, they could not compel the bank to issue Sale Certificates.
However, considering that the petitioners had deposited a substantial amount, the court directed the bank to refund the deposited amount along with 12% interest from the date of deposit till the date of refund. The writ petitions were disposed of accordingly.