Authority: High Court of Jharkhand at Ranchi

Order Date: 05 August 2026

Case Overview

  • Parties: Appellant – Chief Manager & Authorised Officer, Bank of Baroda, ROSARB, Ranchi (Mr. Sanjeev Kumar Verma). Respondent – Shipra Shikha, resident of Jamshedpur.
  • Background: The borrower, Mr. Rajesh Prasad, defaulted on a loan, leading Bank of Baroda to take symbolic possession of his property under Section 13(4) of the SARFAESI Act, 2002. The bank filed a petition under Section 14 of the SARFAESI Act on 14‑03‑2018 to obtain physical possession.
  • E‑Auction: On 14‑09‑2022, the bank conducted an e‑auction of Flat No. E/2/10, 5th Floor, Block E/2, Dalma Enclave, Ranchi. Shipra Shikha placed the highest bid of ₹30,90,000 and paid the full amount between 15‑09‑2022 and 26‑09‑2022.
  • Failure to Deliver Possession: Despite repeated requests (emails dated 26‑09‑2022 to 17‑05‑2023), the bank did not issue a sale certificate or hand over possession. The bank later sent an antedated sale certificate dated 15‑03‑2023 on 27‑10‑2023, 13 months after the auction.
  • Refund and Undertaking: On 22‑11‑2023, the bank cancelled the auction and instructed the petitioner to collect a demand draft of ₹30,90,000 from its Regional Office, with an undertaking that she would not claim any future rights. The amount was refunded on 06‑04‑2024.
  • Interest Claim: The petitioner issued a legal notice on 31‑01‑2025 demanding compound interest at 15% per annum from 26‑09‑2022. The bank rejected the claim, arguing that the petitioner herself sought a refund and had undertaken not to claim further.
  • Writ Petition: The petitioner filed W.P.(C) No. 3247 of 2026. The Single Judge, on 17‑06‑2026, directed the bank to pay 6% per annum interest on the deposited amount for the period it remained with the bank (over 1.5 years).
  • Bank’s Arguments: The bank contended there was no contractual clause for interest, the property was sold “as is where is,” and the undertaking to forgo claims was voluntarily given. It also argued the delay in possession was due to prolonged Section 14 proceedings, not its negligence.
  • Court’s Reasoning:
  • The undertaking was obtained under undue pressure (medical exigency of petitioner) and is void under Section 19 of the Indian Contract Act, 1872.
  • Cited Arce Polymers Ltd. Vs. Alphine Pharmaceuticals Ltd. (2022 2 SCC 221) to distinguish waiver principles; noted the present case differs as the petitioner remained vigilant and possession was never delivered.
  • Observed the bank could have approached this Court for early disposal of the Section 14 proceeding but failed to do so; thus, responsibility to deliver possession or refund with interest lies with the bank.
  • Referred to Union of India v. Tata Chemicals Ltd. (2014 6 SCC 335) and Indian Council for Enviro‑Legal Action v. Union of India (2011 8 SCC 161) establishing that unjust enrichment obliges restitution with interest.
  • Final Outcome: The Letters Patent Appeal was dismissed as devoid of merit. The order dated 17‑06‑2026 directing the bank to pay 6% interest on ₹30.90 lakh remains upheld. Any other interim applications, if pending, are disposed of.

Final Outcome

  • The appeal by Bank of Baroda is dismissed; the bank must pay interest at 6% per annum on the ₹30.90 lakh for the period it was retained, in addition to refunding the principal amount.

Topics: Banking, Restitution