Authority: High Court of Judicature at Madras

Order Date: August 2026

Case Overview

  • Petitioners: Dr. D. Subburaj and Dr. T.A. Sindhuja, doctors residing in Chennai, filed a writ petition under Article 226 seeking a mandamus directing Indian Bank (respondents 1 and 2) to refund Rs 91,29,326 with interest, later amended to the full sale consideration of Rs 1,20,88,000.
  • The property involved measured 2,920 sq.ft., located at S.F. No.134/2B, Plot No.241, Sri Balaji Nagar, Madipakkam Village, Sholinganallur Taluk, Kanchipuram District.
  • The bank had issued a sale notice under the SARFAESI Act (2002) after classifying the loan of Mr. M. Ravi (7th respondent) as a Non‑Performing Asset (NPA). An e‑auction was conducted on 16‑Nov‑2022; the petitioners were the successful bidders, paying Rs 1,20,88,000 (loan of Rs 59,85,000 from the 3rd respondent bank and the balance from personal sources).
  • A sale certificate dated 17‑Dec‑2022 was issued in favour of the petitioners and registered as Document No.143 of 2023; stamp duty and registration expenses of Rs 13,30,490 were incurred.
  • A criminal case (Crime No.3 of 2025) was later registered alleging forgery and fraud: Mr. S. Baskaran allegedly impersonated the deceased father of the 6th respondent, fabricated a sale deed dated 20‑May‑1964, executed a forged Power of Attorney (03‑Dec‑2019), and a sale deed dated 31‑Jan‑2019 in favour of the 7th respondent, who then mortgaged the property to the bank.
  • The petitioners contend the bank failed to verify the original title deeds and did not disclose the cloud over title, violating Rule 8(7)(a) and (f) of the Security Interest (Enforcement) Rules, 2002.
  • The bank argues it performed due diligence, obtained legal opinion, and was unaware of the fraud at the time of auction; it seeks dismissal of the petition.
  • The court examined precedents: Leelamma Mathew vs. Indian Overseas Bank, D. Karthikeyan vs. The Chairman, Indian Bank, Delhi Development Authority vs. Corporation Bank, and Viney Kumar Sharma vs. The Improvement Trust, emphasizing the bank’s duty to disclose material encumbrances and the purchaser’s right to restitution when the bank’s breach leads to unjust enrichment.

Final Outcome

  • The writ petition is allowed. Respondents 1 and 2 (Indian Bank) are directed to refund the full sale consideration of Rs 1,20,88,000 to the petitioners, with interest at 9% per annum calculated from the date of deposit until repayment.
  • The bank may adjust any outstanding loan amount with the 3rd respondent bank before remitting the balance with accrued interest.
  • The petitioners’ claim for registration expenses (Rs 13,30,490) is left open for future settlement when the bank recovers dues from the 7th respondent.
  • The refund must be made within six weeks of receipt of the order copy.
  • The connected Miscellaneous Petition is closed; no costs awarded.

Topics: Banking Regulation, Auction Refund, SARFAESI Act