Authority: High Court of Judicature at Madras (Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan)

Order Date: 11 September 2026

Case Overview

  • Petitioner: S. Karpagavalli (wife of S. Sukumar), residing at Plot No.23, Subbiah Nagar, Madhananthapuram, Mugalivakkam, Chennai‑600 125.
  • Respondent: Authorized Officer, Indian Bank, Stressed Assets Management Branch, Chennai.
  • The petition under Article 226 sought a writ of certiorari and mandamus to quash the bank’s order dated 28‑Apr‑2026 cancelling an e‑auction sale and to direct issuance of a sale certificate and delivery of physical possession of the mortgaged immovable property (7 cents, Door No.3/132, Sathiya Nagar, Manapakkam, Chennai).
  • Background: The bank initiated SARFAESI recovery proceedings against the principal borrower and guarantors, issued an e‑auction Sale Notice on 04‑Sep‑2025 stating “as is where is” sale, symbolic possession, and that TDS under Section 194‑IA would be borne by the successful bidder.
  • The e‑auction was held on 24‑Sep‑2025; petitioner was the highest bidder with Rs 2,92,50,000. Sale Confirmation letter dated 30‑Sep‑2025 confirmed the sale. Petitioner paid the full consideration and deposited TDS at 1 % on 22‑Dec‑2025.
  • Because the PAN of one mortgagor was inactive, the Income Tax Department demanded TDS at 20 % plus penalty and late fees totaling Rs 28,72,890 (notice dated 29‑Dec‑2025). Petitioner demanded the bank bear this liability.
  • The bank filed Crl.M.P.No.858 of 2026 under Section 14 SARFAESI before the Chief Judicial Magistrate, Chengalpattu, to take physical possession but could not do so.
  • On 28‑Apr‑2026 the bank issued an order cancelling the e‑auction sale and returned the sale consideration (minus 0.5 % TDS) through four demand drafts totaling Rs 2,91,03,750.
  • Petitioner encashed all four demand drafts, as confirmed by the bank’s email dated 01‑Sep‑2026.
  • Petitioner’s counsel argued that under Rule 9(4) and 9(6) of the Security Interest (Enforcement) Rules, 2002 the bank was obligated to issue a sale certificate and deliver possession once full consideration was paid, and that the unilateral cancellation caused loss.
  • Respondent’s counsel contended the petition was non‑maintainable, the cancellation was accepted, and legal challenges by borrowers created hurdles to possession.

Final Outcome

  • The court held that by encashing the refund drafts, the petitioner accepted the cancellation, invoking the doctrine of election; she cannot simultaneously challenge the same order.
  • The court affirmed that the sale was on an “as is where is” basis with only symbolic possession, and the petitioner had no right to demand immediate possession or interest.
  • The writ petition was dismissed as without merit; the bank’s cancellation order dated 28‑Apr‑2026 was sustained.
  • No order as to costs was made and the connected miscellaneous petitions were closed.

Topics: Legal Dispute, Banking Regulation