KARNATAKA HIGH COURT: BANK CANNOT FORFEIT MORE THAN 25% DEPOSIT MADE BY AUCTION PURCHASER WHO FAILS TO DEPOSIT REMAINING AMOUNT

The Karnataka High Court in the case Kalyanamurthy K AND State Bank of India observed and has made it clear that a bank cannot forfeit over 25% of the deposit amount made by an auction purchaser who in the case fails to deposit the remaining purchase amount within the stipulated period for completion of the sale.

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The single bench headed by Justice K V Aravind in the case observed and has directed the State Bank of India to refund a sum of Rs.10,00,000, along with applicable interest from the date of payment till refund, within eight weeks to one Kalyanamurthy K.

In the present case, the petitioner has made the payment for an amount of Rs.31,73,750/-. 25% of the total bid amount is Rs.21,73,750/-. Payment of Rs.10,00,000/- is in excess of 25% of the bid amount referred to in Rule 9 of the Rules and the sum for an amount of Rs.10,00,000/- cannot be considered as deposit under sub-rule (3) and (4) enabling the respondent to forfeit under sub-rule (5).