S. Karpagavalli Vs Authorized Officer (Madras High Court)
Summary: The Madras High Court dismissed a writ petition challenging Indian Bank’s cancellation of an e-auction sale. The petitioner had been declared the highest bidder for a mortgaged property at ₹2,92,50,000 and had paid the full sale consideration. She sought a sale certificate and physical possession after the Bank cancelled the sale on 28.04.2026.
The sale notice stated that the property was offered on an “As is where is, as is what is, and whatever there is” basis and that the Bank held only symbolic possession. It also placed responsibility for tax deduction under Section 194-IA on the successful bidder. According to the order, one mortgagor’s PAN was inactive because it was not linked with Aadhaar. The petitioner deducted tax at 1% despite the Bank’s advice concerning a higher rate, and the Income Tax Department subsequently raised a demand of ₹28,72,890 for short deduction, penalty and late fees.
The Bank said it could not immediately deliver physical possession while proceedings under Section 14 of the SARFAESI Act and challenges by the borrowers were pending. On cancellation, it returned ₹2,91,03,750 through four demand drafts, all of which the petitioner deposited and encashed. The petitioner argued that payment of the full consideration obliged the Bank under Rules 9(4) and 9(6) of the Security Interest (Enforcement) Rules, 2002 to issue a sale certificate and deliver possession.
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