2025:KER:28919 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 3RD DAY OF APRIL 2025 / 13TH CHAITHRA, 1947 WP(C) NO. 7595 OF 2025 PETITIONER: ABDUL OFFUR, AGED 60 YEARS, S/O. MOIDUNNY, AMANATH PANIKKAVEETTIL HOUSE, GURUVAYOOR, PUTHANPALLII P.O., THRISSUR DISTRICT, PIN – 680 103. BY ADV RASMI NAIR T. RESPONDENT: AUTHORIZED OFFICER, SOUTH INDIAN BANK, REGIONAL OFFICE, THRISSUR, PLATINUM JUBILEE BUILDING, CIVIL LANE ROAD, AYYANTHOLE, THRISSUR P.O., KERALA, PIN – 680 003. BY ADV S.LAKSHMY (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.04.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2025:KER:28919 WP(C) 7595/2025 2 JUDGMENT The petitioner was the successful bidder in an auction held by the respondent bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The sale was held on 22-08-2023. According to the petitioner, the petitioner remitted a sum equivalent to 25% of the bid by 23-08-2023 (a total sum of Rs.17,50,000/-) and the petitioner was required to pay the balance amount of Rs.52,50,000/- within 15 days. However, the petitioner could not remit the said amount within the time specified and approached the bank for extension of time. The bank vide communications issued on 04-09-2023 and 25-09-2023 extended the time for payment of the balance amount by the petitioner by 15 days each. The petitioner did not remit the amounts within the extended time also. The petitioner is now before this Court seeking to quash Ext.P6 communication and seeking a direction to the respondent bank not to forfeit the amount already remitted by the petitioner. 2. The learned counsel appearing for the respondent bank submits that in respect of a sale under the provisions of the SARFAESI Act, the time for payment of the balance amount is 2025:KER:28919 WP(C) 7595/2025 3 specified in terms of the provisions contained in Rule 9(4) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘2002 Rules’). It is submitted that the right of the bank to grant extension of time is also controlled by the provisions of Rule 9(4) of the 2002 Rules. It is submitted that the terms of the sale and the provisions of the 2002 Rules contemplate forfeiture of the amount already remitted by the petitioner, if the balance amount is not paid. It is submitted that the petitioner also withdrew from the sale. The learned counsel appearing for the respondent bank also placed reliance on the judgments of the Supreme Court in Authorised Officer, Central Bank of India v. Shanmugavelu; 2024 KLT OnLine 1060 (SC) and Authorised Officer, State Bank of India v. Natarajan; 2023 KLT OnLine 1792 (SC) to contend that forfeiture is permissible and authorised by the statute (SARFAESI Act). 3. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent bank, I am of the view that the relief sought for in the writ petition cannot be granted. Ext.P6 communication issued by the respondent bank is strictly in terms of the provisions contained in Rule 9(4) and Rule 9(5) of the 2002 Rules. It is clear that the 2025:KER:28919 WP(C) 7595/2025 4 conditions of the sale and the provisions of the 2002 Rules contemplate that where the successful bidder fails to deposit the amount within the time specified or within the extended time permitted by the bank, any amount deposited by the successful bidder will be forfeited by the bank. There is no challenge to the provisions of the 2002 Rules, and in such circumstances, it is not possible for this Court to direct that the bank must act contrary to the provisions contained in the 2002 Rules. In Shanmugavelu (supra) it was held :- “66. At this stage, we may also answer the submission of the respondent that the authorised officer under Rule 9(5) of the SARFAESI Rules has been conferred with unguided and unfettered power of forfeiture and as such the said rule is liable to be struck down. However, we are not impressed with such submission. First, there was no challenge to the constitutional validity of Rule 9 sub-rule (5) of the SARFAESI Rules. Secondly, even as per Agarwal Tracom (supra) it is always open for a person aggrieved by an order of forfeiture under the SARFAESI Rules to challenge the same before the DRT under Section 17 of the SARFAESI Act. 67. As regards the contention that the SARFAESI Rules being a delegated legislation cannot override the substantive provisions of a statutory enactment more particularly Section(s) 73 & 74 of 2025:KER:28919 WP(C) 7595/2025 5 the 1872 Act, the same was negatived by this Court in C. Natarajan (supra) with the following observations: - “22. .... We have considered it necessary to advert to this question as it is one of general importance and are of the considered opinion that the answer must be in the negative. While the Contract Act embodies the general law of contract, the SARFAESI Act is a special enactment, inter alia, for enforcement of security interest without intervention of court. Rule 9(5) providing for forfeiture is part of the Rules, which have validly been framed in exercise of statutory power conferred by section 38 of the SARFAESI Act. Law is well settled that rules, when validly framed, become part of the statute. …” 68. What can be discerned from the above is that the SARFAESI Act is a special legislation with an overriding effect on the general law, and only those legislations which are either specifically mentioned in Section 37 or deal with securitization will apply in addition to the SARFAESI Act. Being so, the underlying principle envisaged under Section(s) 73 & 74 of the 1872 Act which is a general law will have no application, when it comes to the SARFAESI Act 2025:KER:28919 WP(C) 7595/2025 6 more particularly the forfeiture of earnest-money deposit which has been statutorily provided under Rule 9(5) of the SARFAESI Rules as a consequence of the auction purchaser’s failure to deposit the balance amount. Therefore, the act of the bank in forfeiting the amount deposited by the petitioner cannot be found fault with. Writ petition fails and it is accordingly dismissed. However, this will not prevent the petitioner from participating in any fresh auction that may be conducted in respect of the property. Sd/- GOPINATH P. JUDGE ats 2025:KER:28919 WP(C) 7595/2025 7 APPENDIX OF WP(C) 7595/2025 PETITIONER’S EXHIBITS Exhibit P1 THE TRUE COPY OF THE LETTER DATED 23.08.2023 SENT BY THE RESPONDENT BANK Exhibit P2 THE TRUE COPY OF THE RECEIPT OF REMITTANCE OF RS. 10,50,000/- ON 22.08.2023 Exhibit P3 THE TRUE COPY OF THE LETTER GIVEN BY THE PETITIONER TO THE RESPONDENT BANK Exhibit P4 THE TRUE COPY OF THE LETTER DATED 11.01.2024 SENT BY THE RESPONDENT BANK Exhibit P5 THE TRUE COPY OF THE REPRESENTATION DATED 08.01.2025 Exhibit P6 TRUE COPY OF THE LETTER RECEIVED FROM THE BANK 16/01/2025