Jharkhand HC dismisses Bank of Baroda appeal, upholds interest on refunded e-auction money
SUMAN K SHRIVASTAVA Ranchi, August 5: The Jharkhand High Court on Wednesday dismissed an appeal filed by Bank of Baroda and upheld…
SUMAN K SHRIVASTAVA
Ranchi, August 5: The Jharkhand High Court on Wednesday dismissed an appeal filed by Bank of Baroda and upheld a Single Judge’s order directing the bank to pay 6% annual interest on ₹30.90 lakh refunded to a successful e-auction bidder after failing to hand over possession of the auctioned property.
A Division Bench comprising Chief Justice M.S. Sonak and Justice Rajesh Shankar held that the bank could not retain the bidder’s money for more than one-and-a-half years without delivering possession of the property. The Court observed that such retention of money attracted the principle of restitution and amounted to unjust enrichment.
Dispute Over Delayed Possession of Auctioned Flat
The case arose from an e-auction conducted by Bank of Baroda on September 14, 2022, for a flat located at Dalma Enclave in Jamshedpur under proceedings initiated under the SARFAESI Act. The bidder, Shipra Shikha, was declared the highest bidder and deposited the entire auction amount of ₹30.90 lakh between September 15 and September 26, 2022.
Despite repeated requests, the bank failed to hand over physical possession of the property. After waiting for several months and citing medical exigencies, the bidder sought a refund of the amount along with interest. The bank eventually cancelled the auction and refunded the principal amount on April 6, 2024, without paying any interest.
High Court Rejects Bank’s Defence
Before the Division Bench, Bank of Baroda argued that the auction terms did not provide for payment of interest and that the bidder herself had sought cancellation and refund while giving an undertaking not to raise any future claims.
The High Court rejected these submissions, holding that the undertaking appeared to have been obtained under undue pressure as the bidder had been waiting for possession for a prolonged period while facing health-related financial needs. The Bench observed that such an undertaking could not deprive her of a legitimate legal claim.
Bank Responsible for Delay, Says Court
The Court also rejected the bank’s contention that delays in proceedings before the District Magistrate under the SARFAESI Act prevented it from delivering possession.
It observed that if the statutory proceedings were being delayed, the bank could have approached the High Court for appropriate directions. Instead, it retained the bidder’s money without either delivering possession or promptly refunding the amount with interest.
Court Relies on Supreme Court Precedents
The Division Bench referred to Supreme Court judgments on restitution and unjust enrichment, observing that when a person or institution retains another’s money without lawful justification, it is legally bound to refund the amount along with interest.
Holding that the bank had retained the bidder’s money without legal justification, the Court found no infirmity in the Single Judge’s direction to pay interest at the rate of 6% per annum. Accordingly, the Letters Patent Appeal filed by Bank of Baroda was dismissed.
