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Vasu P. Shetty v. Hotel Vandana Palace

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 4679 of 2014)Decided 22 Apr 2014
Civil Appeal No. 4679 of 2014
Justice S.S. Nijjar · Justice A.K. Sikri

Background

A bank auctioned a mortgaged hotel after the borrower defaulted and failed to complete a settlement. The successful purchaser paid the price and several outstanding charges. The borrower challenged the sale because the auction notice did not provide the required thirty days, while the bank and purchaser argued that the borrower's earlier delaying conduct amounted to waiver.

Decision Breakdown

The Supreme Court dismissed the appeals and upheld setting aside the sale. The borrower's earlier defaults and challenges did not show an informed, intentional waiver of the mandatory notice requirement for this auction; it had promptly contested the fresh notice. The borrower received two months to pay the bank's entire liability and reimburse the purchaser's registration, stamp duty and specified encumbrance payments, after which the property could revert to it. If payment was not made, the bank could sell again using lawful procedure. The purchaser was entitled to refund of the amounts identified by the Court, without interest because it had used the property meanwhile.

Lesson Learnt

A borrower's default does not excuse a bank from complying with auction safeguards. Waiver requires conduct showing intentional surrender of the particular right, and cannot simply be inferred from earlier delay or failed settlement.

Official source (sci.gov.in)View Judgment (PDF)

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