Madras High Court rejects auction buyer's Rs 4.14 crore interest claim against Union Bank

The Madras High Court on 27 October 2026 dismissed a writ petition by Elakayem Auto Ancillaries (P) Ltd seeking interest from Union Bank of India for the delay in handing over a property it bought at a bank auction. The company had claimed about Rs 4.14 crore, at 15% a year, on the amounts it paid.

What Happened

The bank was selling the property under the SARFAESI Act, 2002, the law that lets banks sell a defaulting borrower's mortgaged assets without going to court. The company won a public e-auction held through MSTC Limited on 23 February 2023 with a bid of about Rs 10.22 crore, paid the full amount by 6 March 2023, and spent about Rs 1.12 crore on stamp duty and registration. The sale certificate was issued on 13 March 2023.

Possession came only on 31 May 2025, nearly 26 months after the full payment, according to the petition. The bank's application to the Chief Judicial Magistrate, Krishnagiri, under Section 14 of the Act was filed in May 2023, returned for defects and re-presented in April 2024. After the magistrate allowed it on 16 August 2024, entities claiming to be tenants and a guarantor challenged the order before the Debt Recovery Tribunal, which dismissed them. The borrower company had also gone into insolvency and liquidation, the bank told the buyer in September 2023.

The court held that the delay was caused by intervening proceedings beyond the bank's control, and that the auction terms said the property was sold "as is where is" with only symbolic possession held by the bank. The buyer therefore knew the bank would not hand over possession at once. The court dismissed the petition with no costs.

What It Means

Anyone bidding at a bank's SARFAESI auction should read the sale notice closely. When the property is sold "as is where is" and the bank holds only symbolic possession, this ruling means the buyer may have to wait out court and tribunal proceedings to get physical possession, without a claim for interest on the money paid, unless the delay is the bank's own fault. Complaints about a bank's service can be filed with the RBI at https://cms.rbi.org.in.

Source: High Court judgment