Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 : ss. 13(4), 17 – Security Interest (Enforcement) Rules, 2002 – r. 9 – Contract Act – ss. 73, 74 – Power of forfeiture by the Authorized Officer – Exercise of – Interference with the forfeiture order by the High Court – Justification of – On facts, default committed by one in discharging its debts to the Bank and declared as non-performing asset – E-auction held by the Authorized Officer for secured asset of the defaulter– Respondent declared the highest bidder and paid the earnest money and 25% of the sale price – However, could not pay the balance 75% within the stipulated period and sought extension of time and the same was granted – Respondent further sought extension and the same was rejected– Thereafter, the Authorized Officer cancelled the e-auction sale concluded in favour of respondent and forfeited the amount deposited– Respondent applied before the DRT for the extension of time to deposit the balance amount – DRT directed the Authorized officer to maintain status quo – In appeal, the DRAT permitted the Authorized Officer to proceed with fresh auction without, however, vacating the order of status quo passed earlier – Writ petition by the respondent seeking refund of the forfeited amount – Meanwhile, the secured asset was put up for auction and was sold to another auction-purchaser for the same amount– High Court directed refund of forfeited amount on the ground that the Bank should not be permitted to enrich by forfeiting the amount from the respondent– On appeal, held: Power of forfeiture is statutorily conferred – Nothing prevented the respondent from making full payment of the balance amount and have the sale certificate issued in his favour – Respondent not genuinely interested in proceeding with his part of obligations – Counsel for the respondent has not shown how the Authorized Officer acted in derogation of the statute – While dealing with a case covered by r. 9, an order of forfeiture of sale price should not be lightly interfered – Thus, no arbitrariness or unreasonableness in the action of the Authorized Officer found in forfeiting 25% of the sale price – Furthermore, there being no enrichment of the Bank by reason of the forfeiture, the High Court not justified in directing a refund of 25% of the sale price – Thus, the order passed by the High Court set aside.

Words and Phrases: ”Forfeiture” – Meaning of.