Allahabad HC Recalls Direction To Bank Of Baroda To Compensate Auction Purchaser Over Its 'Arbitrary' Action

For context, on April 9, the court passed this order while dealing with a writ plea moved by Saurabh Singh Chauhan, who claimed that he had successfully bid for the property in question under the SARFAESI Act.

He claimed that the bank returned the property (for which he had already paid earnest money) to the original borrower through a one-time settlement scheme.

Though the Counsel on behalf of the Bank and the bank itself tendered their unqualified apology for illegal action, the Court had directed the Bank to pay earnest money back to the auction purchaser with a 24% interest rate as compensation.

More details of the order here : Allahabad HC Castigates Bank Of Baroda Over 'Illegal' Return Of Auctioned Property To Defaulting Borrower, Orders Heavy Compensation

Now on May 16, the Court was informed that the auction was cancelled within five days from the date of the auction, and the earnest money received from the petitioner (bidder) was returned within a period of seven days from the date of auction.

It was admitted before the bench of Justice Shekhar B Saraf and Justice Dr Yogendra Kumar Srivastava, that this particular fact was suppressed before this Court on the date the order was passed with regard to the payment of interest on the earnest money.

In view of this, the bench recalled the portion of the order dated April 9, 2025 in relation to the payment of interest and return of the money to the petitioner.

Furthermore, the bench noted that since the auction was cancelled and no sale certificate was issued in favour of the petitioner (auction purchaser), no intervention was required at this stage.

The Court added that since the borrower approached the Bank and the Bank accepted OTS settlement with the borrower and returned the possession of the property in question to the borrower, the remedy, if any, was before the Debt Recovery Tribunal.

With this, the writ petition was disposed of.

Advocates Afzal Parvej and Arif Ikbal appeared for the Petitioner.

Advocate Ajal Krishna appeared for the respondents

Case title - Saurabh Singh Chauhan vs. Bank Of Baroda, Regional Stressed Assets Recovery Branch And Another 2025 LiveLaw (AB) 181