The auction in question involved a piece of land measuring 2 guntas, located in Bogaram village, Keesara Mandal, Medchal Malkajgiri district, Telangana. Following an e-auction notice published on March 17, 2018, the auction took place on April 10, 2018, where the respondents emerged as the highest bidders with a total bid of Rs. 1,42,50,000. They promptly deposited 25% of the bid amount, amounting to Rs. 36,00,000, on the same day.

However, complications arose when the bank failed to issue the sale certificate and execute the sale deed, claiming that the respondents had not deposited the remaining balance of Rs. 1,06,50,000 within the stipulated 15-day period. The situation was further complicated by the bank's complaint to the Central Bureau of Investigation (CBI) and subsequent advisory from the Enforcement Directorate (ED) against releasing property documents.

The respondents challenged the bank's actions in a writ petition, arguing that the cancellation was unjustified. The Supreme Court ruled in favor of the respondents, emphasizing that the bank's refusal to issue the sale certificate was unwarranted. The court found that the bank had not properly communicated any default on the respondents' part and highlighted that the auction had been confirmed despite the CBI's ongoing investigations.

One of the key aspects of the court's ruling was its interpretation of Rule 9(4) of the Security Interest (Enforcement) Rules, 2002, which stipulates a 15-day period for the deposit of the remaining sale amount. The court clarified that this period could be extended with mutual written consent, and there was no concrete evidence of default on the part of the respondents.

No Default by Respondents: The Supreme Court noted that the respondents had always expressed their willingness to complete the payment and had even submitted a bank draft for the remaining amount in October 2022. The bank's refusal to accept the payment was deemed unjustified.

Unilateral Cancellation: The bank's decision to cancel the auction sale was described as unilateral and lacking due process, violating principles of natural justice by failing to provide the respondents with notice or an opportunity to be heard.

Extension of Payment Period: The court reaffirmed that the stipulated time for payment under Rule 9(4) is not absolute and can be extended if both parties agree in writing. The bank's inaction effectively implied consent to an extension.

Rejection of CBI Complaint as Justification: The court pointed out that the bank's prior complaint to the CBI did not constitute a valid reason to deny the issuance of the sale certificate, especially as the auction had been confirmed without any contrary directive.

The Supreme Court's decision reinforces the protection of auction purchasers against arbitrary actions by financial institutions. By emphasizing due process and the possibility of extending payment timelines through mutual agreement, the ruling sets a precedent that enhances buyer rights in auction transactions.

As a result, IDBI Bank's appeals have been dismissed, mandating the issuance of the sale certificate and the execution of the sale deed in favor of the respondents. This case serves as a reminder of the importance of transparency and fairness in auction processes, ensuring that purchasers are not unfairly disadvantaged by procedural oversights or unilateral decisions.