Is the auction purchaser completely helpless after Matthew Varghese Judgment
The judgment of Matthew Varghese has specifically laid down that a clear 30 days’ notice of sale had to be given to the borrower. Any lesser time period being given to the borrower would vitiate the auction proceedings. The question remains about the fate of the auction. Admittedly, the auction purchaser who deposits the entire amount and is a purchaser without notice of the flaw, has also obtained rights in the property in a bona fide manner.
In such circumstances if justice is to be done to the borrower, a fair treatment is deserved by the auction purchaser as well. Gaurav Goel, Debt Recovery Lawyer at Chandigarh said that in judgment of Matthew Varghese itself the Hon’ble Apex Court has declared the 30 days’ notice to be mandatory but did not set aside the sale of property to the auction purchaser. Rather it asked the auction purchaser to deposit the difference between the purchase price and the amount got deposited by the borrower through a prospective purchaser. Therefore, setting aside of the auction purchase is not the only consequence of a flawed sales notice.
In other cases where the above judgment has been followed and the auction purchaser has been set aside, the borrower has been directed to compensate the auction purchaser for each and every penny spent by him and also to pay interest for that amount. In all these cases the auction purchaser has been given a fair and just deal in a prompt manner. If the auction purchaser is to be left high and dry, only because the banks served a flawed notice, the same would deter any prospective auction purchaser to bid for mortgaged property.
Yogesh Goel the top DRT Lawyer in Chandigarh said that the rights of the auction purchaser are equally important and have been upheld and maintained by the courts by either holding the sale to be in their favor or compensating them to the fullest extent. Which option of the two is to be exercised, has to be decided on the facts and circumstances of each case. He also said that all the Debt Recovery Tribunal & Debt Recovery Appellate Tribunal shall analyze the judgment in their wisdom.
In any case the legislature has already reduced the notice period from 30 days to 15 days. This may provide some relief to the secured creditors and auction purchasers.