The Times of India           20.09.2010

BDA ordered to refund auction deposit

BANGALORE: In an exceptional case, the Karnataka High Court has directed the Bangalore Development Authority (BDA) to refund Rs 20,73,914 to one Shetal Udayakumar, out of the Rs 63,41,200 deposited by her late husband in 2007 for two corner sites in HRBR Layout II Stage.

Justice Rammohan Reddy gave this direction, asking the BDA to refund the amount within eight weeks, while disposing of a petition filed by the Banaswadi resident, seeking refund of the amount deposited by her husband at the time of auction.

"Though the statutory rules permit the BDA to forfeit the amount for non-payment of the balance sale consideration, in the circumstances of the present case, the BDA should refund Rs 20.73 lakh, after forfeiting Rs 42,67,686 as shortfall amount upon the re-auctioning of the two sites," the judge observed in his verdict.

As per Section 6(3) of BDA (Disposal of corner sites and commercial sites) Rules, 1984, if a successful bidder doesn't deposit the entire amount within 45 days after the sale confirmation, the initial amount, which is 25% of sale consideration amount, is liable to be forfeited. Under 6(4), the BDA can extend the period by 90 days for paying the balance amount, subject to payment of interest at the rate of 18%.

The petitioner has claimed that her late husband had left huge debts and representatives of banks and financial institutions are hounding her to recover those loans. She challenged the endorsement issued by the BDA, forfeiting the 25% bid amount deposited by her husband.

The BDA, by its July 5, 2008 communication, cancelled the auction bid and also forfeited the amount paid by the petitioner's husband. Later, the BDA put up the two sites for re-auction on August 19, 2009, and the bid amount was Rs 2.10 crore. The BDA claimed it had to incur a loss of Rs 42.67 lakh on account of cancellation of the auction where the petitioner's husband was the successful bidder.

BACKGROUND

M Udayakumar, the petitioner's husband, had bid for two corner sites in HRBR Layout on October 30, 2007. The bid amount was Rs 90,85,676 and Rs 1,62,78,582 respectively. Accordingly, he deposited Rs 63,41,200 as 25% of the bid amount in terms of the auction rules. But on November 9, 2007, he fell ill and was admitted to St John's Hospital.

He was diagnosed with Non-Hodgkins Lymphoma and post chemotherapy, died on January 26, 2008, on account of multiple organ failure.