Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Importantly, courts have clarified that withholding or delay in payment, especially when not due to the auctioneer's fault or when the auction process is otherwise valid, does not automatically lead to forfeiture of EMD or annulment of the sale ["2026 Supreme(Online)(Tel) 3666"], ["2023 0 Supreme(Mad) 3327"].
Analysis and Conclusion:
In the high-stakes world of auctions—whether for insolvency assets, bank recoveries under , or property sales—timely payment of the is often emphasized as critical. But what happens if there's a delay? Does a delayed EMD payment or the auction sale? This question arises frequently for bidders, auctioneers, and legal practitioners navigating complex auction processes.
The short answer: Delayed EMD payment does not necessarily an auction sale, provided the auction's terms and conditions clearly outline the consequences of such delays and the bidder's obligations. Courts typically prioritize strict compliance with auction rules, but outcomes depend on specific contractual language and circumstances. This post breaks down judicial trends, key cases, exceptions, and practical advice.
Auction sales are governed by clear, unambiguous terms set forth in the auction notice or proclamation. Courts have consistently held that these terms dictate the sale's validity. For instance:
Judicial decisions emphasize that auction rules are not mere formalities. As noted in 1991 0 Supreme(SC) 608, non-compliance with the mandatory requirement of deposit of full purchase money within prescribed time renders the sale a .
Most cases affirm that delays without explicit permission result in adverse outcomes:
Interest on delays is also enforceable. In 2025 Supreme(Online)(NCLT) 732, the court upheld interest under , for payments beyond 30 days, dismissing claims for EMD interest refunds. Similarly, 2025 Supreme(Online)(NCLT) 958 affirmed: bidders must adhere to schedules without excuses.
While strict compliance rules the day, exceptions exist:
In
, interest on delayed payments was deemed invalid if not contractually supported, highlighting the need for clear clauses.
Insolvency auctions under the IBC often mirror these principles. Bidders face for EMD delays, with no leniency for internal excuses. 2025 Supreme(Online)(NCLT) 732 and 2025 Supreme(Online)(NCLT) 958 dismissed relief claims, stressing Regulation 33's mandatory interest.
auctions under Section 13(2) similarly prioritize timelines. 2018 0 Supreme(Mad) 152 noted that post-auction decree satisfaction doesn't confirmed sales, but delays in initial payments can.
To avoid disputes:
Use precise language to make timelines mandatory.
For bidders:
In insolvency/ cases, prepare for interest under regulations like .
General tip: Document all communications to argue or if applicable.
Delayed EMD payments do not automatically auction sales, but they often lead to , interest, or invalidation if terms deem timelines mandatory. Courts uphold clear contractual provisions, as seen in precedents like 2007 1 Supreme 1, 1967 0 Supreme(SC) 248, and insolvency rulings 2023 Supreme(Online)(NCLT) 1907. Exceptions are narrow, tied to explicit allowances or equities.
Key takeaways:- Prioritize compliance: Timely EMD is foundational.- Know your terms: Validity hinges on auction conditions.- Seek extensions proactively: Don't assume leniency.
This post provides general insights based on judicial trends and is not legal advice. Consult a qualified lawyer for case-specific guidance.
References:- 2007 1 Supreme 1, 1967 0 Supreme(SC) 248, 2024 Supreme(Online)(Del) 33373, 1991 0 Supreme(SC) 608, 2024 0 Supreme(SC) 753- 2023 Supreme(Online)(NCLT) 1907, 2025 Supreme(Online)(NCLT) 732, 2025 Supreme(Online)(NCLT) 958, 2021 0 Supreme(Bom) 1694, 2022 0 Supreme(Bom) 884, 2018 0 Supreme(Mad) 484, 2018 0 Supreme(Mad) 152,
#AuctionLaw,#EMDForfeiture,#LegalInsights
However, DDA proceeded to cancel the auction sale in favour of the respondents by a letter dated 17.05.2022. ... DDA contends that the respondents have not complied with the terms and conditions of the auction and therefore, the Earnest Money Deposit (EMD) paid by the respondents is required to be forfeited. 2. ... The demand-cum-allotment letter would be issued to the successful bidder through the BHOOMI Portal after receipt of second stage EMD payment and other requ....
Appellant cannot claim refund of the EMD, it having breached the contract and it having not made payment in time allowed. ... Admittedly, the Appellant has not made the balance payment. ... Appellant having agreed to honour the clauses of the E-auction Process Document cannot be heard in contending that even if Appellant has not paid the balance sale consideration, EMD need to be refunded to the Appellant. ... The Liquidator being #....
iv. that the sale shall be cancelled if the entire payment is not received within ninety days of successful E-Auction. ... Vachan also contended that in terms of clause 1 (12) of Schedule I of the Regulations, the sale could be cancelled only if the balance payment was not received within a period of ninety days. ... bid or does not bid in the E-Auction portal. ... The sale of Block IV was not con....
the EMD/any payment on default by the H1 Bidder, no exception can be taken to the action of the Liquidator in cancelling the sale and forfeiting the amount deposited by H1 Bidder.” ... The liquidator issued a public Notice dated 04.03.2022 for sale of Stand-Alone assets of the CD for E-Auction wherein it was mentioned that last date of EOI was 22.03.2022 and last date of submission of EMD was 04.04.2022, last date for inspection by interested party was 21.03.2022 and Date of ....
The Co-operative society paid Rs. 2,89,53,000/- as Earnest Money Deposit (EMD) initially for a private sale, which was later considered as EMD for public auction at the instance of the applicant. ... It is further submitted by the Liquidator that the applicant’s demand for interest on delayed payment, amounting to Rs. request for relief is not maintainable in law since the liquidator’s 51,40,149/-, is in accordance with provisions of the Code, specifically, Regulation....
The Co-operative society paid Rs. 2,89,53,000/- as Earnest Money Deposit (EMD) initially for a private sale, which was later considered as EMD for public auction at the instance of the applicant. ... It is further submitted by the Liquidator that the applicant’s demand for interest on delayed payment, amounting to Rs. request for relief is not maintainable in law since the liquidator’s 51,40,149/-, is in accordance with provisions of the Code, specifically, Regulation....
However, since the amount was not refunded from the date of first raising claim for refund vide letter dated 24.12.2023, it is appropriate to direct payment of interest on the amount payable towards refund of EMD + part payment of sale consideration. ... Therefore, the Official Liquidator sought permission to refund the EMD amount and part payment of sale consideration, a total of Rs.29,00,000/- to P. ... The learned Standing Counsel for the Official....
That the OTS entered into with the borrower or guarantors is an independent transaction and does not invalidate a concluded auction or dilute the respondent- bank’s statutory right to forfeit the EMD on account of the purchaser’s default. ... Admittedly, when the stay order passed by this Court was operating, further steps consequent upon the auction sale, which took place on 28.12.2021 could not have been taken either by the secured creditor or by the auction purchas....
In that case, the earnest money was forfeited due to non-payment of 75% of the sale auction consideration, as the bank could not handover the possession of the property free of encumbrances due to ongoing civil suits filed by the tenants of the said property. ... make the payment. ... the bank has no other option except to re-auction the property and forfeit the EMD amount deposited. ... When the petitioner sought to clear the same, the respondent rejected the same an....
Therefore, interest imposed on the delayed payment is not valid in law. It is his further contention that, withholding such late payment charges along with interest from EMD is also not correct. However, the Arbitral Tribunal has not considered the above aspect. ... (4) Whether there has been delay on the part of the respondent in issuing the sale order after the payment of the EMD and again a huge delay in issuin....
The EMD will be refunded to unsuccessful bidders without any interest only after the completion of e-auction activity. EMD refund request made before completion of e-Auction will not be considered. The EMD will not be adjusted against any other scheme.
He submitted that respondent No. 9 was not responsible for delay in payment of remainder. He submitted that provisions of Rule 107(11)(h) are not mandatory and, therefore, late payment of remainder of purchase price cannot vitiate the auction. He submitted that the mandatory requirement of Rule 107(13) of the MCS Rules is that the petitioner should have deposited 5% of the purchase money with the Recovery Officer, which he did not do. Payment was delayed as respondent No. 4 and 5 waited for confirmation of sale.
3. Mr.M.Rajasekhar, learned counsel for the petitioner submitted that when Rs.31,37,500/-, representing 25% of the sale amount, including EMD has already been paid, Bank ought not to have reissued e-auction sale notice, without considering the representation of the writ petitioner, seeking for extension of time, for payment of balance amount.
Any subsequent payment in full satisfaction of the decree by second defendant will not vitiate the auction sale. The second defendant has paid the amount voluntarily after the entire amount was deposited by auction purchaser towards decretal amount. 8(b) In the present case, when E.A.Nos.418 and 419 of 1983 filed by the second defendant and his son Sathappan were dismissed by the Court, the auction sale is confirmed and the sale has become absolute. The learned Judge has rightly confirmed the sale in favour of the 6th defendant and directed to issue the sale certificate.
Delayed communication of adverse remarks does not vitiate the remarks. Reliance is placed on judgment in Ravjis v. Union of India, AIR (2) CAT 157 (Delhi), wherein it was held that instruction regarding communication of adverse entries in Confidential Reports are in the nature of guidelines, breach of which does not render the remarks void. Reliance is also based on Baldev Kapoor v. Union of India and others, reported in 1980(2) SLR 309 (Punjab and Haryana) where it was held that non-compliance of the executive instructions, having no statutory force, does not render the de....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
