3 min readChandigarhApr 29, 2026 07:32 PM IST
In a significant ruling, the Punjab and Haryana High Court recently allowed a borrower to settle its long-pending loan dues and retain its mortgaged property in Gurgaon, quashing an auction sale conducted by Indian Bank on the ground that the sale had never attained finality.
A division bench of Justices Suvir Sehgal and Deepak Manchanda, while disposing of two connected writ petitions on April 24, held that the highest bidder in the auction did not acquire any legal right over the property as the sale remained subject to confirmation by the bank and the outcome of pending court proceedings.
The order clears the way for RKB Healthcare Private Limited and Sudhir Bajaj to retain the property after paying a fresh one-time settlement amount sanctioned by the bank.
The case dates back to 2011, when RKB Healthcare took a Rs 12 crore loan from Allahabad Bank, now merged with Indian Bank, for setting up a healthcare and wellness centre in Gurgaon. The loan was secured against the company’s properties as well as additional land owned by Sudhir Bajaj in the village of Shikohpur.
After the account turned non-performing in 2016, the bank initiated recovery proceedings, took physical possession of the land in January 2022 and put it up for auction. On March 15, 2022, Value One Retail Private Limited emerged as the highest bidder with an offer of Rs 15.98 crore and deposited 25 per cent of the bid amount, approximately Rs 4 crore.
However, the auction was conducted while litigation initiated by the borrowers was pending before the High Court.
Subsequently, in December 2024, the bank sanctioned a fresh one-time settlement of Rs 12.84 crore, which the borrowers paid in full. Value One Retail challenged the settlement, contending that the property ought to have been transferred to it as the highest bidder.
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Rejecting the plea, the Bench noted that the bank’s acceptance letter expressly made the sale conditional.
“Auction purchaser was issued a letter of acceptance on same day wherein bank clearly stated that sale has been conducted subject to confirmation by bank and subject to outcome of proceedings before the High Court… Though, auction purchaser did deposit 25 per cent of bid amount, but he did so at his own risk. The issuance of acceptance letter or deposit of 25 per cent of bid amount will not vest any right in auction purchaser,” the court said.
Emphasising the legal position, the bench held, “As long as the sale is not confirmed in favour of auction purchaser, he does not acquire any right or interest in auctioned property. There is nothing to stop the bank from entering into an OTS with borrower as long as auction sale is not concluded by issuance of a sale certificate.”
The court also found no evidence of collusion between the borrower and the bank “to defeat the claim of intending purchaser”.
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Quashing the sale notice dated February 3, 2022, and the acceptance letter issued to Value One Retail, the High Court directed Indian Bank to refund Rs 3,99,50,000 deposited by the auction purchaser “along with interest at the rate of 7.5 per cent per annum from the date of deposit, within a period of one month from today”.
The bank has also been directed to restore physical possession of the mortgaged property to the borrower upon redemption.
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