1.      This first appeal has been filed by the appellants, Syndicate Bank &Ors. against the order  dated 07.12.2015 of the State Consumer Disputes Redressal Commission, Andhra Pradesh, (in short ‘the State Commission’) passed in CC No.53 of 2014.

2.      Brief facts of the case are that on 24.02.2012, the appellant No.3 has published auction notice in the daily newspaper Indian Express, Sakshi, having circulation in the State of Andhra Pradesh as well as throughout India, for sale by inviting Tenders under the SARFAESI Act, 2002 of immoveable property mortgaged with Machhlipatnam branch of Syndicate Bank for recovery of secured debts under “As is where is bais and no complaint basis” with respect to property which was open plot near D.No.4/843, Rajupet, Machhlipatnam, Krishna District admeasuring 1103 sq. yards, for the liability of M/s Subhani Engineering Works through the authorised officer, Syndicate Bank, i.e. the appellant No.2 herein.  The date and time of the sale was fixed as 29.05.2012 from 10.00 a.m. to 1.00 p.m.  As per the terms and conditions, the reserve price of the sale was kept as Rs.20,00,000/-.  The tenders were invited with EMD @10% of the reserve price i.e. Rs.2,00,000/- refundable without any interest to unsuccessful bidders.  As per the publication, the bidders were allowed the inspection of the property by 28.05.2012.  On 29.05.2012, as per the schedule, the auction was conducted and the respondent was declared as successful bidder in the auction. The total bid amount was Rs.29.55 lacs and upon receipt of the 25% of the bid amount, the appellant no.2 has issued interim sales certificate dated 29.05.5.2012 to the respondent.  On 30.05.2012, the respondent has raised objection that the available extent of the plot was only 832 sq. yards as against 1103 sq. yards.  Upon the said objection of the respondent, the Bank had conducted survey through V.R. Consulting Engineer, Machhlipatnam and as per report submitted by them, the area of the plot was confirmed to be 832 sq. Yards only and not 1103 sq. yards as mentioned in the document.  In the month of June, 2012, balance amount was paid by the respondent.  The auction proceedings were cancelled by the Bank vide letter dated 08.10.2012 and the amount of Rs.29,55,000/- was refunded to the complainant by way of demand draft No.316883 which was duly received and encashed on 13.10.2012. Later, the complainant approached the Banking Ombudsman, however, vide letter dated 14.12.2012, the claim of the respondent was rejected.  On 03.03.2014, the complainant has filed complaint before the State Commission vide CC No.53/2014. The State Commission vide order dated 07.12.2015 allowed the complaint of the respondent thereby directing the appellants to pay an amount of Rs.1,15,584/- towards the interest @12% p.a. on amount of Rs.29,55,000/- from 12.06.2012 to 12.10.2012.  In addition to this a sum of Rs.10,000/- was ordered to be paid towards the litigation expenses and further a sum of Rs.10 lacs towards compensation for mental agony was awarded to the respondent. 

3.      Hence the present appeal. 

4.      Heard the learned counsel for the appellants and the respondent in person.  I also thoroughly perused the record.

5.      The learned counsel for the appellants stated that the auction of the plot in question was done under the provisions of SARFAESI Act, but after the auction the objection was raised by the respondent, who was the successful bidder in the auction that the area of the plot was only 832 sq. yards as against 1103 sq. yards given in the auction notice.  The appellants also get it verified and it was found that actual area was less.  Hence, the bank cancelled the auction on 08.10.2012 and the total amount paid by the respondent Rs.29,55,000/- was returned to the respondent.  Later on the original loane/defaulter deposited the amount of default and the auction proceedings were later on not pursued and the plot was released in favour of the defaulter/loanee.  Thus, there was no deficiency on the part of the appellant bank as the objection was raised by the respondent himself and the auction was cancelled due to that objection. 

6.  Opposing the arguments of the learned counsel for the appellants, respondent in person stated that the bank was deficient first of all, for mentioning wrong area in the auction notice.  Though pre-inspection was allowed, no bidder is supposed to measure the actual area before the auction.  The respondent measured the actual area after he was declared successful bidder and he deposited the money as per the order and conditions of the appellants.  The respondent only raised the objection of less area, but respondent never asked for cancellation of the auction. In these conditions, there was no justification for cancellation of the auction.  The respondent further added that in fact, the appellant bank has released the same plot to the loanee/defaulter under considerations best known to them.  Once the auction was completed, the plot should have been registered under the name of the respondent and possession of the same should have been handed over.  Thus, the deficiency on the part of the appellants is evidently clear.  State Commission has rightly allowed the complaint and has rightly awarded a compensation of Rs.10,00,000/- to the respondent to be paid by the appellants in addition to interest for the period the money was kept by the bank.   

7.  I have carefully considered the arguments advanced by both the sides and have examined the record. It is true that the complainant/respondent has suffered in the whole process of auctioning as he was declared successful bidder, but he could not get the sale deed executed in spite of payment of total bid amount in time.  Even though there was some less area in the plot, but the complainant never asked for cancellation of the auction. But the bank cancelled the auction and refunded the total amount.  The cancellation of the auction has been intimated vide letter dated 08.10.2012 of the bank, which reads as follows:-

“With reference to the above we regret to inform you that the undersigned being the Authorised Officer has decided to cancel the sale proceedings dt.29.5.2012, who is empowered to cancel the auction proceedings at any point of time as per SARFAESI Act, 2002. Due to the reason that the Bank is not able to register the property for 1103 Sq. yards as the available area is only 832 Sq. yards as informed by the Municipal Authorities of Machilipatnam.  Further the Bank has offered two options to you vide our letter Ref.No.3348/LO/OC-103/F.12/54-S dated 12.9.2012 in response to your letter dt. 06.09.2012 and you have not chosen any of our options and made certain allegations in your letter dated 17/09/2012 which are baseless and impracticable and hence we have concluded that you are not interested to sort out the issue in an amicable manner. 

In view of the above, we have instructed our Machilipatnam Branch to refund the amount of auction by DD to you and you are requested to contact the branch in this regard.”

8.      Two options that were given by letter dated 12.09.2012 are as follows:-

“1.  The Bank can issue the sale certificate of the property in “AS IS WHERE IS, AS IS WHAT IS CONDITION AND NO COMPLAINT BASIS” as per the extent mentioned in the link document and execute the registered sale deed for the available extent of 832 Sq. yards by stating specific reasons without reducing the price/bid amount.

(OR)

2.     The Bank can return the total amount deposited by the auction purchaser during the auction proceedings in cancellation of SARFAESI Auction proceedings under special circumstances on mutual consent between the auction purchaser and the Bank.

9.      From the letter dated 08.10.2012, it is clear that the bank has cancelled the auction because there was no response from the complainant to the letter dated 12.09.2012 of the bank.  The auction proceedings were vitiated by the fact that auctioned plot did not have the exact area that was mentioned in the auction notice and the complainant did not give his response to the two options sent by the Bank in writing. Thus, there seems to be no deficiency in cancelling auction proceedings in these circumstances.

10.    On the other hand, it is also true that appellant bank has not taken due care to verify the area of the auction property before issuing the auction notice.  Thus, the bidder had to face unnecessary mental trouble and harassment throughout the whole proceedings due to this lapse on the part of the Bank. Though he had deposited total amount, but was not in a position to get the area as mentioned in the auction notice.  He also had to unnecessarily correspond with the appellants and he got nothing ultimately out of the whole process of auction.  Therefore, the complainant deserves compensation for the harassment and mental agony that he has faced due to the deficiency on the part of the bank that the appellants wrongly mentioned the area of the auction property in the auction notice. 

11.    From the order of the State Commission, it is clear that the interest of Rs.1,15,584/- has been allowed as interest on the total amount deposited by the complainant for the time money remained with the bank.  This part of the order of the State Commission is perfectly justified as the complainant is definitely entitled to the interest on his deposited money for the period it remained with the bank.  So far as the compensation of Rs.10,00,000/- for the harassment and mental agony is concerned, I find that the cancellation of auction was inevitable when the complainant himself raised the objection of less area and did not respond letter dated 12.09.2012 of the appellant bank.  The auction was on as is where is basis and the complainant was not ready to take auction property on “as is where is” basis.  The deficiency on the part of the bank was that they did not very the area before putting the property into auction. However, in the facts and circumstances of the case, the compensation of Rs.10,00,000/- for mental agony and harassment seems to be on a very very high side.  In my view, as the interest has already been awarded on the amount deposited by the complainant, the complainant has been appropriately compensated so far as money aspect is concerned.   For harassment and mental agony, a compensation of Rs.50,000/- (Rupees Fifty Thousand Only) would be reasonable and sufficient in the facts and circumstances of the case.  

12.    Based on the above discussion, First Appeal No.331 of 2016 is partly allowed.  The compensation of Rs.10,00,000/- awarded by the State Commission vide impugned order dated 07.12.2015 is modified to Rs.50,000/- ( Rupees Fifty Thousands) only.  Rest of the order of the State Commission regarding payment of interest and cost of litigation remains unchanged.  No order as to cost for this appeal.