Bombay High Court
MANDAR MADHUKAR JADHAVversusUNION OF INDIA THROUGH PRINCIPAL SECRETARY AND ORS
- Decided
- Disposal
- Disposed Off
Holding
The Court held that interest at 9% per annum on the refund amount is appropriate.
Summary
The petitioner, Mandar Madhukar Jadhav, purchased a flat at auction based on a sale notice describing the property as flat No.501/A, but later discovered the correct description was flat No.502, preventing him from obtaining a loan. He deposited Rs.14,27,500 as part of the auction and sought a refund with interest. Respondent No.3, the secured creditor, agreed to refund the amount and initially proposed interest at 4% per annum, while the petitioner insisted on 18% per annum. The Court examined whether the petitioner’s prior physical inspection of the flat precluded a higher rate of interest and concluded that the inspection did not make him aware of the description error. Accordingly, the Court directed Respondent No.3 to refund the amount with interest at 9% per annum, deeming this rate just in the circumstances, and ordered the refund within two weeks.
Issues considered
- What rate of interest is appropriate on the refund of the auction deposit where the property description was erroneous?
Subjects
- auction
- property misdescription
- refund of deposit
- interest rate
- civil writ petition
- secured creditor
- justice
Judgment
14_WP8586_24.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.8586 OF 2024
Mandar Madhukar Jadhav … Petitioner
Vs.
Union of India through Principal Secretary
Ministry of Finance and others … Respondents
Mr. Jayendra D. Khairnar for Petitioner.
Ms. Vishwali V. Botle i/b. Mr. A. R. Gole for Respondent No.1.
Ms. Twinkle Kalla i/b. Blac Co. for Respondent No.2 (RBI).
Mr. Charles De’souza a/w. Mr. Nikhil Rajani i/b. M/s. V. Deshpande & Co. for
Respondent No.3.
CORAM : MANISH PITALE &
SHREERAM V. SHIRSAT, JJ.
DATE : OCTOBER 05, 2026
P.C. :
. In the earlier orders passed in this writ petition, this Court had
taken note of the basic dispute between the parties. The petitioner is the
auction purchaser, who is distressed by the fact that the subject flat in the
sale notice was shown as flat No.501/A, for which he submitted his bid
and became the successful auction purchaser. But, subsequently, it came
to light that the correct description of the flat was flat No.502.
2. This resulted in the petitioner not being able to obtain loan for the
balance amount as the very description of the property was under a
cloud.
3. During the course of hearing of this writ petition, eventually,
respondent No.3 (secured creditor) agreed to offer a refund of the
MINAL Digitally
by MINAL
signed
amount i.e. Rs.14,27,500/-, deposited by the petitioner. An affidavit
SANDIP SANDIP PARAB
Date: 2026.10.05
PARAB 17:37:00 +0530
dated 31.08.2026 of the authorized officer of respondent No.3 is on
record to that effect.
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14_WP8586_24.doc
4. On the last occasion, the hearing of this writ petition was
adjourned on the narrow question as to how much interest should the
refund amount carry in the facts and circumstances of the present case.
5. While the petitioner is insisting on refund of amount with interest
@18% p.a., this Court had indicated that interest @9% p.a. would meet
the ends of justice. The learned counsel for respondent No.3 had sought
adjournment to take instructions in the matter.
6. Today, on instructions, the learned counsel for respondent No.3
submits that the said respondent is ready to refund the aforesaid amount
with interest @ 4% p.a.
7. Attention of this Court is invited to documents on record, which
show that the petitioner had physically inspected the subject flat before
offering his bid in response to the sale notice issued by the respondent
No.3. It is submitted on behalf of the said respondent that in the light of
the petitioner having himself inspected the subject flat, at the most
interest @4% p.a. can be given on the refund amount. We are unable to
accept the contention raised on behalf of the respondent No.3, simply
because when the petitioner had gone to inspect the subject flat,
obviously, the representatives of the respondent No.3 had told the
petitioner that the said flat was indeed flat No.501/A as per the
description given in the sale notice. The inspection of the flat on behalf
of the petitioner was primarily to ascertain the condition of the flat to
enable the petitioner to offer his own bid at the time of auction sale. It
cannot be said that the petitioner by physically inspecting the subject flat
could be deemed to have become aware about the dispute and
controversy that subsequently arose with regard to the actual description
of the flat being 502 and not 501/A.
8. Therefore, we are of the opinion that it would be only in the
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14_WP8586_24.doc
interest of justice that the amount which the respondent No.3 intends to
refund, carries interest @9% p.a.
9. In view of the above, the writ petition is disposed of by directing
respondent No.3 to refund the aforesaid amount of Rs.14,27,500/- along
with interest @9% p.a. to the petitioner within a period of two weeks
from today.
10. It is made clear that this order is passed in the peculiar facts and
circumstances of the present case, as noted in the earlier orders passed in
this writ petition, including the fact that the petitioner is working as a
peon in a nationalized bank and respondent No.3 has volunteered to
refund the amount.
(SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.)
Minal Parab
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