Auction Purchaser Must Verify Dues In “As Is Where Is” Sale; Bank Not Liable for Undisclosed Liabilities: Allahabad High Court

Recently, the Allahabad High Court has held that it is the duty of the auction purchaser to check the dues and liabilities on the property being auctioned on "as is where is", "as is what is and "whatever there is" basis.The bench of Justice Ajit Kumar and Justice Swarupama Chaturvedi held:“once a person participates in any auction while having knowledge that the property is being e-auctioned having the condition "as is where is", "as is what is and "whatever there is" the duty is upon the prospective bidder, who is the purchaser in facts of the case, to exercise complete caution in checking dues and liabilities.”The Petitioner auction purchaser discovered post-sale certain problems and dues on the property which were allegedly not disclosed by the previous owner and the Bank at the time of the purchase or before taking the possession. The property was purchased through SARFAESI e-auctionAccordingly, petitioner approached the High Court seeking restoration of water supply and a direction to the authorities to recover the society dues from the bank.The question before the Court was whether the Bank can be held liable to pay society dues which are discovered by the auction purchaser when the auction has taken place with the condition that it is on "as is where is", "as is what is and "whatever there is" basis and whether a direction to that effect can be issued under Article 226 of the Constitution of India. The Court referred to South Indian Bank Limited and Another Versus JAC Olivol Products Private Limited and Others, where the Calcutta High Court held that the purchaser is bound to fulfil the obligations which come with the property and the Bank can only provide the information regarding encumbrances which are in its knowledge. It was held that the Bank will not be responsible for any omission or missed dues. Further, relying on the judgment of the Apex Court in K. C. Ninan vs Kerala State Electricity Board and Others, the Court held that since the auction was on "as is where is", "as is what is and "whatever there is" basis which the petitioner was aware of, the petitioner will be liable to pay the dues. The Court also rejected petitioner's grievance regarding non-compliance with the provisions of the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010 on grounds that the petitioner was aware of the terms and conditions of auction and chose to participate in it. Accordingly, the Court held that the petitioner had a remedy under the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010 and dismissed the writ petition. Case Title: Mukesh Singh v. State Of U.P. And 3 Others [WRIT - C No. - 35952 of 2025]Click Here To Read/Download Order

Auction Purchaser Must Verify Dues In “As Is Where Is” Sale; Bank Not Liable for Undisclosed Liabilities: Allahabad High Court

Upasna Agrawal

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