Auction confirmation was barred pending the petitioner’s opportunity to sell property and repay investors.

The petitioner was a partner in Krishna Bankers, which defaulted on repayments to depositors. Following a depositor’s complaint, criminal proceedings were initiated under Section 420 of the IPC and Section 5 of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997 (“TNPID Act”). The Government ordered interim attachment of properties belonging to the petitioner and family members, and the competent authority sought to make the attachment absolute and sell the attached properties.

On 10 October 2025, the TNPID Court, acting on the petitioner’s application under Section 7(8) of the TNPID Act, raised the attachment over Item No. 9 of the relevant Government Order, subject to the petitioner compounding the offence within three months. The petitioner did not complete the proposed sale within that period, and an auction notice was issued in respect of other properties.

Challenging the auction notice, the petitioner sought additional time to sell Item No. 9 and satisfy the investors’ claims. The High Court directed him to deposit ₹25 lakh; he complied by producing a demand draft in favour of the competent authority.

1. Whether the petitioner should be granted further time to sell Item No. 9 and discharge the investors’ claims, notwithstanding his failure to act within the period fixed by the TNPID Court.

2. Whether the auction sale could proceed to confirmation while the petitioner was given that opportunity.

Article 226 of the Constitution was invoked to challenge the auction notice and seek relief.

Section 7(8) of the TNPID Act was the statutory basis of the petitioner’s earlier application to raise the attachment; the judgment records the TNPID Court’s conditional order but does not set out or interpret the provision’s text.

The High Court applied its discretionary authority to grant conditional relief: it treated the petitioner’s deposit of ₹25 lakh as evidence of bona fides and made the extension subject to payment of the entire liability to investors through the competent authority by the stipulated date.

Although the petitioner had not complied with the TNPID Court’s three-month deadline, the High Court considered that a sale of Item No. 9 could potentially enable settlement of the investors’ claims and that a buyer was available.

It tested the petitioner’s bona fides by directing a ₹25 lakh deposit; after he complied, the Court extended the time allowed by the TNPID Court to 16 November 2026.

To preserve the opportunity to repay investors without defeating the auction process outright, the Court prohibited confirmation of the auction sale in favour of the successful bidder only until that date and made the relief automatically lapse upon default.

The auction sale could not be confirmed in favour of the successful bidder before then; the order would automatically stand vacated upon default.

The Sub-Registrar, Thiruvattar, was impleaded and directed to facilitate the sale of Item No. 9 to a third party upon production of the sale deed.

The petition was disposed of without costs, the connected miscellaneous petitions were closed, and the matter was listed for reporting compliance on 17 November 2026.