In mortgage execution proceedings under the Artha Rin Adalat framework, when a secured property is sold through court auction, the entire purchase price deposited by the buyer is first applied toward satisfying the claims of the decree-holder bank. The borrower does not automatically receive any portion of the sale proceeds unless a surplus remains after all legally recoverable deductions have been made. This reflects a core legal principle: priority of institutional recovery over borrower entitlement.
How Auction Sale Proceeds Are Distributed
From the purchaser’s deposited amount, the first and most significant deduction is the bank’s total outstanding dues. This includes the principal loan, accrued interest up to the date of auction, and any applicable penal or default charges.
Once the bank’s dues are adjusted, the court proceeds to deduct auction-related expenses. These include costs incurred for publishing sale notices in newspapers, property valuation, and administrative expenses necessary to conduct the auction process.
Execution-related costs are then deducted. These arise from enforcing the decree and delivering possession of the property. Such costs include court fees, bailiff charges, police assistance, and expenses related to eviction or removal of occupants, governed by the Code of Civil Procedure, 1908.
Further deductions may include legal costs incurred by the bank during recovery proceedings, particularly where the borrower has caused delay or obstruction. These costs typically cover lawyer’s fees and litigation expenses.
Finally, transfer-related expenses such as registration fees, stamp duties, and associated formalities under the Registration Act, 1908 are accounted for.
After all these deductions are completed, any remaining balance is treated as surplus and may be returned to the borrower upon application and court order. Importantly, banks are not legally entitled to retain any amount beyond their lawful dues and recoverable costs.
Cost Deduction Breakdown (At a Glance)
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Bank’s Dues (Priority First)
- Principal + interest + penalties
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Auction Expenses
- Publication, valuation, court charges
-
Execution Costs
- Bailiff, police, eviction, enforcement
-
Legal Costs
- Lawyer’s fees, litigation expenses
-
Registration & Transfer
- Registration fees, stamp duty
-
Final Outcome
- Remaining amount (if any) → Surplus to borrower
Possession Timeline: What Buyers Should Expect
While financial clarity is important, the real challenge for most auction buyers is obtaining physical possession of the property.
After the auction is conducted, the court typically confirms the sale within one to four weeks, provided no valid objections are sustained. The purchaser is then required to complete the full payment, usually within 30 days.
Following payment, the court issues a sale certificate, which legally establishes ownership. However, this does not automatically grant possession.
To obtain possession, initiate execution proceedings. The court then issues orders for delivery of possession through its officers, including bailiffs, and may authorize police assistance if necessary.
Typical Timeline
- Sale confirmation: 7–30 days
- Full payment: Within 30 days
- Sale certificate: 2–6 weeks
- Possession (smooth case): 2–4 months total
- Possession (contested case): 6–12+ months
Approximate Cost Breakdown
- Court Execution Fees: Tk 5,000 – 20,000
- Lawyer’s Fees: Tk 20,000 – 1,00,000+
- Bailiff & Process Costs: Tk 5,000 – 15,000
- Police Assistance: Tk 10,000 – 30,000
- Eviction & Labour Costs: Tk 10,000 – 50,000
- Miscellaneous Expenses: Tk 5,000 – 20,000
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