2024 (9) TMI 1587 - SC - Indian Laws

Auction sale pertaining to the immovable property - valuation of the property of the society (under liquidation) and the upset price were fixed on the lower side - three bidders had not participated in the auction sale - mala fide could be attributed in respect of the questioned auction sale or not - whether auction purchaser was not a private individual but a body established under the statute i.e. the Agricultural Produce Market Committee Rahuri? - HELD THAT - The appellant was seized of the report of a Government approved valuer who valued the property of the society in excess of Rs.4 crore in the year 2013. Since prices of immovable properties seldom decline with passage of time what was expected of the appellant was to seek interference of the High Court as soon as the auction sale notice dated 12th February 2016 was published. In its letter dated 2nd March 2016 the appellant did not object to the valuation. The auction sale notice dated 12th February 2016 was duly published in the newspapers and did bear reflection of the valuation of the property put up for sale with the upset price yet the appellant remained in slumber. It has never been the case of the appellant that it had no notice/knowledge of such notice - It is failed to comprehend as to what prevented the appellant if at all it was aggrieved by the undervaluation of the property as shown in the notice to take immediate recourse to available legal remedies to stall the process. The explanation that the appellant was busy in obtaining information after the auction sale was conducted for launching an attack on the process of sale could be correct on facts but by that precious time was lost. Law is well-settled that a writ court does not encourage petitions from indolent tardy and lethargic litigants; the writ court comes to the aid of a litigant who approaches it with promptitude and before accrual of third-party rights - That possession of the property had not been taken by the appellant or that its name was not entered in the revenue records are of no significance having regard to the discernible conduct of the appellant in allowing things to drift to its detriment. Thus the matters which have settled for long ought not to be unsettled. The escalation of price demonstrated by the appellant is not surprising. The respondent no. 6 did not contest such facts and figures probably because the High Court was not inclined to interfere and did not call for a sur-rejoinder. But merely because the respondent no.6 is a creature of a statute that would not clothe it with any immunity and to have a property transferred to it at a throw away price. After all the appellant s status has also to be borne in mind. It is not a private bank but a Co-operative Bank which has been brought into existence with specific objects and purposes in mind. The interest of the appellant when its outstanding dues recoverable from the society runs into crores of rupees cannot be brushed aside and deserves due consideration in order to keep the appellant survive in the banking sector. Thus it would only be just and fair to invoke powers conferred by Article 142 of the Constitution of India. Invoking such power and with a view to do complete justice between the parties the respondent no.6 is directed to pay to the appellant a sum of Rs.1, 05, 98, 710/- (without interest) towards full and final settlement of the dues of the appellant from the society - appeal disposed off.

Issues Involved:
1. Valuation of the property and upset price.
2. Participation of bidders in the auction sale.
3. Allegations of mala fide in the auction process.
4. Compliance with procedural formalities under the Maharashtra Cooperative Societies Act, 1960.
5. Timeliness of the appellant's challenge to the auction process.
6. Outstanding dues of the appellant.

Detailed Analysis:

1. Valuation of the Property and Upset Price:
The appellant contended that the valuation of the property at Rs. 2,47,48,000/- was incomprehensible and unacceptable, especially when a Government-approved valuer had valued it at Rs. 4.10 crore in 2013. The appellant argued that the price of immovable property generally increases over time, and the undervaluation was grossly unfair. The High Court, however, did not find substance in this argument, noting that the appellant did not object to the valuation in its letter dated 2nd March, 2016.

2. Participation of Bidders in the Auction Sale:
The appellant argued that the auction process was flawed because only two bidders participated, whereas the law requires a minimum of three bidders. The High Court found this argument unconvincing, noting that three bidders had initially expressed interest and made deposits, but only two turned up at the auction. The Court held that the Government could not be blamed if a buyer, despite showing early interest, did not turn up at the auction.

3. Allegations of Mala Fide in the Auction Process:
The appellant alleged that the auction process was tainted by mala fide actions, including the failure to publish corrigenda in newspapers, which kept many interested buyers away. The High Court did not find any evidence of mala fide, noting that the auction purchaser was a statutory body and not a private individual. The appellant's allegations were deemed unfounded as the relevant officers were not made parties to the writ petition by name.

4. Compliance with Procedural Formalities under the Maharashtra Cooperative Societies Act, 1960:
The appellant contended that the procedural formalities under the 1960 Act were not substantially followed. The High Court acknowledged that procedural formalities might not have been followed to the letter but emphasized that the appellant's negligence allowed the auction process to progress to the finalization of the sale. The Court noted that the appellant did not object to the valuation in its letter dated 2nd March, 2016, and failed to seek immediate legal remedies.

5. Timeliness of the Appellant's Challenge to the Auction Process:
The High Court criticized the appellant for its delayed challenge to the auction process, noting that the appellant was aware of the upset price much before the auction took place. The Court held that the appellant's conduct of waiting and watching the auction process unfold before challenging it was unacceptable. The writ court does not favor petitions from indolent litigants and expects prompt action before third-party rights accrue.

6. Outstanding Dues of the Appellant:
The appellant claimed that it had not received any payment towards its dues, which had swelled to over Rs. 5 crore. The High Court directed the respondent no.6 to pay the appellant a sum of Rs. 1,05,98,710/- (without interest) towards full and final settlement of the dues. This amount was to be paid within three months, failing which it would carry simple interest at 6% per annum until payment.

Conclusion:
The Supreme Court upheld the High Court's judgment, refusing to interfere with the sale effected in favor of the respondent no.6. However, invoking Article 142 of the Constitution of India, the Court directed the respondent no.6 to pay the appellant Rs. 1,05,98,710/- towards full and final settlement of its dues. The remaining balance amount of Rs. 29,78,499/- was to be disbursed to other creditors, excluding the appellant, as per priority. If no other creditors remained, this amount could be disbursed to the appellant.

Final Disposition:
The civil appeal was disposed of on these terms, with each party bearing its own costs. Pending applications were also disposed of.

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