- According to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, once a bid is confirmed, the borrower cannot bring in another purchaser with a higher offer.
- Justice Bechu Kurian observed that after the borrowers lost their right to redeem the property, the Debts Recovery Tribunal could not have allowed the borrowers to bring in another person to purchase the property by offering to pay an amount marginally higher than what the petitioner bid at.
- The Supreme Court decision in Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd and Ors was cited: "If it is held that every confirmed sale can be set aside, no auction-sale will ever be complete because someone will always come after the auction or its confirmation offering a higher amount."
- The case involved three parties: the petitioner, the auction purchaser, and the respondents, the borrowers and the asset reconstruction company (ARC), respectively.
- Borrowers' loan account was declared NPA on March 31, 2011, and a decree was obtained for Rs.19 crores. The property was taken into possession on January 29, 2019.
- There were no bidders on the previous two occasions of sale.
- Petitioner submitted its bid for Rs.7.51 Crores on the third occasion, when the auction notice was published on 03-12-2020, scheduling the sale for 29-12-2020.
- Borrowers suggested 16 days after the sale that there is another purchaser for Rs.7.60 Crores, the quantum of which is only a meagre sum of Rs.9 lakhs more than what was bid at the auction sale.
- If the said bid is accepted behind the Petitioner's back, the Petitioner will undoubtedly suffer harm, and the Act's scheme will be violated.
- As a result, the petitioner had the right to participate in the securitisation proceedings challenging the sale notice dated 03-12-2020.
- However, the Debts Recovery Tribunal denied the petitioner's request to intervene in the proceedings.
COURT’S OBSERVATION AND ORDER
- The High Court ruled that the rejection order was perverse and that the jurisdiction was exercised improperly, necessitating intervention under Article 227 of the Indian Constitution.
- Senior Advocate V.V. Asokan, Advocates Varghese C. Kuriakose and Sunil Shankar represented the respondents, and Advocates S. Renjith and Aljo K. Joseph represented the petitioner.
- Do you believe that the borrower should be allowed to bring in another purchaser with a higher offer once the bid with another person is confirmed?
- What are your views on the order given by the High Court? Do you agree with their order?
Let us know your views on the issue in the comment section below!