Back
2025 Supreme(SC) 732
SUPREME COURT OF INDIA
Dipankar Datta, Manmohan, JJ.
GBJ Hotels Private Limited – Petitioner
Versus
Sriharan Sripathmanathan & Ors. – Respondents
Special Leave Petition (C) No. 7301 of 2025
Decided On : 28-04-2025
Advocate Appeared:
For the Petitioner: Mr. G. Balaji, AOR, Mr. Neeleshwar Pavani, Adv. Ms. Arzu Paul, Adv.
For the Respondent: Mr. Rajeeve Mehra, Sr. Adv., Mr. Anush Raajan, AOR Mr. Pradyumn Yadav, Adv., Mr. Rajiv Shakdher, Sr. Adv. Mr. Jose John, Adv., Ms. Surekha Raman, Adv. Mr. M. Narendran, Adv. Mr. D.Prajesh, Adv., Mr. Shreyash Kumar, Adv. Mr. Karan Khetani, Adv. Ms. Maithili Moondra, Adv., Mr. Jonathan Ivan Rajan, Adv. M/S. K J John And Co, AOR, Mr. Shyam Divan, Sr. Adv. Mr. S. Ravi, Sr. Adv., Mrs. Indu Mathi Ravi, Adv. Mr. R. Sanjeev, Adv., Mr. V. Ramasubramanian, AOR, Mr. Satish Parasaran, Sr. Adv. Mr. Vishnu Mohan, Adv., Mr. Ravi Raghunath, AOR,
The court upheld the auction process under the SARFAESI Act, confirming the acceptance of the highest bid to protect creditor interests.
Headnote:(A) SARFAESI Act, 2002 - Auction process - Financial assistance - Default in repayment - Respondents owed approximately Rs. 135 crore to Edelweiss ARCL - GBJ Hotels emerged as successful bidder for Rs. 108 crore, but GRT Hotels outbid with Rs. 153 crore - High Court directed to accept better offer - Sale certificate issued in favor of GRT Hotels. (Paras 3, 7, 13, 17)
(B) Interest on returned amount - Rate of interest on Rs. 27 crore returned to GBJ Hotels set at 18% per annum. (Paras 14, 15)
Facts of the case:
The petitioner challenged a High Court order allowing GRT Hotels to outbid GBJ Hotels in an auction for assets of a company in default of loan repayment, raising issues of auction integrity and debt recovery.
Findings of Court:
The best available offer was accepted, and the sale certificate was issued to GRT Hotels, with directions for possession transfer.
Issues: The main issues were the validity of the auction process under the SARFAESI Act and the determination of the best offer for the secured asset.
Ratio Decidendi: The court emphasized the importance of accepting the best offer for creditors and confirmed the auction sale to GRT Hotels, while leaving other questions open for future adjudication.
Result: Special leave petition disposed of.
ORDER :
1. GBJ Hotels Private Limited1[GBJ Hotels] is the petitioner in this special leave petition, which impugns an order dated 6th March 2025 passed by the High Court of Judicature at Madras2[High Court] on a writ petition3[Writ Petition No. 1001 of 2025] presented by the respondents 14[Sriharan Sriparthmanathan] and 25[Asiana Hotel Management Company PTE Limited].
2. Respondents 1 and 2 had received financial assistance provided by Edelweiss Finvest Limited. The debt was then assigned to Edelweiss Asset Reconstruction Company Limited, respondent no.36[Edelweiss ARCL]. Respondents 1 and 2 committed default in repayment of their dues. As borrowers, the respondents 1 and 2 owed approximately Rs. 135 crore to the Edelweiss ARCL as on date the impugned order was passed (recorded in paragraph no.4 thereof). In the writ petition, the respondents 1 and 2 had challenged an order of the relevant Debts Recovery Appellate Tribunal, whereby they were ordered to deposit 50% of the sum due, i.e., a little less than Rs.36 crore.
3. Pertinently, in pursuance of proceedings under the SARFAESI Act, 2002, an auction was conducted. Bid of GBJ Hotels for a sum of Rs.108 crore was accepted by Edelweiss ARCL.
4. Prior to the impugned order, the High Court had passed two orders on 26th February 2025 and 5th March, 2025.
5. Upon perusal of the order dated 26th February, 2025, it appears that counsel for the respondent no.1 submitted that he “is ready with a third party who is ready to pay Rs. 120 crores for the same property, which is being sold for Rs. 108 Crores”. Pursuant to this submission, the High Court directed the sum of Rs. 120 crore to be kept in deposit to show the bona fides of interested parties. The third party, although not named in the order, appears to be GRT Hotels & Resorts Private Limited7[GRT Hotels]. This is clear upon a perusal of the letter of intent dated 4th March, 2025 addressed to the respondent no.1 whereby GRT Hotels expressed its intent to purchase the assets of the respondent no.48[Malabar Hotels Private Limited] (wherein the respondents 1 and 2 were directors) and which was under a process of corporate insolvency.
6. Thereafter, the said letter, along with a memorandum of compliance (stating deposit of Rs. 120 crore pursuant to the order dated 26th February, 2025) and demand draft for the said sum, were placed before the High Court. The High Court vide order dated 5th March, 2025 acknowledged the same. Learned counsel for GBJ Hotels was directed to obtain instructions as to whether it was willing to improve its offer.
7. No doubt, GBJ Hotels emerged as the successful auction purchaser in the process of sale conducted by Edelweiss ARCL. However, faced with the situation that the High Court, in course of hearing, was informed of the offer of GRT Hotels that it had kept in deposit with the Registry of the High Court a sum of Rs.120 crore in terms of the order dated 26th February, 2025, the High Court had extended an opportunity to GBJ Hotels to improve its offer. Learned counsel appearing on its behalf on 6th May, 2025 expressed inability to pay a penny more than Rs.108 crore. The High Court thus felt, “better the price, better it is for the creditor”. The concluding part of the impugned order, which records that Edelweiss ARCL has agreed to accept the offer of GRT Hotels and to return the deposit of GBJ Hotels, left GBJ Hotels aggrieved triggering this petition primarily on the ground that sanctity of the auction under the SARFAESI Act has been breached in the process.
8. This special leave petition was considered by us on 24th March, 2025, for the first time. On the oral prayer of Dr. Singhvi, learned senior counsel, GRT Hotels was impleaded as the respondent no.8 in the special leave petition. On the same date, while directing relisting of the special leave petition on 28th March, 2025, we invited GBJ Hotels and GRT Hotels to improve their bids and submit the same in sealed covers by 27th March, 2025. Obviously, this was in
