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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Harinder Singh Sidhu, Lalit Batra, JJ.
Manish Batra – Appellant
Versus
State Of Punjab & Ors. – Respondents
CWP No. 11023 of 2022 (O&M)
Decided On : 16-11-2022
E-auction - Property Sale - State Financial Corporation Act, 1951 - Section 29 - Summary of Acts and Sections: The court discussed the provisions of Section 29 of the State Financial Corporation Act, 1951, which were invoked for the e-auction of the property. The court highlighted the terms and conditions of the e-auction notice, including the bidding process, deposit requirements, and the authority's right to accept or reject bids. The court also emphasized the requirement for approval of the secured creditors before confirming the sale. The judgment concluded that there was no irregularity in the auction process, and the sale was made with the approval of the secured creditors.
Fact of the Case:
The petitioner, a sole proprietor of a firm engaged in manufacturing, participated in an e-auction for the sale of a property. The petitioner alleged that a technical error occurred during the auction, preventing the submission of a higher bid. The petitioner sent a representation the next day, offering a higher bid, but the sale was confirmed in favor of another bidder. The petitioner filed a writ petition seeking to set aside the auction.
Finding of the Court:
The court found that there was no error or glitch in the e-auction process and that the auction was finalized with the approval of the secured creditors. The court also noted that the petitioner's objection was an afterthought, as the representation was sent after the close of office hours the next day. The court concluded that there was no justification to re-open the auction at the petitioner's instance and dismissed the petition.
Issues: The issues involved the alleged technical error during the e-auction, the approval of the secured creditors, and the petitioner's request to re-open the auction.
Ratio Decidendi: The court held that a sale made pursuant to a public auction can only be set aside if it is established that the property was sold at a throwaway price due to fraud, irregularity, or inadequacy in the auction process. The court emphasized that the auction sale cannot be set aside based on subsequent offers made by third parties without serious intent.
Final Decision: The petition was dismissed, and the court found no justification to re-open the auction at the petitioner's instance.
JUDGMENT
Harinder Singh Sidhu, J. - This petition has been filed for setting aside the E-auction conducted from 25.04.2022 to 28.04.2022 pursuant to e-auction notice dated 30.03.2022 (Annexure P-2) including the confirmation of sale if any. It is also prayed that official respondent No.2 be directed to re-auction the property (Lot-1).
2. The petitioner is the sole proprietor of his firm registered in the name of CY International, New Delhi which is engaged in the business of manufacture of motor, controller and differential etc.
3. Respondent No.4 is the company whose property was put to Eauction by respondent No.2 - Punjab State Industrial Development Corporation (PSIDC) through respondent No.3 Punjab Urban Development Authority (PUDA) by invoking the provisions of Section 29 of the State Financial Corporation Act, 1951.
4. As per the of E-auction notice dated 30.03.2022 the property to be sold for recovery of dues was to be sold in two lots. Lot No.I comprised Plot No.B-1, Focal Point Jalandhar measuring 4028 sq. yards on 99 years lease from PSIEC along with building and plant and machinery. As per the auction notice the covered area of the building was 34686 sq. ft. The Plant and Machinery was a Forging Plant. The Reserve price was Rs.616.84 lakh.
The E-auction notice specified that if Lot-I was sold, no auction was to be conducted for Lot-II.
E-auction for the sale of Lot-I was to be conducted from 10.00 AM on 25.04.2022 till 3.00 PM on 28.04.2022.
5. As per the Terms and Conditions specified in the e-auction notice the intending bidders were required to deposit Earnest Money in advance. The bidders not depositing the required Earnest Money would not be allowed to participate in the E-Auction.
6. The other relevant Terms and conditions of E-auction notice dated 30.3.2022 (Annexure P-2) are reproduced as under :-
'9. Original promoters/borrowers/guarantors and second charge holders may join sale proceedings on the date and time mentioned above or they may also make their offers or bring other parties to bid for auction in response to this advertisement as per the schedule indicated above alongwith demand draft of EMD. No Separate notice shall be given to the original promoters/guarantors and their not joining at this stage shall automatically be deemed that they are not interested in the purchase of the captioned assets.
10. The highest bid will be subject to approval of the Secured Creditor(s).
11. The successful bidder shall bear GST or any other tax, Stamp Duty, registration fee, incidental expenses etc. for getting the Sale Deed Registered etc. The Corporation reserves the right to accept or reject any bid or postpone or cancel the sale process without any reason and also to notify any Terms and Conditions of the sale without any prior notice.
12. The possession will be handed over on 'As is where is and Whatever there is basis' after receipt of entire sale consideration.
15. During the E-Auction bidders will be allowed to offer higher bid in inter-se bidding over and above the last bid quoted and the minimum increase in the bid amount must be of Rs. 0.50 lac to the last higher bid of the bidders.
16. The e-Auction will start and close at stipulated date and time at the portal https://puda. e-auctions. in. However, in case a bid in respect of a property is received 10 minutes prior to time fixed for closure of the bids, then the time for closure of the auction would be extended automatically by 10 minutes, until a time when no bid is received in extended time for any property under that auction event.
17. The competent authority shall reserve to itself the right to accept any bid or reject any bid or withdraw any or all the properties from auction or cancel/postpone the e-auction, without assigning any reason thereof.
19. After finalization of E-auction by the Corporation, only successful bidder will be informed through SMS/email (
The main legal point established in the judgment is that a sale made pursuant to a public auction can only be set aside if there is evidence of fraud, irregularity, or inadequacy in the auction proce....
Duty of court is to confine itself to question of legality.
E-auction sanctity upheld absent cogent evidence of technical glitch or procedural flaws; higher post-auction offer insufficient to discard valid highest bid approved by stakeholders in time-bound li....
The obligation to exercise ordinary care and diligence to avoid mistakes in auction participation, and the importance of transparency and certainty in auction processes.
The highest bidder at public auctions only has a right of consideration and is subject to evaluation against the reserve price. No concluded contract comes into being until the bid is accepted by the....
Purpose of auction (open or close format) is to get the most remunerative price and giving opportunity to intending bidders to participate and fetch higher realizable value of property – If that path....
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