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A Land That Was Supposed To Be Sold At A Public Auction Is Now Under Liquidation – In The High Court Of Judicature At Bombay

The Chairman of the Society’s statement to the Court that the Society was willing to transfer up vacant ownership of 3000 square feet of land to the Bank was accepted as an undertaking. Following that, this writ petition was ordered to be considered alongside Writ Petition No.7513/2019. Two intervention applications were submitted in Writ Petition No.2975/2019 throughout the pendency of the proceedings. The Society’s Chairman has since filed Civil Application No.1453/2019, requesting that the ruling dated 29/04/2019 be modified to allow the Society to participate in the auction process, subject to vacating the premises. The Learned Judges A. S. CHANDURKAR AND PUSHPA V. GANEDIWALA, JJ, pronounced the Judgement on 21.01.2022 in JITENDRA N. JAIN V. STATE OF MAHARASHTRA.

The Buldhana District Co-operative Agricultural Rural Multipurpose Development Bank Ltd. (for short, the Bank), a Society registered under the Maharashtra Co-operative Societies Act, 1960, owns property measuring approximately 30000 square feet with construction on it located at Plot No.7/2, Chaitanyawadi, Buldhana. The Bank is in Liquidation, and the Liquidator is the District Deputy Registrar, Co-operative Societies, Buldhana. According to an agreement dated October 20, 2012, the Wardhman Urban Co-operative Credit Society Ltd. Buldhana (for short, the Society) owns roughly 97.24 square meters of the land.

The agreement will be effective from August 1, 2011, to July 31, 2014. The sale of land No.7/2 was recommended in the liquidation proceedings. On September 19, 2017, the Bank, through the Liquidator, published a tender notice requesting offers from parties interested in acquiring such land, which measures about 30000 square feet and includes building. For the sale of the land mentioned above, an upset price of Rs.15,01,58,000/- was determined. Because there was no response to the last tender notice, the Liquidator published a new statement on November 6 and 7, 2017. The upset price from the original tender notification was not changed. In the absence of a response to this notice, the Liquidator published a third tender notice on December 16, 2017, proposing to sell the land as mentioned above at the same upset price.

Swastik Shops & Shop Owners Co-operative Housing Society Ltd. Buldhana (the Housing Society) expressed interest in purchasing the property mentioned above and bid for Rs.5,51,11,111/-. The Housing Society’s proposal was lower than the upsetting price. The Housing Society had approached this Court in Writ Petition No.8450/2018 since no decision had been made on the abovementioned bid.

The main issue presented in these writ petitions is that, although the upset price for the sale of the property in question was specified to be Rs.15,01,58,000/-, the Housing Society’s offer for an amount of Rs.5,51,11,111/- was accepted. Because the sum provided was far less than the upset price specified, such acceptance was not permitted.

Though the tender announcement specified the upset price to be 15,01,58,000/-, it was later discovered that this upset price was decided based on the inaccurate amount provided in the ready reckoner, according to the Liquidator’s reply. As a result, the Liquidator conducted an independent appraisal of the property, which revealed that the property’s true worth was Rs.5,36,00,000/-. A Government-approved Valuer then evaluated it for Rs.5,43,58,000/-, and the Housing Society’s bid was accepted.

The intervenors’ experienced counsel contends that the applicants, as Bank employees, are interested in recovering money due and owing to them from the Bank, which is in Liquidation. The sale of the property at a lower price than its market worth would unquestionably jeopardize the rights of numerous claimants and creditors.

After reviewing the contentions of both sides, the Learned Judge of the High Court is indisputable that the Bank’s land, which measures 30000 square feet and is under Liquidation, was intended to be sold at public auction. Based on an agreement terminated on July 31, 2014, the Society owns about 97.24 square meters of land. The upset price of the property to be sold was indicated as Rs.15,01,58,000/- in tender notices dated 19/09/2017, 6-7/11/2017, and 16/12/2017. According to the records, the Housing Society was the sole bidder that responded to the tender notice with a quote of Rs.5,51,11,111/-. Given the restriction imposed by Clause 22 that no bid below the upset price may be entered, it is evident that the Housing Society’s proposal was not genuine at all. As a result, no legitimate bid quoting the upset price was received in response to the third tender notice dated 16/12/2017. As a result, the only option was to submit a piece of new tender information.

For the reasons mentioned above, the Learned Judge believes that the order dated 31/01/2019 issued by the Joint Registrar, Co-operative Societies, Maharashtra State approving the sale of the land in question according to the Housing Society’s bid, as well as the Liquidator’s subsequent communication dated 16/02/2019 accepting the Housing Society’s proposal, are liable to be set aside. The remaining balance was paid in two instalments of Rs.75,00,000 and Rs.4,68,61,111, for a total of Rs.5,51,11,111. The Liquidator holds this sum. While the earnest money must be returned to the Housing Society in line with Clause 17 of the tender contract, the remainder of Rs.5,43,61,111/- must also be repaid.

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Reviewed by Rangasree

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