1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.4832 OF 2008 ... Mr.Vasudev Karia ...Petitioner v/s. Debt Recovery Appellate Tribunal & Ors. ...Respondent WITH WRIT PETITION NO.4833 OF 2008 ... Ragmet Engineers & Ors. ...Petitioners v/s. Debt Recovery Appellate Tribunal & Ors. ...Respondent ... Mr.K.K.Shroff with Ms.M.P.Phophale i/b Akshar Laws for the Petitioners. Mr.B.S.Nagar i/b Global Law Associates for Respondent No.4. ... 2 CORAM: D.K.DESHMUKH, & K.K.TATED, JJ DATED: 17th December,2009 P.C.: 1. By these Petitions the Petitioners make a grievance about the Orders passed by the DRT and DRAT in relation the auction in respect of two galas namely 108 and 109. Consequent to recovery certificate granted, property of the debtor was sold, which consisted of three galas, i.e. Gala Nos.108, 109 and 110. Respondent No.4 was found to be the highest bidder in relation to two galas. His bid in relation to Galas Nos.108 and 109 was for Rs.13 lakh and Rs.13.5 lakh respectively. It appears that the debtor had raised an objection to the confirmation of the sale in favour of Respondent No.4. Recovery Officer disposed of the objection 3 filed to the auction sale by his order dated 5-6-2007. It appears that after the bid given by the Respondent No.1 was found to be the highest and while objection to the auction were pending consideration before the Recovery Officer, the Petitioners had given a bid of Rs.16 lakh for two galas. Thus the amount offered by the Respondent No.4 for the two galas is Rs.26.50 lakh, whereas the Petitioner was offering Rs.32 lakh. The Recovery Officer by his order referred to above decided to accept the bid given by the Petitioner as he found that the price offered by the Petitioner is substantially high. That order was challenged before the D.R.T. The Appeal was decided by DRT by order dated 5-11-2007. The DRT found that the Recovery officer was not justified in accepting the bid given by the Petitioner because the bid of the Respondent No.4 was found to be 4 highest pursuant to the auction held, which was not found to be defective. The Appellate Tribunal, therefore, directed the Recovery Officer to accept the bid given by the Respondent No.4. This order of the Appellate Authority was again subjected to appeal, but that appeal also failed. Therefore, these two petitions were filed challenging the order of the Appellate authority. It appears that during the pendency of these proceedings the Respondent No.4 applied to the Recovery officer for refund of the money that was deposited by him pursuant to the acceptance of his bid. The Recovery Officer by his order dated 23rd December, 2008 permitted the Respondent No.4 to withdraw the amount, save and except, the amount of Rs.5 lakh which was retained as earnest money. The Respondent No. 4 has also given an undertaking to bring back the money, if so directed. It appears that 5 during the pendency of these petitions, this Court had directed the Respondent No.4 to deposit the amount that was withdrawn by him, but the Respondent No.4 has failed to bring back the money, though the learned Counsel appearing for the Respondent No.4 stated before us that if the Respondent No.4 is given further time he will bring back the money. But in view of the order that we propose to make, we declined to grant any time to the Respondent No.4 to bring back the money. 2. The learned Counsel appearing for the Respondent No.4 relying mainly on the judgment of the Supreme Court in the case of Valji Khimji and Co. v/s. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. And ors, (2008) 145 Company Cases 36 (S.C.) submits that merely because somebody is 6 offering slightly more amount, offer accepted cannot be set aside when there is no defect found in the process of holding the auction. The learned Counsel submits that even the amount that the Petitioner is offering is not substantially higher than what was offered by the Respondent No.4. 3. The learned Counsel appearing for the Petitioner, on the other hand, submits that in the facts which were being considered by the Supreme Court in Valji Khimji s case the sale was confirmed and higher offer was made after confirmation of the sale and therefore, the Supreme court has observed that as there is no defect found in the process of holding the sale, and as the offer made is not so high as to raise doubt in the mond of the court about the genuineness of the sale process conducted earlier, the subsequent 7 offer should not be accepted. The learned Counsel submits that the Petitioner had not only increased his offer i.e. Rs.18 lakh per gala, but he has also deposited the amount in court before the sale was confirmed in favour of the Respondent No.4. The learned Counsel submits that the bid given by the Petitioner for two galas i.e. Rs.36 lakh is substantially higher than the bid given by Respondent No.4. 4. Now, in the light of these rival submissions if the record of the case is perused, following can be taken as etablished position: (i)that in the month of May, 2007 when the Petitioner made the offer, though the bid given by the Respondent No.4 was found to be highest, the sale in his favour was not confirmed. 8 (ii)The difference in the price offered by the Petitioner and the Respondent No.4 cannot be said to be negligible. (iii)That the property is being sold for recovery of the amount of the bank. In other words, the sale-proceeds of the property will go towards repayment of the debt of the bank that is for augmentation of public fund. It has also come on record that though the auction was held in the year 2007, the valuation report on the basis of which the auction was held was of the year 2003 and between the years 2003 to 2007 the property prices in Mumbai, it is common knowledge, have gone up. (iv)It is also established on record that the Respondent No.4 has withdrawn the amount that he had deposited, save and except Rs.5 lakh, and though he had given 9 undertaking before the Recovery Officer that he will being back the amount, if so directed by the Court, he was unable to bring back the amount though this court directed him to bring back the amount. (v)The Petitioner has agreed before us that he is willing to purchase the property for Rs.36 lakh and that he is willing to participate in the process of auction, if this court so orders. He also undertakes to keep deposited, Rs.30 lakh which he has deposited, till the process of fresh auction is completed. 5. Therefore, taking overall view of the matter, in our opinion, following order would meet the ends of justice. O R D E R 10 (i)The order passed by the Recovery Officer as well as the order of Appellate Authority are set aside; (ii)The Recovery Officer shall immediately call for fresh valuation report of the two galas. The amount necessary for getting the valuation report shall initially be paid by the Petitioner. After receiving the valuation report, the Recovery Officer shall proceed to hold a fresh auction of the property in accordance with the procedure that is established by law; (iii)At the fresh auction, the Petitioner shall be entitled to bid. The sale of the property shall be confirmed in favour of the highest bidder. (iv)If no person comes to bid for the property in excess of Rs.18 lakh per gala, then assuming that the highest bid 11 is of the Petitioner for Rs.18 lakh per gala, the bid of the Petitioner shall be accepted; (v)If bid amount for the two galas is in excess of Rs.40 lakh, then whatever amount the Petitioner spent for getting fresh valuation done shall be refuned to the Petitioner. (vi)Till this process is completed, the amount deposited by the Petitioner shall be invested in fixed deposit in a nationalised bank. In case the Petitioner does not turn-out to be the highest bidder, then the amount deposited by him shall be refunded to him with accruals, if any. It is clarified that at the fresh auction, even the Respondent No.4 shall be free to bid, if he complies with the conditions of the auction notice. (vii)The process shall be immediately 12 initiated by the Recovery Officer and shall be completed as expeditiously as possible, in any case within a period of twelve weeks from today. (viii)The Petitioner to serve writ of this order on the Recovery Officer. (ix)The Recovery Officer shall permit the Respondent No.4 to withdraw the amount, which lies in deposit with the Recovery Officer with accruals, if any. (D.K.DESHMUKH, J.) (K.K.TATED, J.)