1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL LODGING NO.337 OF 2008 WITH APPEAL NO.302 OF 2008 IN COURT RECEIVER S REPORT NO.162 OF 2008 IN SUIT NO.3636 OF 1999 ALONG WITH APPEAL LODG. NOS.336 OF 2008 AND 347 OF 2008 Metropolitan Infrahousing Pvt. Ltd. ..Appellant. Vs. ICICI Bank Ltd. and ors. . ..Respondents. Mr.Aspi Chinoy,Sr. Advocate with Prakash Shah and Sumit Raghoni for the Appellant in Appeal (L) No.336 of 2008 and Appeal(L) No.337 of 2008. Mr. Sachin Chandrama with S. Chopda i/by M.K.Ambalal & Co. for the Respondent No.1-ICICI Bank. Mr. Janak Dwarkadas. Sr.Advocate with Ashish Kamat i/by Karitkeya & Associates for Rajiv Dhawan, Sr. Advocate with Prashant Kunar & V. Mishra i/by Vimadalal & Co. for the 2 Appellant in Appeal No.302 of 2008 and Appeal (L) No.347 of 2008. Mr. D.A.Nalawade. Govt. Pleader for the State. Mr. N.M.Ganguli for the Applicant in Appeal (L) No.336 of 2008. CORAM : D.K. DESHMUKH & R.S. MOHITE, JJ. DATE : 23RD JUNE, 2009. PC : 1. By these appeals, the appellants challenges the order dated 27.6.2008 passed by the learned Single Judge of this court on the Court Receiver s Report No.162 of 2008. By that order, the learned Single Judge has permitted the respondent highest bidder to withdraw the bid. The facts that are relevant and material for deciding these appeals are that ICICI Bank had filed suit No.3636 of 1999 as Debenture Trustees under Debenture Deed dated 21.12.1997. The suit claim was Rs.136.79 Crores. Suit was filed on 12.5.1999. On 30.6.1999, the Court Receiver was appointed on the suit properties including land admeasuring 723,449 sq. mtrs. By order dated 8.2.2002, the Court 3 Receiver was directed to sell the said property. First auction sale was held on 5.7.2002. All the offers were rejected because they were below the reserve bid. Second auction sale was held on 3.9.2002. Again all the offers were rejected as the same were below the reserve bid. On 5.5.2003 third auction sale was held. Again all the bids were rejected for the same reason namely they were below the reserve bid. On 17.1.2004 fourth auction sale was held. Again all the bids were rejected for the same reasons. The record shows that on all the four occasions highest bid did not exceed Rs.60/- Crores. The Court Receiver held auction of 541,446 sq. mtrs. of land. The court on the basis of the valuation report submitted to it which were three in number fixed the reserve bid. However,the amount of reserve bid was not disclosed to anybody. Again auction was held on 22.4.2008 and Citra Developers Ltd. who are the Respondent No.3 in Appeal (L) No.337/2008 were the highest bidders. Their bid was for an amount of Rs.676/- Crores. They also deposited necessary amount as per the terms of the auction sale. The Court Receiver submitted report before the court in 4 relation to the auction. The Court Receiver also sought direction that if the offer of Citra developers is not accepted whether the Court Receiver should re-advertise the sale and re-auction the suit properties. When the report came before the court on 5.5.2008, the court opened the envelope containing the order fixing the reserve bid and recorded that the highest offer of Citra Developers is below the reserve bid and therefore, it cannot be accepted. At the request of the highest bidder, the court disclosed the amount of the reserve bid which was 10650/- Crores. It appears that thereafter, matter was again before the court on 6.5.1988. On that day all the parties were allowed to take zerox copies of the three valuation reports on the basis of which the reserve bid was fixed. The earnest money deposited by the highest bidder was directed to be invested in fixed deposit. The earnest money deposited by the other bidders were directed to be refunded. It appears that the parties moved the learned Judge who had fixed the reserve bid for speaking to the minutes of his order fixing the reserve bid. The learned Judge (Justice S.J. Vazifdar) by his order dated 12.6.2008 observed that there is no mistake 5 in the order fixing the amount of reserve bid and also disclosed reasons why he had fixed the amount of reserve bid which is much higher than the amount of valuation mentioned in the three valuation reports. The learned Judge also observed that, if the learned Judge deciding the Receiver s report thinks that the amount of reserve bid is not workable, the learned Judge can consider the question of modification of the order fixing the reserve bid. On 13.6.2008, highest bidder submitted a praecipe before the learned Judge taking Receiver s report stating that they are desirous of making an application for confirmation of sale in their favour. It was also stated that the learned Judge (Justice S.J.Vazifdar) in his order on the praecipe filed for speaking to the minutes of the order indicated that the request for reduction of reserve bid can be considered by the learned Judge taking Receiver s report. The matter came before the court on 16.6.2008. On that date, the learned Judge directed the parties to file their respective affidavits in support of their contentions and the matter was placed before the court on 27.6.2008. On that date, on behalf of the workers an affidavit was filed. 6 One of the reason given in the affidavit for modification of the reserve bid amount was that the debenture trustees Metropolitian Infrahousing Pvt. Ltd. who are the present appellants also filed an affidavit requesting that highest bid of Citra Developers should be accepted. The reference was made to the previous auction sale. On the same day, the learned Judge passed an order dated 27.6.2008. By that order, firstly, the affidavits filed on behalf of the workers union and the present appellant were taken on record and the highest bidder Citra Developers were permitted to withdraw their offer as they declined to raise the bid. The amount that they had deposited was permitted to be withdraw with interest and the Court Receiver was directed to hold auction again. The present appeal is directed against that order. 2. Short submissions on behalf of the appellants as also workers union are that by the impugned order, the highest bidder has been permitted to withdraw his offer, this could not have been done. According to them even if the order permitting highest bidder to withdraw the offer is 7 taken to mean that the learned Judge has declined to confirm the auction in favour of the highest bidder, then the order does not disclose any reason why the learned Judge has declined to accept the highest bid which offer was substantially more than the offers made in the previous auctions and also more than the value of the property mentioned in all the three valuation reports. The learned counsel further submits that though in the order no reason why the learned Judge has declined to confirm the auction is given, even if it is assumed that the reason is that the offer made by Citra Developers is below the reserve bid then according to the learned counsel there were affidavits filed before the learned Judge requesting the learned Judge to modify the amount of reserve bid. The learned Judge should have therefore, first considered that request and then only taken up the question for consideration whether highest bid is to be accepted or the property should be re-auctioned. There is also a submission made that in any case highest bidder should not have been allowed to take back the amount deposited by him with interest. The learned counsel appearing for the highest 8 bidder however, contended that the highest bid submitted by Citra Developers is in fact not rejected by the order dated 12.6.2008 but it was really rejected on 5.5.2008. According to the learned counsel therefore, as the learned Judge had already declined to confirm the highest bid by order dated 5.5.2008, the order dated 27.6.2008 is really inconsequential. The learned counsel further submitted that though affidavits were filed before the learned Judge for modification of the amount of the reserve bid, nobody argued it before the learned Single Judge and therefore, he has placed his reliance on the ruling in the case of Mohd. Akram Ansari Vs. Chief Election Officer and others reported in (2008) 2 SCC 95 and submitted that the appeal cannot be entertained on that ground. In the light of these rival submissions, if the record of the case is perused, it becomes clear that it is clear that the highest bid given by Citra Developers was considerably higher than any of the bids received for the properties on previous occasion. The order dated 5.5.2008 which is relied on by the highest bidder reads as under. 9 a. The reserve bid has been kept in a sealed cover by the Court Receiver. It is opened. The reserve bid is seen by the court. b. The offer made by the highest bidder is far below the reserve bid. Hence, it cannot be accepted. c. Upon the request of Mr.Dwarkadas on behalf of the highest bidder requesting to disclose the reserve bid to enable the highest bidder as well as the other bidder Metropolitan Infrahousing Pvt. Ltd. to bid, the reserve bid which is sealed is disclosed to the parties. For the area of 5,41,446 sq. meters it is fixed at Rs.1650,00,00,000/-. d. The property which was to be sold in auction was to be demarcated. The DILR has submitted his report. The demarcation is made. The plaintiff has deposited Rs. 10 1 lac on account of costs of demarcation. The DILR fee is shown to be Rs, 1,95,750/-.The plaintiff shall deposit Rs.95,750-/ in the office of Court Receiver within 4 weeks from today. e. All parties shall be entitled to take zerox copies of the DILR report. f. S.O. tomorrow i.e. 6th May 2008 at 3.00p.m. 4. Perusal of this order shows that only a tentative decision is taken by the learned Judge, that, in view of the amount at which reserve bid has been fixed, highest offer cannot be accepted. However, a request was made by the learned counsel appearing for the highest bidder to disclose the amount of highest bid because till that time nobody knew what was the amount of reserve bid. The report of the Court Receiver was not disposed off. Then matter came before the court on 6.5.2008. The learned Judge 11 has referred to three valuation reports. It was contended before the learned Judge by all the parties that, there is a clerical mistake in the order fixing the amount of the reserve bid. The learned Judge allowed the parties to take copies of all the three valuation reports and the amount of deposit given by the highest bidder was directed to be invested. In our opinion, this order clearly shows that highest offer was not rejected by the order dated 5.5.2008 had that been so the earnest money deposited by the Citra Developers could not have been retained by the court. It is clear from this order that the learned Judge was given to understand that the parties were to move Justice (S.J. Vazifdar) contending that there is a clerical error in the mention of the amount of reserve bid in his order. Accordingly, parties moved Justice S.J. Vazifdar for correcting the amount of the reserve bid. However, Justice Vazifdar declined to make any correction holding that there is no arithmetical error. The reserve bid was fixed consciously. He further held that if the reserve bid fixed is not workable, it is for the learned Chamber Judge to entertain any application for modification thereof. He 12 granted liberty to the parties to move the learned Judge taking up Receiver s report for modification in the amount of the reserve bid. It is at this juncture that praecipe was filed by the highest bidder for placing papers of the matter before the Judge taking up Court Receiver s report clearly indicating that they want to move the learned Judge for acceptance of the highest bid. Therefore, in our opinion, there is no substance in the contention raised on behalf of the highest bidder that by order dated 5.5.2008 highest bid was rejected. It is clear from the record that on 20.6.2008, the learned Judge herself has directed parties to file affidavits. Those affidavits were filed. It is clear from the record that affidavits were to be filed in relation to the modification of the amount of reserve bid. But the learned Judge by order dated 27.6.2008 even without applying her mind to the question raised before her in relation to the modification in the amount of reserve bid decided to permit the highest bidder to withdraw his offer. In our opinion, course of action adopted by the learned Judge is improper. It has caused prejudice to the workers as well as their trade union. The 13 learned Judge, in our opinion should have first considered the request made by the workers union to modify the reserve bid. On consideration of that request had the learned Judge come to the conclusion that the amount of reserve bid is correctly fixed, the learned Judge could have passed the order accordingly on the Receiver s report. On the other hand, had she come to the conclusion that the amount of reserve bid needs to be modified then she could have acted accordingly. In our opinion, keeping the request made by the parties for modification in the reserve bid pending, the learned Judge could not have taken the final decision on the highest bid and in any case amount deposited by the highest bidder could not have been ordered to be refunded. We find that the procedure adopted by the learned Judge has caused serious prejudice to the workers. Looking to the history of the matter, in our opinion, it was necessary for the learned Judge to decide the question whether order fixing reserve bid deserves to be modified or not, in view of the liberty granted by Justice S.J. Vazifdar who had fixed the amount of the reserve bid. The reserve bid is fixed to guide learned Judge to decide 14 whether the highest bid is to be accepted or not. 5. So far as the submissions on behalf of the highest bidder relying on the judgment in the case of Mohd. Akram Ansari Vs. Chief Election Officer and ors (cited supra) is concerned, it relates to the point being raised in the Memo of Appeal or Petition and not argued before the court . In the present case, in our opinion, ratio of the judgment of the Supreme Court relied by the highest bidder is not applicable because the learned Judge before whom the proceedings were, it is clear from the record, was fully aware that the parties seek to move the learned Judge to modify the highest bid and the learned Judge had directed the parties to file affidavits. It is clear from the record that the learned Judge has taken those affidavits on record which were filed pursuant to her own order. In our opinion, it was the duty of the learned Judge to refer to the contents of those affidavits. In our opinion, therefore, following order would meet the ends of justice. 15 ORDER a. The order dated 27.6.2008 on Receiver s report is set aside. That report is remitted back to the learned Judge for denovo consideration according to law. The learned Judge is requested to consider the request made on behalf of the workers union for modification in the amount of reserve bid and then take up the report of the Receiver for consideration and dispose of it, according to law. b. As the matter has been pending for long time and even the workers dues are outstanding, the learned Judge is requested to dispose off the matter in any case within a period of three months from the date of receipt of this order. c. By the order dated 27.6.2008, the highest bidder was permitted to withdrawn the amount deposited by him with interest. We have been informed that highest bidder has undertaken in this appeal to bring back that amount, if so directed and therefore, highest bidder is directed to 16 redeposit the amount withdrawn by them within a period of eight weeks from today. d. Appeal is disposed off. e. All the chamber summons and notice of motions stands disposed off. f. On a motion made by the learned counsel for the appellant, Appeal Lodging No.336 of 2008 and 347 of 2008 are allowed to be withdrawn as the question of modification in the amount of reserve bid can now be agitated before the learned Single Judge. ( D.K. DESHMUKH, J.) ( R.S. MOHITE, J. )