Summary
The Supreme Court, having itself invited improved sealed bids for a secured asset auctioned under the SARFAESI Act after the High Court had entertained a higher third-party offer, confirmed the sale to the higher bidder, fixed 18% interest on the refunded deposit of the original auction purchaser, and left all other questions, including the quantum of the debt, open.
Issues
- Whether the sale of the secured asset to the higher bidder, which outbid the original SARFAESI auction purchaser in sealed-cover bidding directed by the Supreme Court, should be confirmed.
- At what rate the asset reconstruction company should pay interest on the Rs. 27 crore it had refunded to the original auction purchaser.
- Whether the Court should examine the asset reconstruction company's claim that the debt far exceeded the bid amount, or the borrowers' contention that the asset was sold at a throwaway price.
Held
- Where the High Court hearing the borrowers' writ petition was informed of a third-party offer exceeding the accepted SARFAESI auction bid and the auction purchaser declined to improve its bid, the Supreme Court, in exercise of its inherent power to fetch the best offer for a secured asset reportedly worth much more than what was offered, invited both parties to submit improved bids in sealed covers. (¶¶ 7, 8, 9)
- The best available offer having been accepted and the higher bidder having deposited the sums required of it, the sale in its favour stood confirmed; the Court declined to examine the quantum of the debt or the allegation that the asset was sold at a throwaway price. (¶¶ 12, 13, 18, 19)
- The asset reconstruction company having left the rate of interest to the Court's discretion, the Rs. 27 crore returned to the original auction purchaser was directed to carry interest at 18% per annum, payable within seven days. (¶¶ 14, 15)
- The sale certificate having been issued to the successful bidder, the asset reconstruction company was directed to take steps for delivery of peaceful and vacant possession and all consequential steps in accordance with law within a month, and was given liberty to withdraw the Rs. 33 crore deposited by the successful bidder with the Registry with accrued interest. (¶¶ 16, 17, 20)
- The order was passed in the special facts and circumstances of the case and is not to be treated as a precedent. (¶ 22)
Result
SLP disposed of; sale to the higher bidder confirmed; Rs. 27 crore refunded to the petitioner to carry 18% per annum interest, payable within seven days; possession to be delivered to the successful bidder within a month; Rs. 33 crore deposit releasable to the secured creditor; all other questions left open; order not a precedent.