Properties Pvt. Ltd. & Ors Vs. The Custodian & Ors  Insc 206 (31 March 2005)
R.C. Lahoti, G.P. Mathur & P.K. Balasubramanyan
J U D
M E N T R.C. Lahoti, CJI
appeal is directed against an order of interlocutory nature passed by the Special
Court constituted under the provisions of the Special Courts (Trial of Offences
Relating To Transactions in Securities) Act, 1992 (hereinafter 'the Act', for
Sale of certain properties is being
held. The appellants do not dispute the liability of the properties to be sold
for the recovery of dues. The Special Court
initially directed the High Court Receiver to hold the sale of the properties.
It appears that the High Court Receiver was not able to hold the sale
proceedings expeditiously and to the satisfaction of the Special Court and the Court formed an opinion
that this was because the High Court Receiver was over-burdened with work. The
Court directed further proceedings of sale to be conducted by the Custodian
appointed under the Act as requisite infrastructure for functioning as Receiver
was available with the Custodian.
the Court directed the Custodian to act as Receiver and hold and conduct the
sale obviously under the directions of the Court. The Court also directed the
progress report to be filed by the Custodian before the Court every four weeks.
singular submission made by Dr. Rajiv Dhawan, the learned senior counsel for
the appellants, is that the Custodian plays more or less an adversarial role in
the proceedings before the Special Court
and, therefore, it would not be just and fair to permit the sale proceedings
being conducted by the Custodian.
urged that the proceedings should be held by the High Court Receiver only and
he could be directed to conduct the sale proceedings expeditiously. The prayer
made on behalf of the appellants has been opposed on behalf of the Custodian-
respondent No. 1. It was submitted that ordinarily the Custodian holds and
conducts the sale of immovable properties as directed by the Special Court and an interference with the
impugned order, which is very reasonable and does not cause any prejudice to
anyone, is uncalled for.
learned senior counsel for the appellants invited the attention of the Court to
Gajadhar Prasad & Ors. v. Babu Bhakta Ratan & Ors., (1973) 2 SCC 629,
and submitted that various precautions in holding and conducting the sale to be
observed by any court consistently with the observations made by this Court in
the cited decision are not being observed and, therefore, the property may not
fetch the best price. In particular, it was submitted that the reserve price
has not been determined by the Special Court
as it ought to have been.
heard the learned counsel for the appellants and respondent No. 1, we are
satisfied that an interference with the impugned order passed by the Special
Court, which is purely interlocutory and does not decide any rights of any
party, is uncalled for. Our attention is invited to the decision of this Court
in Canbank Financial Services Ltd. v. Custodian & Ors., (2004) 8 SCC 355 (para
69), wherein this Court has pointed out that one of the main functions to be
performed by the Custodian is to deal with properties in the manner as directed
by the Special Court. The learned counsel for respondent No. 1 pointed that
every precaution is taken to protect the interest of the person whose property
is being sold, as also of all the other parties concerned so as to fetch the
maximum price of the property subjected to sale.
learned counsel for respondent No. 1 also pointed out that the Custodian
follows the same procedure for the sale of immovable assets as followed by the
Official Receiver of Bombay High Court in holding auction of the immovable
assets of notified persons. It was pointed out that the Custodian at first gets
the valuation of the immovable asserts to be sold. The valuation is done by the
valuer appointed either by the Special Court
or on the directions of the Special Court.
The Valuation Reports are submitted by the valuer to the Special Court in a sealed cover.
this, the Custodian releases advertisement in prominent newspapers in the
city/town where the immovable property is located. The last date and time for
receiving the bids is fixed.
Committee to open the bids is formed by the Custodian.
Committee meets on the appointed time and date where bidders are also expected
to be present. All the bids are opened before the bidders and their signatures
are obtained. The bid amount of different bidders is announced to the bidders.
Then all the bidders are given opportunity to enhance the bid amount, if they
so desire. The enhanced bids of all the bidders are compiled and their
signatures are taken. All the bids along with the enhanced bids are then
submitted to the Presiding Judge of the Special Court where the date is fixed for the consideration of the report
of the Custodian on the bids received. The date fixed for consideration of the
report in the Special Court is communicated to all the bidders indicating that
they can enhance their bid before the Special Court, if they so desire. The bidders
who are interested, appear before the Hon'ble Special Court and can enhance their bid. Based on the final bid received
before the Hon'ble
Special Court, the Hon'ble
Judge may consider passing an Order confirming the sale of the immovable
property in favour of a particular bidder. It is seen that the highest bid has
been considered by the Special
Court if it matches
or is higher than the Valuation amount of the immovable property. Hence, the
bidders at first give their bid in a sealed cover to the Custodian. Then
bidders have the option to enhance their bid amount before the Committee formed
by the Custodian. Then again these bidders can enhance their bid amount before
the Special Court.
the course of hearing it was brought to our notice that a public notice for
holding auction of the property in the present case was issued by the Custodian
on the 10th day of March, 2005 and the last date appointed for receiving the bids
is 31st March, 2005. A copy of the public notice was
produced for the perusal of the Court. We do not deem it proper, in the facts
and circumstances of the present case, to interfere midway and alter the course
of the sale proceedings which are already nearing the accomplishment shortly.
to say, before the bids are finalized and the Court accepts any bid, the
appellants herein would have the opportunity of hearing and, if the Court feels
convinced that the property has not fetched the best or the expected reasonable
price then the Court is not powerless to reject all the bids and order auction
afresh, subject to such directions as it may choose to make as to the manner of
holding and conducting the sale and the person who would do it under the directions
of the Court.
being the position of law, the appeal is dismissed.
interim order of stay passed on March 29, 2005 stands vacated.