Case Note & Summary
The appellant, Ahmednagar District Central Cooperative Bank Ltd., sanctioned a cash credit loan of ₹95 lakh to Mula Sahakari Soot Girni Ltd., a cooperative society. Upon default, the appellant obtained an award for recovery of ₹1,05,98,710/- with interest. Meanwhile, the society was ordered to be wound up under the Maharashtra Cooperative Societies Act, 1960, and the District Collector was appointed as Liquidator. The appellant attached the society's property and obtained a valuation of ₹4.10 crore in 2012. An auction notice in 2013 with upset price of ₹4.10 crore attracted only one bidder (respondent no. 6, Agricultural Produce Market Committee, Rahuri), who later backed out. Subsequently, the High Court, in a pending writ petition regarding the liquidation, directed the Liquidator to sell the property within six months. Fresh valuations were obtained: ₹87,33,200/- by the Sub-Registrar and ₹2,47,48,000/- from the open market. The Director of Handlooms and Textile granted permission for e-tender. An e-auction notice was published on 12th February 2016, with the auction date postponed multiple times via corrigenda displayed on the website. The auction was finally held on 25th May 2016, with three bidders participating, and respondent no. 6 emerged as the highest bidder at ₹2,51,48,000/-. The appellant filed a writ petition in August 2016 challenging the sale on grounds of undervaluation and inadequate publicity, which was dismissed by the High Court. The Supreme Court upheld the dismissal, finding no irregularity. The Court noted that the appellant did not object to the valuation at the time of the e-auction notice, the sale price was marginally above the upset price, and the process was conducted under High Court supervision. The appeal was dismissed with no order as to costs.
Headnote
A) Cooperative Law - Liquidation of Cooperative Society - Auction Sale - Valuation - The appellant bank challenged the auction sale of the society's property on grounds of undervaluation and inadequate publicity. The Supreme Court held that the valuation of ₹2,47,48,000/- by the Liquidator, based on open market assessment, was not grossly inadequate, especially since the appellant did not object at the time of the e-auction notice. The sale price of ₹2,51,48,000/- was marginally higher than the upset price, indicating a fair process. (Paras 21-24) B) Cooperative Law - Liquidation of Cooperative Society - Auction Sale - Adequate Publicity - The appellant argued that corrigenda postponing the auction were not published in newspapers. The Court found that the e-auction notice was published in a daily newspaper, and subsequent corrigenda were displayed on the website, which was sufficient given the nature of e-auction. The participation of three bidders (including the appellant's nominee) negated the claim of inadequate publicity. (Paras 25-27) C) Cooperative Law - Liquidation of Cooperative Society - Auction Sale - Mala Fides - The appellant alleged malice in law due to the sale to respondent no. 6. The Court rejected this, noting that the appellant itself had earlier invited bids from respondent no. 6 and that the sale was conducted under the supervision of the High Court. No evidence of collusion or fraud was presented. (Paras 28-30)
Issue of Consideration
Whether the auction sale of the property of a cooperative society under liquidation was vitiated by undervaluation and lack of adequate publicity, and whether the High Court erred in dismissing the appellant's writ petition challenging the sale.
Final Decision
The Supreme Court dismissed the appeal, upholding the High Court's judgment. The Court found no merit in the appellant's contentions regarding undervaluation, inadequate publicity, or mala fides. The auction sale was conducted in accordance with law, and the sale price was fair. No order as to costs.
Law Points
- Auction sale
- Cooperative society liquidation
- Valuation of property
- Adequate publicity
- Mala fides
- Section 102
- Section 105 Maharashtra Cooperative Societies Act
- 1960
