RAJIV KUMAR JINDAL AND OTHERS versus BCI STAFF COLONY RESIDENTIAL WELFARE ASSOCIATION AND OTHERS

Citation: [2023] 4 S.C.R. 79 · Decided: 27-04-2023 · Supreme Court of India · Bench: AJAY RASTOGI · Disposal: Dismissed

Cited by 1 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

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[2023] 4 S.C.R. 79
79
RAJIV KUMAR JINDAL AND OTHERS
v.
BCI STAFF COLONY RESIDENTIAL WELFARE ASSOCIATION
AND OTHERS
(Civil Appeal No(s). 10127–28 of 2011)
APRIL 27, 2023
[AJAY RASTOGI AND BELA M. TRIVEDI, JJ.]
Sick Industrial Companies (Special Provisions) Act, 1985 :
ss. 20(4), 21(c) – Winding up of sick industrial company – Operating
agency to prepare complete inventory – On facts, Operating Agency-
IDBI initiated process to sell the subject assets of the sick industrial
company-BCI in terms of the order passed by the BIFR – Submission
of solitary bid by the appellant – Operating authority accepted the
same – However, the appellant did not adhere to the terms and
conditions of Asset Sale Committee (ASC) – In view thereof, BIFR
did not agree to the proposal to accept the bid – However, the
Appellate Authority-AAIFR set aside the order of BIFR and issued
directions to confirm the sale in favour of the appellant – However,
Division Bench holding that the appellants have not made payment
in terms of the guidelines of the ASC, they failed to furnish the
bank guarantee and to deposit the purchase consideration, restored
the order of the BIFR – On appeal, held : Operating Agency was
under an obligation to obtain the valuation report of the subject
property and after due assessment has to arrive at the reserve price
– Procedure adopted by the Operating Agency was defective –
Appellants-auction bidder neither paid the sale consideration nor
furnished the bank guarantee within 15 days of the acceptance of
the bid in terms of the guidelines – Moreover, the Division Bench of
the High Court holding that there was no competitive bidding which
is a sine qua non for public auction and the guidelines of the ASC
have not been complied with, set aside the order of the AAIFR with
the direction to initiate the process afresh – No error in the view of
the High Court – Appellant was under an obligation to comply with
the requirement and despite opportunity the appellant failed to
comply with the twin conditions – Thus, the High Court rightly set
aside the order of AAIFR.
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SUPREME COURT REPORTS
[2023] 4 S.C.R.
Auction: Object and purpose of – Process of auction/bidding
– Explained.
Dismissing the appeals, the Court
HELD: 1.1 The Operating Agency was under an obligation
to obtain the valuation report of the subject property and after
due assessment has to arrive at the reserve price for the sale of
the property in terms of Section 21(c) of the Sick Industrial
Companies (Special Provisions) Act, 1985 and thereafter has to
proceed with a procedure known to law while adopting a method
for sale of the assets by public auction or by inviting tenders or in
any other manner specified and for the manner of publicity therefor
in terms of Section 18(2)(k) of the Act, 1985. [Para 22][89-D-E]
1.2 In the instant case, it has not been placed on record if
there was any valuation report assessed by the Operating Agency
from the approved valuer of the subject property and, at the same
time, the reserve price of the subject property was never
disclosed/indicated in the first place when the public notice came
to be notified inviting offers from the interested parties. Thus,
the very procedure adopted by the Operating Agency appears to
be defective at its very inception. [Para 23][90-C-D]
1.3 The object of the auction is to secure optimum realizable
value of the property by giving opportunity to the potential buyers
facing competitive bids either in open or closed format. The terms
‘auction’ or ‘bid’ are inter–related as both give the idea of selling
the product to the public. Bidding involves the process where a
person offers a price which is known as a bid. The process of
bidding takes place in a situation where large number of people
show their willingness to buy a particular product or a service
and bidding in a sealed envelope is often used by various
companies, industries and small businesses for assessing the
needs of the public at large. On the other hand, auction is the
process that involves buying and selling goods and services by
offering them for bids, taking bids and selling the item to the
highest bidder and that is possible if there is a competitive bidding
between the bidders. The purpose of auction (open or close
format) is to get the most remunerative price and giving
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opportunity to the intending bidders to participate and fetch higher
realizable value of the property. If that path is cu

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