Om Sakthi Sekar Vs V. Sukumar & Ors (Supreme Court of India)
Conclusion: A conclusion of an auction sale would not bar re-valuation of the auctioned property, when a question arises regarding the adequacy of valuation or fixation of the reserve price.
Held: Appellant was the successful bidder in an auction conducted by the Recovery Officer pursuant to recovery proceedings initiated by a bank before the DRT. The sale was confirmed in 2011 and a sale certificate was issued. The guarantors challenged the recovery proceedings before the DRAT and thereafter before the High Court. The High Court upheld the validity of the auction and recovery proceedings but remitted the matter to the DRT for reconsideration of the valuation of the properties, observing that if the properties were sold at an undervalue, appropriate directions could be issued against the auction purchaser. Appellant challenged only this limited remand. The issue arose for consideration was whether, after confirmation of an auction sale in recovery proceedings, the High Court was justified in directing reconsideration of valuation of the secured assets. The Supreme Court held that while rights of a bona fide auction purchaser and finality of confirmed sales must ordinarily be protected, such protection was not absolute. Where credible issues arise regarding adequacy of valuation or fixation of reserve price, the Court could permit limited scrutiny to ensure that the sale process secured the best possible value of the property. It was observed that the High Court had not set aside the auction sale, but merely directed reconsideration of valuation by the DRT. Such a limited remand did not invalidate the sale but enables examination of whether the recovery process was fair, transparent, and consistent with law. The Court emphasized that the objective of auction was to maximise realisation of the secured asset, and this principle must coexist with the doctrine of finality of confirmed sales. Accordingly, the remand by the High Court was a balanced and permissible exercise of jurisdiction, warranting no interference. High Court’s direction for limited reconsideration of valuation by DRT upheld.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
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