Auction sale of secured assets upheld where valuation, publicity, and workmen's pari passu rights were properly protected

A confirmed auction sale of secured assets is not liable to be disturbed where there is no proved fraud, collusion, or material irregularity, and where the sale is preceded by proper valuation, adequate newspaper publicity, and acceptance of the highest bid in the presence of the official liquidator. The note also records that workmen's pari passu rights were protected through remittances towards labour dues and compliance with the statutory distribution scheme. On these facts, the challenge to the auction sale was unsuccessful and the sale was treated as valid.

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Issues: Whether the auction sale of the secured assets was liable to be quashed on the grounds of inadequate valuation, inadequate publicity, or alleged irregularity, and whether the interests of workmen had been protected in accordance with the statutory priority scheme.

Analysis: The secured creditor proceeded under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the company court had already permitted sale of the secured assets subject to involvement of the official liquidator and valuation of the assets through an approved valuer. The reserve price was fixed on the basis of the assessed market value of the land, structures, plant and machinery, and the sale notice was published in newspapers having wide circulation. The auction was conducted in the presence of the official liquidator, bids were received, and the highest bid was accepted and confirmed. The record disclosed no concrete material showing fraud, collusion, or a grossly inadequate price. The workmen's claims were safeguarded by remittances made towards labour dues and by the undertaking furnished under the statutory scheme governing distribution between secured creditors and workmen.

Conclusion: The challenge to the auction sale failed, and the sale was upheld as valid.

Ratio Decidendi: A confirmed auction sale of secured assets will not be set aside in the absence of proved fraud, collusion, or material irregularity, particularly where the sale is preceded by adequate publicity, valuation by an approved valuer, and protection of workmen's pari passu rights through the official liquidator.

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