Transparent secured-asset sale process required under Section 29; undisclosed pre-determined sale and ignored timely offer were invalidated.

A financial corporation's sale of a secured asset under Section 29 must be transparent, fair and reasonably designed to secure the best price, consistent with Article 14. The court found the process vitiated because material terms were not properly disclosed, the negotiation committee finalised the deal before the stated period expired, and the petitioner's timely offer was wrongly ignored. The resulting sale in favour of a third party, and the later transfer, were held unsustainable because they flowed from the same tainted process; the transferees could acquire no better title in view of lis pendens under Section 52 of the Transfer of Property Act. The sale process was struck down and the petitioner's offer was to be reconsidered afresh.

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Issues: (i) Whether the financial corporation's process for sale of the secured asset under Section 29 was arbitrary, unfair and non-transparent, and whether the petitioner's timely offer ought to have been considered. (ii) Whether the sale concluded in favour of the third party and the subsequent transfer could be sustained.

Issue (i): Whether the financial corporation's process for sale of the secured asset under Section 29 was arbitrary, unfair and non-transparent, and whether the petitioner's timely offer ought to have been considered.

Analysis: The sale process had to conform to Article 14 and the statutory duty under Section 29 to secure the best possible price through a fair, open and reasonable procedure. The advertisement and subsequent notice did not disclose the material terms on which the offer had already been accepted, while the negotiation committee finalized the deal before the expiry of the stated period and before a fair opportunity was afforded to other bidders. The petitioner's offer was held to have been received within time, and the corporation's refusal to consider it was found to be hasty, non-transparent and unreasonable.

Conclusion: The petitioner's offer was timely and the corporation's rejection of it was unlawful and unsustainable.

Issue (ii): Whether the sale concluded in favour of the third party and the subsequent transfer could be sustained.

Analysis: The agreement to sell and the completed sale in favour of the third party flowed from the same vitiated process and were held to be contrary to the obligation to obtain the best price. The subsequent transfer to later purchasers could confer no better title, being hit by the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882. The challenged transactions were therefore incapable of protection in law.

Conclusion: The sale in favour of the third party and the subsequent transfer were invalid and liable to be quashed.

Final Conclusion: The entire sale process was struck down, the petitioner's offer was directed to be considered afresh in accordance with law, and the later transferees were not entitled to retain the property on the basis of the impugned transactions.

Ratio Decidendi: A statutory sale by a financial corporation must be conducted transparently and reasonably to secure the best possible price, and a disposition made through a pre-determined and undisclosed process is liable to be invalidated under Article 14 and Section 29.

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