Court upholds auction process for cooperative bank property, dismisses fraud claims & validates upset price.

The court upheld the legality and propriety of the auction process conducted by the Liquidator for a plot and building owned by a cooperative bank. It found no irregularities in altering auction conditions, fixing the upset price, or allegations of fraud and collusion. The court deemed the upset price adequate based on valuation reports and dismissed claims of improper modifications to auction conditions. Additionally, the court ruled that the absence of the Joint Registrar during the auction did not invalidate it and rejected claims of lack of shareholder awareness. The writ petitions were dismissed, and interim relief was vacated, allowing for further legal recourse within two weeks.

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Issues Involved:
1. Legality and propriety of the auction process.
2. Adequacy of the upset price fixed.
3. Allegations of fraud and collusion in the auction process.
4. Modification of auction conditions.
5. Presence of the Joint Registrar during the auction.
6. Shareholders' awareness of the auction.

Detailed Analysis:

1. Legality and Propriety of the Auction Process:
The petitioners challenged the auction of a plot and multi-storey building owned by Parbhani People's Cooperative Bank Ltd. on grounds that the auction conditions were altered mid-process, proper procedures were not followed, and there was collusion between the auction purchaser and authorities. The auction was conducted by the Liquidator, and the highest bid of Rs. 12.06 crores was accepted. The court found no illegality in the auction process, as the Liquidator followed the prescribed procedures under the Maharashtra Cooperative Societies Act and Rules.

2. Adequacy of the Upset Price Fixed:
The upset price of Rs. 10,64,97,000/- was based on valuation reports from two government-approved valuers and the government ready reckoner. The court reviewed the valuation reports and found that all relevant factors, including the property's commercial nature, location, and condition, were considered. The petitioners' claim that the property could fetch Rs. 25 crores was unsupported by evidence. The court concluded that the upset price was adequate and no illegality was committed in fixing it.

3. Allegations of Fraud and Collusion:
The petitioners alleged fraud and collusion between the auction purchaser and authorities. However, the court found no evidence to support these allegations. The auction was widely publicized, and the highest bid was accepted after negotiations. The court referred to the principles laid down in Vedica Procon Private Ltd. and other judgments, emphasizing that a higher subsequent offer alone is insufficient to reopen concluded auction proceedings unless fraud or collusion is proven.

4. Modification of Auction Conditions:
The auction conditions were modified to hold negotiations only with the highest bidder, based on a Central Vigilance Commission circular. The court found no illegality in this modification, as it was done transparently and in response to objections. The petitioners were aware of the modified conditions and participated in the auction without raising objections.

5. Presence of the Joint Registrar During the Auction:
The petitioners contended that the auction was invalid because the Joint Registrar was not present. The court rejected this argument, noting the absence of any mandatory requirement for the Joint Registrar's presence during the auction.

6. Shareholders' Awareness of the Auction:
The petitioners claimed that the auction was conducted behind their backs. The court dismissed this claim, noting that the auction notice was published in widely circulated newspapers and posted at prominent locations. The petitioners' delayed challenge to the auction further weakened their case.

Conclusion:
The court concluded that the petitioners failed to substantiate their claims of illegality, inadequacy of the upset price, fraud, and collusion. The auction process was found to be proper, and the writ petitions were dismissed. The court also vacated the interim relief granted earlier and stayed the effect of the judgment for two weeks to allow the petitioners to seek further legal recourse.

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