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Auctions invariably stipulate payment of a prescribed percentage by the highest bidder immediately on fall of hammer. But in auctions of high-value properties, it is simply not possible to pay up in cash this upfront amount and it takes sometime to get the demand drafts made from a bank.
Therefore, it would be wrong for either the loser in an auction or a judgement debtor to assail the auction only on the ground that the highest bidder did not forthwith deposit the prescribed percentage of the amount he had bid. This was the pith and substance of the Supreme Court judgement in Ram Karan Gupta v. J.S. Exim Ltd and Others.
The Respondent had bid the highest amount of Rs 9.60 crore for a building in Delhi and in terms of the terms and conditions of the auction, had deposited demand drafts aggregating to 25 per cent of the bid amount in a couple of days. The Court did not find anything wrong in this because the highest bidder, in all fairness, must be given a reasonable time to arrange for demand drafts.
(The author is a New Delhi-based chartered accountant)
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