When a bank or financial institution launches coercive proceedings under the Securitisation Act to recover its dues, and auctions the property mortgaged, such auction cannot be stalled on the ground that a third party, which did not participate in the auction, has now come forward to pay more for the same property, held the Gujarat High Court in Micro Forge India Ltd and others v. State Bank of India .

The Court found there was nothing arbitrary in the auction process and the highest bidder had deposited 25 per cent of the bid amount as required and, hence, earned the right to acquire the property on payment of the remaining amount.

The petitioner had kept quiet all through but, finding the ground slipping under its feet, woke up belatedly to file a writ petition for annulment of the auction on the ground that, later on, it could find a company that was interested in paying more for the same property.

The High Court, rejecting the petition, held that once the auction is conducted legally, its outcome must be accepted with grace by all concerned.

It was always possible for the disgruntled borrower to put up the plea of under-selling the property on auction.

Nothing prevented the person making a belated offer for better terms from participating in the auction and besting the present highest bidder.

(The author is a New Delhi-based chartered accountant.)

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