M/S Tansimi Educational Society vs Punjab National Bank
2013 Latest Caselaw 3469 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      W.P.(C) 5000/2013

       M/S TANSIMI EDUCATIONAL SOCIETY           ..... Petitioner
                     Through: Ms. Priti Issar, President of Petitioner
                              with Mr. Jagdeep Kumar Sharma,
                              Advocate

                    versus

       PUNJAB NATIONAL BANK                  ..... Respondent
                    Through:          None

%                                    Date of Decision: 06th August, 2013.


CORAM:
HON'BLE MR. JUSTICE MANMOHAN

                              JUDGMENT

MANMOHAN, J (Oral):

CM Appls. 11289/2013 (exemption) in W.P.(C) 5000/2013 Keeping in view the averments in the application, the same is allowed, subject to just exceptions.

W.P.(C) 5000/2013 & CM Appl.11290/2013

1. Present writ petition has been filed under Articles 226 and 227 of the Constitution of India challenging the respondent-bank's valuation of petitioner's secured/mortgaged asset, namely, Site No. 3111, DLF City Phase III, Gurgaon, Haryana.

2. Ms. Priti Issar, President of petitioner society, who appears in person, states that though she does not dispute the right of the respondent-bank to auction the petitioner's property, she disputes the reserve price of Rs. 7.95 crore fixed by the Bank. She points out that the respondent-bank itself had valued the aforesaid property for Rs.7.97 crore in September, 2008 and subsequently on 07th February, 2013 for Rs.8.35 crore.

3. According to the petitioner, the valuation of the secured asset is about Rs.14.80 crore and in support of her valuation, she relies upon the report of Mr. O.P. Bhatia, an approved valuer of the respondent-Bank. In support of her submissions, she relies upon the judgment of the Supreme Court in Kerala Financial Corporation v. Vincent Paul and Another (2011) 4 SCC 171 wherein it has been held as under:-

"(vi) The essential ingredients of sale are correct valuation report and fixing the reserve price. In case proper valuation has not been made and the reserve price is fixed taking into consideration the inaccurate valuation report, the intending buyers may not come forward treating the property as not worth purchase by them."

4. Legally speaking, the reserve price is not the sale price at which an asset is to be sold. In the opinion of the Valuer, the reserve price is the minimum price at which the property should be sold. In essence, the reserve price means the price with which the public auction starts. Auction bidders are not permitted to offer bids below the reserve price and the authority conducting the auction cannot sell the property below the reserve price.

5. If the reserve price is higher than the market price, then the auction will not succeed. It is this scenario which was sought to be addressed and dealt with by the Supreme Court in the paragraph referred to by the petitioner in Kerala Financial Corporation (supra). The aforesaid Supreme Court

judgment is also not applicable to the present case as it is not even the petitioner's case that the Bank has not followed its own rules and guidelines while fixing the reserve price.

6. This Court may also mention that it is settled legal position that a Court examines the decision making process and not the decision. In the present case the petitioner has not submitted that the bank has not followed a fair procedure.

7. In the opinion of this Court, normally two Valuers never agree on the same reserve price. Like all experts, each valuer has its own opinion. Moreover, apart from Mr. Bhatia's valuation, all the three valuations are not far apart.

8. In any event, if the reserve price is low, nothing prevents the petitioner from either bringing a bidder or from participating in the bid and purchasing the property at a price which she believes is the market price.

9. It is pertinent to mention that though the petitioner had defaulted in repaying the loan in the year 2011, the respondent-bank had given the petitioner more than a year's time to repay the debt. Admittedly, as of today, a sum of Rs.2.44 crore is due and payable by the petitioner.

10. Consequently, this Court sees no reason to interfere with the auction notice. However, the petitioner is permitted either through itself or through its nominee or through a third party to participate in the auction conducted by the respondent-bank and bid a higher amount than the reserve price. With the aforesaid observations, present writ petition and application are dismissed.

Order dasti.

MANMOHAN, J AUGUST 06, 2013 js