Wednesday, March 23, 2011

Public auction best bet for sale of state property - Supreme Court

Inviting tenders from the public or holding a public auction is the best method for disposal of state property, the Supreme Court has held.

In sale of public property, the dominant consideration is to secure the best price. “This can be achieved only when there is maximum public participation in the process of sale and everybody has an opportunity of making an offer. It becomes a legal obligation on the part of the authority that property be sold in such a manner that it may fetch the best price,” said a Bench of Justices P. Sathasivam and B.S. Chuahan.
However, the highest bidder could not have a right to get the property or any privilege, unless the authority confirmed the auction sale, being fully satisfied that the property fetched the appropriate price and there was no collusion among the bidders.
Writing the judgment, Justice Sathasivam said: “The decision/intention to bring the property for sale shall be published by way of an advertisement in two leading newspapers, one [of them] in the vernacular language having sufficient circulation in that locality. Before conducting sale of immovable property, the authority concerned shall obtain valuation from an approved valuer and, in consultation with the secured creditor, fix the reserve price and may sell the whole or any part of such immovable secured asset.”
If the property of a debtor was being sold, he should be given a reasonable opportunity in the matter of valuation, lest the sale suffer substantial injury, the Bench said.

In the instant case, the Kerala Financial Corporation (KFC) challenged a Kerala High Court order decreeing a suit for specific performance in favour of Vincent Paul for sale of its property.

Disposing of the appeal, the Bench said the KFC had not strictly followed the procedure in bringing the property for sale. It set aside the High Court order and all other transactions either in the form of tender or auction of the property. It directed the KFC to first issue an advertisement calling for tenders by way of a public auction by following the directions contained in this judgment. If the KFC had accepted any deposit from any of the parties by way of tender or bid, it should be returned within 30 days with nine per cent interest from the date of deposit until it was repaid.

No comments:

Post a Comment