Auction – A property was acquired by Union of India u/s.269 UD(1) of the Income Tax Act – Despite several attempts to sell property, several auctions conducted qua the said property failed – Appellant made offer to the Central Board of Direct Taxes to purchase the said property for a sum of Rs.32.11 crores – However, the offer was not accepted – A fresh valuation report of the property was submitted on 04.09.2017 and a reserve price for property was fixed at Rs.30 crores – Appellant made a bid of Rs.30.21 crores – On 26.09.2017 respondent no.3 sent a report to respondent no.2, in which it was stated that the offer made by the appellant was less than the sum of Rs.32.11 crores, which was offered by it earlier – Therefore, a fresh auction to be conducted – Pursuant thereto, auction proceedings with a reserve price of Rs.30 crores were kept in abeyance – Again a valuer was appointed, who valued by the property at Rs.31.07 crores on 23.01.2018 – Earlier auction process which yielded the sum of Rs.30.21 crores was cancelled – Fresh auction was conducted – Aggrieved by the cancellation of the auction process, appellant filed writ petition – In the fresh auction, appellant did not participate and respondent no.4 was the sole bidder, with the bid of Rs.31.10 crores – On the other hand, High Court dismissed the writ petition filed by the appellant – On appeal before the Supreme Court, respondent no.4 made an offer to pay a sum of Rs.35 crores for the said property – Appellant contended that cancellation of auction process was invalid in law – Held: The reasons stated in the report dated 26.09.2017 cannot be said to be arbitrary – Also, a letter dated 06.04.2018 from the Government of India, Ministry of Finance to Chief Commissioner of Income tax, which stated that the other properties of a similar nature in the same area was sold for a considerably higher amount was not arbitrary – Thus, there was no arbitrariness in the entire auction process – It was in the public interest to see that the highest possible price is fetched – Further, there is no reason to doubt the valuation reports – Besides, appellant was given several opportunities to bid in the fresh auction conducted, however, he refrained from participating – This being the case, offer made by the respondent no.4 of Rs.35 crores for the said property accepted – Respondent no.4 to pay the said amount directly to the Union treasury.
Dismissing the appeal, the Court
HELD: 1. In the present case, several auctions were conducted from the year 1994, including an auction as recent as 27.03.2017 which failed to elicit a response from any buyer. Ultimately, the auction with the reserve price of Rs.30 crores, on which the appellant bid was Rs.30.21 crores, was kept in abeyance. The reason that is available from the record is in a Report dated 26.09.2017 in which it was pointed out that this figure was considerably lower than the figure offered by the appellant itself at Rs.32.11 crores and that, therefore, a fresh auction be held. This Court cannot say that the aforesaid reason can be said to be, in any manner, arbitrary. After all, it was in public interest to see that the highest possible price be fetched for such properties. Further, this Court has also seen how at every stage valuation reports were submitted by reputed Valuers, first from Mumbai, and then from Chennai, and has no reason to doubt what has been stated to be the Fair Market Value in any of these reports. It may also be pointed out that though the appellant was given several opportunities to bid in the fresh auction conducted, ultimately, for reasons best known to him, he chose to refrain from participating in the fresh auction that was conducted. [Paras 13,14 and 15] [667-B-E]
2. Following various judgments of the Supreme Court, suffice it to state that the reasons disclosed both in the Report dated 26.09.2017 and the letter dated 06.04.2018 from the Government of India, Ministry of Finance, to the Chief Commissioner of Income Tax, make it clear that there is no arbitrariness that is discernible in the entire auction process. This being the case, this Court dismisses this appeal and hold respondent no.4 to the offer very fairly made before this Court. [Para 20] [668-D-E]
63 Moons Technologies Ltd. (Formerly known as
Financial Technologies India Ltd.) & Ors. v. Union of India & Ors. (2019) 7 SCALE 50 – relied on.
Michigan Rubber (India) Ltd. v. State of Karnataka & Ors. (2012) 8 SCC 216 : [2012] 8 SCR 128 ;
Mohinder Singh Gill v. Chief Election Commissioner’ (1978) 1 SCC 405 : [1978] 2 SCR 272 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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