Why Auctions of Attached Properties Demand Open Bidding

The matter arose from properties attached under the Maharashtra Protection of Interest of Depositors (Financial Establishments) Act in connection with the NSEL scam. The Competent Authority appointed under the MPID Act, assisted by valuer Quiker Realty Ltd., conducted a sale that culminated in a Sale Certificate dated 31 August 2020 in favour of Rudraveerya Developers Limited. Primezone Developers Private Limited and other appellants challenged that sale before the Bombay High Court in Criminal Appeal No. 337 of 2026 and connected appeals.

The Court's Concern

The Division Bench of Justice A.S. Gadkari and Justice Kamal Khata focused on whether the auction process gave intending bidders a fair opportunity to participate and whether the price realised reflected the true value of the attached assets. The Bench observed that wide publicity and open competition are essential safeguards in auctions of attached property. In its words, where that path is cut down or closed, the possibility of fraud, inadequate price, or underbidding would loom large. The Court emphasised that the discretion to confirm such sales must be exercised wisely and with circumspection on the facts of each case.

Directions Issued

The Bench passed a common order across the appeals. The Sale Certificate dated 31 August 2020 was set aside, although the attachment over the properties was directed to continue pending reauction. The State was directed to appoint a new Competent Authority within four weeks. That new Competent Authority must appoint a fresh valuer in place of Quiker Realty and conduct a fresh auction with wide publicity in local newspapers and electronic media.

Amounts received from Rudraveerya Developers Ltd. were ordered to be refunded within four weeks of uploading of the order. The State was further directed to investigate and take appropriate action against the members of the earlier Competent Authority and the valuer Quiker Realty, and to file a compliance affidavit after six months. Criminal Appeal No. 932 of 2022 was allowed, the other appeals were disposed of in those terms, and the connected interim applications were closed.

Why It Matters

The ruling reinforces that auctions under the MPID Act are not private commercial deals but mechanisms to protect depositor interests. Competent Authorities and their valuers must demonstrate transparent process, real publicity, and competitive bidding. Sales that fall short can be unwound even years later, and individual officials and valuers can face investigation.

Takeaway: Successful bidders in MPID auctions cannot rely on a Sale Certificate alone if the underlying process lacked open publicity and competitive participation.