'100 Crore Property Sold At 10 Crore' : Supreme Court Questions Valuer For Auction Under MPID Act

The Supreme Court today refused to stay a Bombay High Court judgment that found serious irregularities in the valuation and auction of a Haryana land parcel attached in the NSEL scam and questioned the role of the valuer whose assessment had formed the basis of the sale.A bench of Chief Justice of India Surya Kant and Justice Joymalya Bagchi ultimately allowed valuer Quiker Realty to withdraw his special leave petition and pursue a review before the High Court.The Court was hearing a special leave petition filed by a valuer challenging the High Court order directing the valuer to be blacklisted for five years. During the hearing, the Court repeatedly questioned the valuation exercise that led to a 35-acre land parcel in Haryana being sold for about ₹10 crore after earlier valuations had placed its worth at several times that amount.“We are not going to suspend or stay the operation of this order prima facie. The property of ₹100 crore you are selling through dubious procedure to a person for ₹10 crore, and the purchaser is not a government entity, it is somebody who is a private builder of that very area, knowing fully well that what is the value of the land. How are you here?”, the CJI said.The land was initially valued by the petitioner at around ₹74.74 crore using a discounted cash-flow method, with a distress-sale value of about ₹56 crore and circle-rate value of ₹95 crore. Two auctions conducted with a reserve price of ₹60 crore failed to attract bidders. Subsequently, a fresh valuation carried out in June 2020 assessed the land at around ₹10.41 crore on an “as is where is” basis after treating it as agricultural land. The property was ultimately auctioned to Rudraveerya Developers Ltd for about ₹10.09 crore. In its May 8 judgment, the Bombay High Court set aside the auction sale after finding that the property had been wrongly reclassified as agricultural land despite being situated in a residential sector, no site inspection had preceded the revised valuation, and the auction process suffered from serious irregularities. The High Court held that the Competent Authority and Quiker Realty appeared to have engineered the sale in favour of the successful bidder, described the episode as a “scam within the scam”, and directed replacement of the members of the Competent Authority under the MPID Act. Quiker Realty Filed the present SLP against this judgment.During the hearing, the Court also expressed concern over the functioning of MPID courts while discussing the High Court's findings against the Competent Authority. Chief Justice Surya Kant recalled an earlier matter in which despite a Supreme Court stay order, the MPID court had continued executing sale deeds. “This MPID Court, in fact, in one of the matter, I also caught them. They are so daredevil. What a corruption going on and the High Court must take notice of it. In one of the matters, despite the fact that we had through a judicial detailed order, we had stayed and we constituted a high-powered committee presided or headed by a former judge of this court to take over the assets of the company. Even then this MPID Court from backdate continued to execute sale deeds. We don't know what kind of Court it is there”, he said.The remarks came while the Court was questioning the government's objection to observations made by the High Court against the Competent Authority under the MPID Act.Counsel for the State informed the Court that Maharashtra was in the process of filing its own SLP against the direction for replacement of the members of the Competent Authority.The bench strongly criticised this. Justice Kant observed, “We will impose exemplary cost on the state. There is a big fraud that has been detected by the High Court. In fact, the High Court should have directed registration of FIR also.”Chief Justice Kant said the High Court had in fact shown restraint, as it could even have directed registration of an FIR against those involved in the transaction.After being informed that the Competent Authority was an officer of the rank of Deputy Collector, Justice Kant remarked, “He should have been arrested.”The Court questioned why the State was seeking to defend an officer whose conduct had been criticised by the High Court. Justice Bagchi pointed out that the office of Competent Authority was institutional and could be discharged by another officer if confidence in the incumbent had been lost.When state counsel argued that removal of the Competent Authority would disrupt an ongoing settlement process involving thousands of NSEL investors, the Court remained unconvinced. The Court noted that over 7,000 depositors had already been settled and around ₹800 crore had been distributed, but opined that replacement of one officer would not affect continuation of the scheme. Justice Bagchi cautioned that if the State continued to insist on defending the officer, it could create an impression that higher authorities also had an interest in retaining him.In the...

'100 Crore Property Sold At 10 Crore' : Supreme Court Questions Valuer For Auction Under MPID Act

Amisha Shrivastava

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Amisha Shrivastava

'100 Crore Property Sold At 10 Crore' : Supreme Court Questions Valuer For Auction Under MPID Act

Amisha Shrivastava

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Amisha Shrivastava

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