The Bombay High Court turned down the attempt to stall the sale of a prime bungalow, spread over around 25, 000 square feet, at the Cuffe Parade for the recovery of the dues of a financial institution. On Friday, 29th May 2020, a division bench consisting of Justice Nitin Jamdar and Justice NR Borkar refused to grant any interim relief to the owner of the bungalow.
Apart from challenging the notice issued on 15th April 2020, for the sale of the property, the owner also challenged the validity of a notification issued by the Union Finance Ministry on 9th November 2016, which exempted the borrower from the requirement of consent of the sale of the asset by private treaty. On behalf of the lender, it was claimed that, by taking advantage of the pan- India lockdown due to coronavirus, the property was massively undervalued and transferred illegally via a private treaty. The petitioner's counsel pointed out that, for auction selling, the property was priced at Rs. 158 crores in August 2018, but the price has now been brought down to Rs. 75 crores.
Citing that the alleged default occurred in March 2019, but the financer waited almost a year, the counsel said that no prejudice would be caused if the sale remained until the lockdown had been lifted. He claimed that if a public sale is conducted after the lockout has been lifted, a higher price can be charged for the property that would favor the financial institution as well. The financial institution opposed the plea in Court alleging that an artificial cause of action had been established to rely on the jurisdiction of the High Court to avoid paying a sum of 25 percent of the amount required to file an appeal with the Debt Recovery Appellate Tribunal. Besides, the court was informed that a notice dated 17 February 2020 had set the reserve price for the property at Rs. 82 crores, which had been lowered to Rs. 75 crores since the lockdown had been imposed. In the contentions of the financial institution, the bench noticed that the valuation of the property had been slowly decreased after no response had been issued to the sale notices and that no benefit had been taken of the lockdown to increase the reserve price for the property.
The bench stated, “There is merit in the contention that the petitioner’s sole attempt is to somehow stop the sale of the property, as the petitioner has not tried to bring any buyer or to make a statement before the Debt Recovery Tribunal or to this court that the petitioner will deposit a certain amount or will bring a buyer. The Debt Recovery Tribunal has rightly noted this conduct of the petitioner. In this factual position, we do not find that the attempt to sell the property by private treaty is mala fide.”