Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
The Telangana High Court dismissed Union Bank of India's appeal against the cancellation of a property auction of a company under liquidation. The dispute arose when the bank conducted its own auction at a reserve price of around INR 25.80 crore, despite a separate buyer willing to pay over INR 32 crore and the objections of the official liquidator. The court ruled that banks must involve the liquidator and follow proper procedures to ensure fair value and protect creditor interests. The decision reinforces legal safeguards in asset sales during liquidation.
The Telangana High Court rejected an appeal by Union Bank of India against an earlier order that cancelled its auction of a property belonging to a company under liquidation. The company, based in Hyderabad, had faced financial difficulties leading to a winding-up order. Advertisement
Union Bank had conducted an online auction independently, setting a reserve price of around INR 25.80 crore, while another interested party, approved by the company's former director, had offered over INR 32 crore. The official liquidator, tasked with managing the company's assets and ensuring fair recovery for all creditors, objected to the bank proceeding without their involvement. The court noted that the bank bypassed proper procedures, which could compromise the interests of creditors and stakeholders.
A division bench of Justices K. Lakshman and V. Ramakrishna Reddy emphasized that while banks have the authority to recover dues under laws like the SARFAESI Act, such powers cannot override liquidation rules once a company has entered winding-up. The court highlighted the liquidator's role in ensuring transparency, protecting the rights of secured and unsecured creditors, workmen, and other stakeholders, and maximizing the sale value of assets. By excluding the liquidator, the bank failed to uphold these responsibilities.
The bench upheld the earlier order cancelling the auction and dismissed the appeal. The judgment reaffirms that asset sales in liquidation must follow statutory procedures and involve the official liquidator. It also sends a clear message that banks cannot prioritise recovery over proper legal processes and fair treatment of all parties involved.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
