Bombay High Court Upholds Cooperative Bank Liquidation Auction: A Concluded Sale Cannot Be Reopened Merely on a Subsequent Higher Offer
Background and Context
When a cooperative bank enters liquidation, the sale of its assets through a court-supervised auction process raises complex legal questions — particularly when unsuccessful bidders later claim inadequacy of price or procedural lapses. The Bombay High Court, in Datta s/o Sakharam Kothule Vs State of Maharashtra, addressed precisely these issues while adjudicating multiple writ petitions challenging the auction of immovable property belonging to Parbhani People's Cooperative Bank Ltd., a cooperative bank that had entered liquidation in 2007.
This judgment serves as an important reference point for liquidators, cooperative society shareholders, financial institutions, and legal practitioners involved in insolvency and liquidation proceedings under the Maharashtra Cooperative Societies Act, 1960.
Facts of the Case
Parbhani People's Cooperative Bank Ltd. — registered under the Maharashtra Cooperative Societies Act, 1960 — was placed under liquidation in 2007 following allegations of financial mismanagement and irregularities. The Liquidator, appointed by the District Deputy Registrar of Cooperative Societies, was tasked with realizing the assets of the bank.
The subject property comprised a plot admeasuring 2,832.37 sq. metres along with a multistorey building constructed thereon. The property had remained unoccupied since 2007, and the building — approximately 36 years old at the time — had reportedly fallen into a dilapidated condition.
Valuation and Reserve Price
The upset price for the property was determined on the basis of valuation reports submitted by two government-approved private valuers:
- Mr. Sanjay Chandak (qualification: B.E. Civil, NIE, FIV) assessed the property at ₹10,64,17,000/-, accounting for land value, building cost, and miscellaneous amenities.
- Mr. Sanjay S. Kapse, also a government-approved valuer, arrived at a valuation of ₹10,59,56,040/-, incorporating land, building, and ancillary items such as compound walls.
Both valuers treated the property as a commercial property and factored in relevant considerations including:
- Location of the property
- Type and quality of construction
- Total built-up area
- Age and remaining useful life of the building
- Guidance rate as per the Registrar's office (government ready reckoner)
A third valuation, conducted by the Joint Registrar (Class-II), Parbhani-I — functioning as the Government Valuer — placed the property's value at ₹6,66,01,833/-, inclusive of plot and building.
Based on these reports, the Commissioner approved an upset price of ₹10,64,17,000/- via a permission letter dated 08.04.2019, subject to certain conditions, one of which originally required negotiations to be conducted with all bidders.
The Auction Process
The Liquidator issued an e-tender notice on 03.05.2019, publishing it in two leading state-level newspapers with wide circulation and uploading it on the e-tendering agency's web portal. The upset price was disclosed in the notice itself.
The auction was conducted on 28.05.2019. A total of five bidders participated. Following negotiations, the offer of the highest bidder — Kailash Balaprasadji Ajmera — of ₹12.06 crores was accepted by the authorities, and the auction price was subsequently deposited with the Liquidator.
One of the unsuccessful bidders, the petitioner in Writ Petition No. 7784/2019, had submitted an offer of ₹11,21,21,111/- during the auction. After the acceptance of Ajmera's bid, this petitioner raised a fresh offer of ₹13.71 crores — a figure placed before the Court as grounds to reopen the auction.
Petitioners' Contentions
The petitioners across the three writ petitions (W.P. Nos. 7784/2019, 9064/2019, and 104192/19) raised several grounds to challenge the auction: