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No body can sell mortgage property below reserve price

Hon’ble Supreme Court in the matter of in Anil Kumar Srivastava Vs. State of U. P. and another, AIR 2004 SC 4299

wherein the Hon’ble Apex Court considered the scope of fixing the reserve price and placing reliance on its earlier judgment in Duncans Industries Ltd. Vs. State of U. P. and others, AIR 2000 SC 355, explained that reserve price limits the authority of the auctioneer. The concept of the reserve price is not synonymous with valuation of the property. These two terms operate in different spheres. An invitation to tender is not an offer. It is an

attempt to ascertain whether an offer can be obtained with a margin. The valuation is a question of fact, it should be fixed on relevant material. The difference between the ‘valuation’ and ‘reserve price’ is that, fixation of an upset price may be an indication of the probable price which the property may fetch from the point of view of intending bidders. Fixation of the reserve price does not preclude the claimant from adducing proof that the land had been sold for a low price.

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Hon’ble Supreme Court in the matter of Desh Bandhu Gupta v. N. L. Anand and Rajinder Singh, (1994) 1 SCC 131: (1993 AIR SCW 3458)

Because the authorized officer of Respondent bank has failed to appreciate the settled legal position as held by Hon’ble Supreme Court in the matter of Desh Bandhu Gupta v. N. L. Anand and Rajinder Singh, (1994) 1 SCC 131: (1993 AIR SCW 3458) the Hon’ble Apex Court held that in an auction sale and in execution of the Civil Court’s decree, the Court has to apply its mind to the need for furnishing the relevant material particulars in the sale proclamation and the records must indicate that there has been application of judicial mind and principle of natural justice had been complied with.

Apex Court held that before putting the assets for sale the Financial Corporation must ascertain the market value of the property, assets should be sold on itemized basis or as a whole, whichever found to be more profitable, and bidders should know the details of the assets or itemized value. Property is to be sold for obtaining the market price and not merely for recovering the dues of the Corporation or any other subsequent charge-holder. In such a case auction is to be held to obtain the best possible price for the mortgaged assets and the best possible price must, in the context, mean the fair market price.

The authority, while assessing the fair market price, must act in accordance with the statutory rules and cannot be permitted to act unreasonably. The reasonableness is to be tested against the dominant consideration to secure the best price Because when the statute provides for a particular procedure, the authority has to follow the same and cannot be permitted to act incontravention of the same. It has been hitherto uncontroverted legal position that, where a statute requires to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on a legal maxim “Expressio unius est exclusio alterius” meaning thereby that if a statute provides for a thing to be done in a particular manner. then it has to be done in that manner and in no other manner and following other course is not permissible.

it is a well settled principle of law laid down by the Hon’ble Supreme Court and various Hon’ble High Courts from time to time that anything which is contrary to the rules is contrary to the law and is thus liable to quashed and set aside at the first instance.

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