Bombay HC Quashes Rigged Auction Of Prime Vile Parle Property, Orders Fresh Valuation And New Bidding Process

Mumbai, Feb 06: The Bombay High Court has quashed a court-supervised auction of a prime Vile Parle property after finding that the bidding process appeared to be “rigged” and tainted by possible cartelisation. The court stressed that judicial sales must fetch the highest possible price through a transparent process.

EMDs forfeited, fresh valuation ordered

Justice Madhav Jamdar, on February 4, also ordered forfeiture of the Rs 10 lakh earnest money deposit (EMD) paid by each bidder and directed that a fresh valuation be obtained before a new auction is conducted.

The order followed a Sheriff’s Report submitted by the Deputy Sheriff of Mumbai regarding the sale of leasehold rights in a plot at Vallabhnagar Cooperative Housing Society, JVPD Scheme, Vile Parle (West), measuring 852.50 sq m. Five bidders had responded to the auction notice published in January after site inspections were facilitated.

Suspicious bidding pattern flagged

When bids were opened in court, four bidders quoted between Rs 85 lakh and Rs 1 crore, while Bidder No. 5 — M/s Swarnim Gems & Jewelers Pvt. Ltd. — offered Rs 6.03 crore. A live round of bidding saw Bidder No. 3 — Anay Nayan Shah — gradually raise his offer to Rs 9.50 crore, followed by Bidder No. 5 increasing it to Rs 9.75 crore.

Justice Jamdar noted that both bidders stepped out of the courtroom shortly before the final escalation, with one doing so without permission. The judge observed that their conduct undermined confidence in the process. “This is a Court Auction and therefore, sanctity of the process of the Court Auction has to be maintained,” the court said.

Court cites syndicate and underbidding

“The manner in which Mr Mahesh Soni, Director of M/s Swarnim Gems & Jewelers Pvt. Ltd. (Bidder No. 5), and Mr Anay Nayan Shah (Bidder No. 3) have conducted themselves in this Court Auction clearly shows that the sanctity of the Court Auction is completely lost. The same clearly shows that this Court Auction is affected by formation of a syndicate and underbidding,” the judge noted.

Citing a Supreme Court ruling on the need for strict judicial oversight of auctions, the court emphasised that open bidding must remain free from manipulation to secure a fair market price.

Valuation report criticised

The court was also sharply critical of a valuation report assessing the property at Rs 64.47 lakh, calling it a “gross undervaluation” for a plot in a prime Mumbai neighbourhood. The bidding pattern itself, the judge said, indicated that the true value was far higher.

Bidder claims intimidation

Matters escalated when one bidder stated in court that he had intended to bid Rs 15 crore but was allegedly told to remain silent. Justice Jamdar noted in the order: “At this stage, Bidder No. 1 — Pinakin Chitalia — states that in fact he was intending to give an offer of Rs 15 crore, but he was asked to keep quiet.”

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Holding that “the entire bidding process has been rigged”, the court forfeited all EMDs, directed their investment in a nationalised bank for six months, and ordered the Deputy Sheriff to obtain a fresh valuation before initiating a new auction in accordance with law.

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