Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 12.10.2026
Bombay High Court Upholds Auction Process but Increases Property Reserve Price
This Short Article has been prepared & written by Advocate Madhumita Jha. The views expressed are based on her interpretation of the law. She can be reached at her email id jhamadhumita27@gmail.com .
The Bombay High Court partly allowed Sejal Feedsβ challenge to the auction valuation of its mortgaged property, increasing the upset price from Rs.3.84 crore to Rs.4.25 crore while allowing the scheduled auction to proceed.
Background of the dispute
M/s. Sejal Feeds, also known as M/s. Sejal Foods, challenged orders of the District Deputy Registrar and the Divisional Joint Registrar concerning the sale of property mortgaged to secure a loan. The authorities had fixed the propertyβs upset price at Rs.3,84,23,000 for a recovery auction.
The borrower argued that the figure was substantially below the propertyβs value. Its valuer, M/s. Srujan Architects, had estimated the market value at Rs.12,22,82,000. The lending society relied on a valuation by government-approved valuer Gunwant L. Chaudhari, on which the lower upset price was based.
Courtβs view on the valuation process
The petitioner contended that Rule 107(11)(f) of the Maharashtra Co-operative Societies Rules, 1961 required the Registrar to obtain an independent valuation rather than rely on a valuation submitted by the credit society.
The Court rejected that interpretation. It held that the rule requires the Registrar to consider prevailing market prices, ready reckoner rates and a valuation from an approved valuer. It does not mandate a separately commissioned independent valuation in every case.
In this matter, the societyβs report had been prepared by a government-approved valuer. The Court also found that the valuer had undertaken an independent site visit and applied a land rate of Rs.2,750 per sq. metre for 13,972 sq. metres of land. This was materially higher than the ready reckoner rate of Rs.930 per sq. metre.
Bungalow value could not be excluded without support
The Court found merit in one objection: the societyβs valuer had excluded a residential bungalow from the valuation, stating that it fell within a proposed road-widening area.
However, the record did not prima facie establish that the bungalow was actually affected by road widening. The petitioner had raised this issue in revision, but the Divisional Joint Registrar had not addressed it.
The petitionerβs valuer placed the value of the 240 sq. metre bungalow at Rs.41,04,000. To resolve the issue without further delaying the sale, the bank accepted that this amount could be added to the existing upset price.
Revised upset price:
- Existing upset price: Rs.3,84,23,000
- Value added for residential bungalow: Rs.41,04,000
- Revised upset price: Rs.4,25,27,000
No fresh sale proclamation required
Sejal Feeds also sought cancellation of the sale proclamation dated 9 September 2026 and issuance of a fresh notice. The Court declined this request, noting that no legal provision was identified requiring a new time gap merely because the upset price had been revised.
Instead, the Recovery Officer was directed to issue a corrigendum limited to the corrected upset price. The revised figure was to be published in newspapers on 10 October 2026.
Auction allowed to continue
The Court observed that the recovery process had already faced repeated challenges, including litigation by the petitioner and relatives asserting separate objections connected with the mortgaged land. In those circumstances, it found no reason to postpone the auction further.
The auction remained scheduled for 12 October 2026. Apart from increasing the upset price, the Court did not interfere with the recovery or auction process.
Key legal takeaway
The ruling clarifies that, under Rule 107(11)(f), an upset price may be based on a credit societyβs report when it is prepared by an approved valuer and the statutory valuation considerations are met. At the same time, material assets cannot be excluded on an unsupported assumption. Here, the unsupported exclusion of the bungalow resulted in an increase of Rs.41.04 lakh in the reserve price, while the auction itself proceeded without delay.
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Source: Bombay High Court
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