Introduction:

The Allahabad High Court recently delivered a significant judgment addressing a dispute related to the delay in payment following the auction of a property. The case revolved around the appellant, a successful bidder in an e-auction conducted due to the liquidation of a company, who later contested the auction terms, alleging non-disclosure of obstructions on the property. The Division Bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar reiterated the principles of the “as is where is and whatever there is” doctrine, emphasizing the responsibility of bidders to inspect auctioned properties and comply with agreed terms.

Appellant’s Contentions:

The appellant argued that due to ill health, they could not inspect the property on the scheduled dates, January 2 and 3, 2023. Subsequently, upon inspection on November 18, 2023, they discovered unauthorized constructions on the land, which were allegedly not disclosed in the e-auction notice. The appellant claimed this amounted to fraud, contending that the e-auction notice was required to disclose such vital information. They submitted that payment of the balance bid amount would only be made after the obstructions were removed. Further, citing their ill health, they sought an extension of time to comply with the payment terms.

Respondent’s Arguments:

The respondents countered that the e-auction notice explicitly stated that the property was being auctioned on an “as is where is and whatever there is basis.” They argued that the appellant had been given ample opportunity to inspect the property before bidding. The appellant’s failure to utilize these opportunities was not the respondents’ responsibility. They emphasized that the appellant had already been granted an extension, with a clear stipulation that no further time would be granted. The respondents asserted that the appellant’s request for additional extensions lacked merit and undermined the terms of the auction agreement.

Judgment:

The High Court upheld the principles outlined in its earlier ruling in Palika Towns LLP v. State of U.P. and Ors. (2022), which clarified the responsibilities of bidders under the “as is where is” doctrine. The Court observed that this doctrine obliges bidders to conduct due diligence, including inspecting the property, before entering into a bid. Failure to do so precludes bidders from later contesting the auction on grounds of property defects.

The Court noted that the appellant had been granted sufficient opportunity to inspect the property and meet the payment deadlines. It rejected the appellant’s claim of non-disclosure of vital facts, highlighting that the auction terms were explicit and transparent. The Court also emphasized that the orders dated July 26, 2023, and December 1, 2023, granting extensions for payment, had attained finality and were not challenged by the appellant.

Regarding the appellant’s demand for obstructions to be cleared before payment, the Court held that it lacked the authority to alter or rewrite the terms of the auction. Such demands, it observed, were inconsistent with the agreed terms and conditions. Finding no irregularities in the company judge’s order, the Court dismissed the appeal.