MPID Act Has No Provision To Release Attached Property To Owner After Auction Order Is Passed: Bombay High Court

"It is also not in dispute that the MPID Act has no provision regarding release of property in favour of the owner, after an order is passed permitting auction," Bombay High Court, in a significant ruling, held that the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act) does not contain any provision for the release of attached property in favor of its owner once an order permitting its auction has been passed.

A bench of Justice A.S. Gadkari and Justice Kamal Khata observed that an accused cannot be permitted to bid for or secure the release of such property merely because it remained unsold during previous auction attempts.

The appellant, arraigned as Accused No. 59 in the National Spot Exchange Limited (NSEL) scam case, sought the release of his property which had been attached under the MPID Act. The property was put up for auction three times with a reserve price of Rs. 48 lakhs, but no buyers came forward. The appellant subsequently filed an application before the Special MPID Court offering to deposit the reserve price to secure the release of the property, which was rejected on October 16, 2024.

The primary question before the court was whether a property owner can seek the release of attached assets under the MPID Act by paying the reserve price after the property fails to sell in public auctions. The court was also called upon to determine the validity of the valuation reports used to set the reserve price.

Absence Of Statutory Provision For Property Release To Owners

The Court emphasized that the MPID Act is a special statute designed to protect the interests of depositors, and its provisions regarding the attachment and sale of assets must be strictly followed. The bench noted that once a Special Court passes an order making the attachment absolute and permitting an auction, the legal process moves toward liquidation for the benefit of the depositors.

"The MPID Act has no provision regarding release of property in favour of the owner, after an order is passed permitting auction."

The bench further clarified that the failure of a public auction to attract bidders does not create a right for the accused or the owner to reclaim the property at the reserve price. The court rejected the appellant's contention that the lack of buyers justified a handover to the original owner upon payment of the last-recorded bid price.

Court Highlights Massive Discrepancy In Property Valuation

A critical aspect of the ruling involved the valuation of the subject property. While the appellant relied on a valuation by HDFC Quicker Realty which pegged the value at Rs. 48 lakhs treating it as agricultural land, the Respondent No. 4 produced a significantly higher valuation. A report by Notiyal and Associates valued the same property at over Rs. 12.55 crores, classifying it as commercial land.

"The Trial Court was right in rejecting the Application upon the Appellant securing an amount of Rs 48 lakhs when the value was Rs. 12,55,56,352/- as per the other valuation report."

The High Court found no reason to disbelieve the higher valuation and noted that allowing the appellant to take the property for a fraction of its actual market value would be detrimental to the interests of the depositors. The bench observed that the Special Court had correctly exercised its discretion in identifying the valuation gap.

Scope Of MPID Special Case And Attachment

The Court noted that the appellant’s property was one of several assets attached in connection with C.R. No. 89 of 2013, involving offences under Sections 120-B, 409, 465, 467, 468, 471, 474, and 477-A of the IPC along with Sections 3 and 4 of the MPID Act. The bench reiterated that the objective of such attachments is to ensure that the proceeds of the crime or the assets of the financial establishment are available for equitable distribution.

"We find no reason to permit the Appellant to bid for the said property merely because the said property remained unsold though put up for auction for three times."

Finding no merit in the appeal, the High Court upheld the order of the Special MPID Judge. The Court concluded that the appellant could not bypass the statutory framework of the MPID Act to regain possession of attached assets, especially when there was a gross disparity between the offered amount and the professional valuation of the land.

Date of Decision: 29 April 2026