In the Bhagvati Infra–Aura City dispute, the Bombay High Court has quashed the 2026 auction conducted to recover MahaRERA dues, holding that the mandatory 30-day notice under Section 194(2) of the Maharashtra Land Revenue Code was breached, the property description and bidding process were defective, and the record indicated manipulation to favour the auction purchaser. The Court clarified that where auction of immovable property is conducted under the Maharashtra Land Revenue Code, the mandatory requirement of at least 30 days’ notice under Section 194(2) must be strictly followed. An auction held before expiry of that period is not a procedural defect or curable irregularity; it is a gross illegality that vitiates the sale itself.
The Court also clarified that a fresh auction notice issued after a failed earlier process must independently comply with the statutory notice requirements. Such a fresh notice cannot be defended as a mere continuation of the earlier notice where the text and circumstances show otherwise. Further, it was laid down that an auction sale can be invalidated not only for breach of the statutory notice period, but also for cumulative defects such as misdescription of property, absence of required bid documents, failure to verify bidders’ financial capacity, lack of proper valuation, and conduct suggesting mala fides or collusion by the authority conducting the sale.
Also Read Karnataka HC: Unclaimed Land Advance Cannot Be Taxed Without Property Deal or Forfeiture
The Division Bench comprising Justice A. S. Gadkari and Justice Kamal Khata found the Tehsildar’s conduct deeply questionable from the record itself. The Court noted that two auction notices had been issued, one on 7 April 2026 and another on 27 April 2026, and even the Tehsildar’s affidavit did not properly explain why a fresh notice was issued despite the developer’s undertaking before the Court to deposit money. A significant point that troubled the Court was that the Tehsildar could not clearly answer under which statutory provision or rule the auction had been conducted. The Court recorded that when asked this basic question, the Tehsildar took nearly 20 minutes to respond and appeared unaware of the governing legal provision, which reinforced the Court’s doubts about mala fides.
The State argued that, since there was no specific execution procedure under the MahaRERA framework, the authorities followed the Maharashtra Land Revenue Code, 1966. The Court therefore examined Sections 192 to 195 of the MLRC, especially Section 194(2), which mandates at least 30 days’ notice before sale of immovable property, and the proviso to Section 195 requiring a fresh proclamation if a postponed sale is held beyond 30 days unless waived by the defaulter. On the notice issue, the Court held that both auction notices were legally defective. The first notice dated 7 April 2026 fixed auction on 20 April 2026, which was less than the mandatory 30-day period. The second notice dated 27 April 2026 was published on 28 April 2026 for an auction on 29 April 2026, effectively giving only a two-day or even one-day notice window. The Court said this was plainly impermissible and was issued only to deceive.
The Court also found that the auction notice incorrectly described the property. The minutes of meeting dated 29 April 2026 showed that even the auction purchaser had pointed out an error in the survey number mentioned in the notice, which the Tehsildar said would be corrected. The Court held that this misdescription itself made the notice invalid. Serious irregularities were also found in the bidding process. The original records were loosely tied with thread and not maintained in a proper file, making them vulnerable to manipulation. The Court deprecated this manner of maintaining public records. It further found that mandatory bid documents like GST documents and balance sheets were not submitted by the bidders, yet the auction was still completed.
The Court noticed that only a very limited number of persons participated, and two bidders were from the same village and lived very close to each other. One of the bidders was an agriculturist and had not produced the required documents or proof of financial capacity. These circumstances added to the Court’s suspicion about the fairness of the auction process. The valuation process was also found defective. The Tehsildar had not obtained valuation from a government-approved valuer and had proceeded only on ready reckoner value. The Court held that this was another independent reason to set aside the auction.
The Court made strong findings against the Tehsildar and said that the affidavit filed by the Tehsildar was vague, contradictory and appeared to be a calculated attempt to mislead the Court. In particular, the Court found inconsistency in the Tehsildar’s stand that SBI’s letter dated 18 October 2025 was supposedly an NOC, while at the same time the Tehsildar had himself sought an NOC from SBI again on 4 February 2026. According to the Court, this contradiction showed that the Tehsildar had not approached the Court with clean hands.
The Court ultimately concluded that the Tehsildar acted mala fide, with undue haste, and apparently to benefit the auction purchaser. It also remarked that the auction purchaser’s conduct in strongly resisting even a re-auction proposal reinforced the inference that the auction was designed to favour him. The Court went so far as to say the record suggested collusion and a rigged auction. The Court also criticised the Collector for casually appearing through video conference while travelling by car, calling it impermissible and showing scant respect to the Court. Separately, the Court examined SBI’s role and observed that, despite being the secured creditor with a charge over the property, SBI had not taken meaningful steps for over eight years to sell the project and recover dues, which prejudiced not only the borrower and public exchequer but also the flat purchasers waiting for recovery.
Also Read Patna HC Quashes Land Compensation Order Based on Illegal Six-Man Committee Report
Briefly, the two connected petitions arose out of the “Aura City” residential project at Shikrapur, Pune. In one petition, the developer, M/s Bhagvati Infra, challenged the auction held by the Tehsildar on 29 April 2026. In the connected petition, flat purchasers sought enforcement of MahaRERA recovery orders for return of their money by sale of the developer’s properties.
The case background was that several flat purchasers had booked units in the project and paid money to the developer, but possession was not handed over within time. The purchasers then approached MahaRERA, which allowed their claims in 2018. In 2023, MahaRERA directed the Collector to attach the project property, following which mutation entries were made in the Government’s name. An earlier auction process was initiated in June 2023, but it was cancelled because SBI did not permit sale of part of the land while it was itself attempting to deal with the entire mortgaged project. Later, the Tehsildar again issued auction notices in April 2026 and proceeded with an auction on 29 April 2026, which led to the present challenge by the developer.
The developer told the Court that it was willing to refund the purchasers and had even given an undertaking in the connected writ petition to deposit part of the encumbrance amount. According to the developer, despite this undertaking being accepted by the Court, the Tehsildar hurriedly issued a fresh auction proclamation on 27 April 2026 fixing the auction for 29 April 2026, and refused to accept demand drafts when the developer tried to tender them on the auction date. The flat purchasers, however, made it clear that their main concern was recovery of their money at the earliest. They stated that if the developer genuinely paid them in terms of the MahaRERA orders, they had no objection, but their interests had to remain protected until actual payment was made.
