The Bombay High Court has set aside the auction sale of properties belonging to Primezone Developers Private Limited, which were attached in connection with the National Spot Exchange Limited (NSEL) scam. A Division Bench comprising Justice A. S. Gadkari and Justice Kamal Khata observed that the auction process, conducted under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (MPID Act), was riddled with “suspicious circumstances” and “gross undervaluation.” The Court has ordered the removal of the current Competent Authority and directed the State to investigate the actions of the officials and the valuer involved.
Background of the Case
The case pertains to 35.768 acres of land in Sector 10, Assandh, District Karnal, Haryana, owned by Primezone Developers. The properties were attached following allegations that Mr. Ranjeev Agarwal, who took over Primezone in 2012, had siphoned off ₹31 crores from PD Agro Processors (a clearing member of NSEL) and invested it in the Appellant company.
Following the NSEL scam, which caused a loss of approximately ₹5,600 crores to over 13,000 investors, the State of Maharashtra attached Primezone’s properties under Section 4 of the MPID Act. The Competent Authority subsequently moved to auction these assets to repay the defrauded investors.
Arguments of the Parties
The Appellant, Primezone Developers, challenged the auction on several grounds, including lack of proper notice, the existence of prior mortgages with Union Bank of India, and the fact that the properties were purchased using personal incomes of original directors before Agarwal’s involvement.
The Competent Authority and the State of Maharashtra defended the sale, arguing that the auction was valid, the Appellant failed to raise objections at the appropriate time, and that the sale to the successful bidder, Rudraveerya Developers Ltd (Respondent No. 5), was final upon the issuance of the Sale Certificate in August 2020.
Union Bank of India intervened, asserting that the properties were mortgaged to them for bank guarantees and that the auction ignored their secured interest. Furthermore, bonafide plot purchasers (Appellants in Appeal No. 932 of 2022) argued they had paid over ₹7 crores for small portions of the land and were unaware of the attachment due to poor publication of notices.
The Court’s Analysis
The Court conducted a thorough examination of the valuation reports and the auction procedure. It noted a staggering discrepancy between the two valuations provided by Quiker Realty Ltd. The first valuation in May 2018 estimated the property’s value at ₹60 crores as a “residential plotted development.” However, a second valuation in June 2020 slashed the value to approximately ₹10.41 crores by reclassifying the land as “agricultural.”
The Bench remarked:
“We find it impossible to accept that a property initially valued at ₹60 crores could subsequently be reduced to ₹10 crores for an area measuring approximately 35 acres.”
The Court found that the Competent Authority and the valuer had deliberately misdescribed the property and its location on the auction website. It was also noted that the auction notices were published in newspapers with limited circulation in the area where the property was situated, which the Court termed as “nothing short of a fraud played upon the Court.”
Regarding the bidding process, the Court observed that two of the bidders shared a common director, suggesting the auction was “pre-planned to create an illusion of due process while being conducted in a manner designed to favour Rudraveerya Developers Ltd.”
Findings of Fraud and ‘Scam Within the Scam’
The Court expressed severe dissatisfaction with the conduct of the Competent Authority and Quiker Realty:
“According to us, this is a scam within the scam. The Competent Authority bear primary responsibility, and Quiker Realty is equally complicit. By assisting in undervaluation and facilitating sales to predetermined entities, they deprived investors of the full realization of their funds.”
The Court further stated:
“The Competent Authority cannot itself become a party to the scam and perpetuate a fraud upon the State and the Court. Such conduct warrants serious censure and cannot be countenanced.”
Decision of the Court
In light of these findings, the Court passed the following orders:
- Sale Set Aside: The Sale Certificate dated 31st August 2020 in favor of Rudraveerya Developers Ltd is set aside.
- New Competent Authority: The State is directed to appoint a new Competent Authority within four weeks.
- New Valuer & Fresh Auction: The new Authority must appoint a different valuer and conduct a fresh auction with wide publicity in local and electronic media.
- Disqualification of Valuer: The State is directed to revoke Quiker Realty’s approval and disqualify it from conducting government valuations for at least five years.
- Investigation: The State must investigate and take appropriate action against the members of the previous Competent Authority and the valuer, filing a compliance affidavit within six months.
- Refund: The amounts received from Rudraveerya Developers Ltd are to be returned within four weeks.
The Court concluded by emphasizing its duty to protect the interests of the 13,000 victims of the NSEL scam, noting that the Competent Authority had “defeated the very purpose of conducting an auction.”
Case Details:
- Case Title: Primezone Developers Private Limited v. State of Maharashtra & Ors. (with connected matters)
- Case No.: Criminal Appeal No. 337 of 2026
- Bench: Justice A. S. Gadkari and Justice Kamal Khata
- Date: May 8, 2026
