Supreme Court Confirms Sale to Highest Bidder, Directs 18% Interest on Returned Deposit and Declares GRT Hotels Successful Bidder

A bench of Justices Dipankar Datta and Manmohan heard a special leave petition challenging a Madras High Court order arising from SARFAESI proceedings and an auction sale of secured assets, where GBJ Hotels contested the High Court's acceptance of a higher offer and the return of its deposit.

The Court held that the best available offer would be accepted and confirmed the sale in favour of GRT Hotels, while determining the rate of interest payable by Edelweiss ARCL to GBJ Hotels on a sum of Rs.27 crore returned to GBJ Hotels. The Court recorded that it exercised its inherent power to "fetch the best of offers" and observed that, in the limited exercise before it, it would not adjudicate the quantum of the underlying debt. The Court, in its reasoning, observed: “At this juncture, we do not consider it necessary to examine the quantum of debt. The best available offer has been accepted. We are only tasked today to determine the rate of interest payable by Edelweiss ARCL to GBJ Hotels on the sum of Rs.27 crore which has been returned to the latter by the former and to also pass consequential directions with regard to declaration of GRT Hotels as the successful bidder.” The Court directed interest at 18% per annum on the returned amount and clarified that other questions were left open for adjudication before appropriate fora.

Background The dispute arose after respondents (borrowers) defaulted on financial assistance originally given by Edelweiss Finvest Limited and later assigned to Edelweiss Asset Reconstruction Company Limited (Edelweiss ARCL). In SARFAESI proceedings, a public auction led to acceptance of GBJ Hotels' bid of Rs.108 crore. During High Court proceedings, respondents informed the court of a third-party offer of Rs.120 crore (described by the High Court as demonstrating bona fides), following which the registry received Rs.120 crore as deposit and GBJ Hotels was given an opportunity to improve its offer. The High Court noted that "better the price, better it is for the creditor" and recorded Edelweiss ARCL's agreement to accept the higher offer while returning GBJ Hotels' deposit, prompting GBJ Hotels to approach this Court.

On 24th March 2025 the Supreme Court impleaded GRT Hotels, invited sealed improved offers and, upon receipt, recorded that respondent no.8 (GRT Hotels) outbid GBJ Hotels by offering Rs.153 crore. The Court called upon GRT Hotels to deposit an additional Rs.33 crore, which was placed in a short-term interest-bearing account, and directed relisting. Edelweiss ARCL filed an additional affidavit claiming the outstanding debt exceeded Rs.186 crore; the Supreme Court, however, declined to examine the quantum of debt in this proceeding and limited its determination to interest on the Rs.27 crore returned to GBJ Hotels and confirmation of the sale. The Court ordered interest at 18% per annum: on Rs.10.80 crore from 18.05.2024 to 18.03.2025 and on Rs.16.20 crore from 23.05.2025 to 18.03.2025, to be paid within seven days. The Court recorded that a sale certificate had been issued to GRT Hotels and directed Edelweiss ARCL to take steps for delivery of peaceful and vacant possession within one month, while leaving all other questions open for adjudication. The Court added that "This order is passed in the special facts and circumstances of this case and is not to be treated as a precedent." The special leave petition stood disposed of in terms of the order.

Case Details: Case No.: Special Leave Petition (C) No. 7301 of 2025 Case Title: GBJ Hotels Private Limited v. Sriharan Sripathmanathan & Ors. Appearances: For the Petitioner(s): Mr. G. Balaji, AOR; Mr. Neeleshwar Pavani, Adv.; Ms. Arzu Paul, Adv. For the Respondent(s): Mr. Rajeeve Mehra, Sr. Adv.; Mr. Anush Raajan, AOR; Mr. Pradyumn Yadav, Adv.; Mr. Rajiv Shakdher, Sr. Adv.; Mr. Jose John, Adv.; Ms. Surekha Raman, Adv.; Mr. M. Narendran, Adv.; Mr. D. Prajesh, Adv.; Mr. Shreyash Kumar, Adv.; Mr. Karan Khetani, Adv.; Ms. Maithili Moondra, Adv.; Mr. Jonathan Ivan Rajan, Adv.; M/s K J John & Co, AOR; Mr. Shyam Divan, Sr. Adv.; Mr. S. Ravi, Sr. Adv.; Mrs. Indu Mathi Ravi, Adv.; Mr. R. Sanjeev, Adv.; Mr. V. Ramasubramanian, AOR; Mr. Satish Parasaran, Sr. Adv.; Mr. Vishnu Mohan, Adv.; Mr. Ravi Raghunath, AOR.