Gbj Hotels Private Limited vs Sriharan Sripathmanathan

REPORTABLE 2025 INSC 585

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (C) NO. 7301 OF 2025

GBJ HOTELS PRIVATE LIMITED …PETITIONER

VERSUS

SRIHARAN SRIPATHMANATHAN & ORS. …RESPONDENTS

ORDER

1. GBJ Hotels Private Limited1 is the petitioner in this special leave petition,

which impugns an order dated 6 th March 2025 passed by the High Court of

Judicature at Madras2 on a writ petition3 presented by the respondents 14 and

25.

2. Respondents 1 and 2 had received financial assistance provided by Edelweiss

Finvest Limited. The debt was then assigned to Edelweiss Asset

Reconstruction Company Limited, respondent no.36. Respondents 1 and 2

committed default in repayment of their dues. As borrowers, the respondents

1 and 2 owed approximately Rs. 135 crore to the Edelweiss ARCL as on date

the impugned order was passed (recorded in paragraph no.4 thereof). In the

writ petition, the respondents 1 and 2 had challenged an order of the

relevant Debts Recovery Appellate Tribunal, whereby they were ordered to Signature Not Verified Digitally signed by JATINDER KAUR Date: 2025.04.29 1 GBJ Hotels 17:18:09 IST Reason:

2 High Court 3 Writ Petition No. 1001 of 2025 4 Sriharan Sriparthmanathan 5 Asiana Hotel Management Company PTE Limited 6 Edelweiss ARCL 2

deposit 50% of the sum due, i.e., a little less than Rs.36 crore.

3. Pertinently, in pursuance of proceedings under the SARFAESI Act, 2002, an

auction was conducted. Bid of GBJ Hotels for a sum of Rs.108 crore was

accepted by Edelweiss ARCL.

4. Prior to the impugned order, the High Court had passed two orders on 26 th

February 2025 and 5th March, 2025.

5. Upon perusal of the order dated 26th February, 2025, it appears that counsel

for the respondent no.1 submitted that he “is ready with a third party who is

ready to pay Rs. 120 crores for the same property, which is being sold for Rs.

108 Crores”. Pursuant to this submission, the High Court directed the sum of

Rs. 120 crore to be kept in deposit to show the bona fides of interested

parties. The third party, although not named in the order, appears to be GRT

Hotels & Resorts Private Limited 7. This is clear upon a perusal of the letter of

intent dated 4th March, 2025 addressed to the respondent no.1 whereby GRT

Hotels expressed its intent to purchase the assets of the respondent no.4 8

(wherein the respondents 1 and 2 were directors) and which was under a

process of corporate insolvency.

6. Thereafter, the said letter, along with a memorandum of compliance (stating

deposit of Rs. 120 crore pursuant to the order dated 26 th February, 2025) and

demand draft for the said sum, were placed before the High Court. The High

Court vide order dated 5th March, 2025 acknowledged the same. Learned

counsel for GBJ Hotels was directed to obtain instructions as to whether it

was willing to improve its offer.

7. No doubt, GBJ Hotels emerged as the successful auction purchaser in the

process of sale conducted by Edelweiss ARCL. However, faced with the 7 GRT Hotels 8 Malabar Hotels Private Limited 3

situation that the High Court, in course of hearing, was informed of the offer

of GRT Hotels that it had kept in deposit with the Registry of the High Court a

sum of Rs.120 crore in terms of the order dated 26 th February, 2025, the High

Court had extended an opportunity to GBJ Hotels to improve its offer.

Learned counsel appearing on its behalf on 6 th May, 2025 expressed inability

to pay a penny more than Rs.108 crore. The High Court thus felt, “better the

price, better it is for the creditor”. The concluding part of the impugned

order, which records that Edelweiss ARCL has agreed to accept the offer of

GRT Hotels and to return the deposit of GBJ Hotels, left GBJ Hotels aggrieved

triggering this petition primarily on the ground that sanctity of the auction

under the SARFAESI Act has been breached in the process.

8. This special leave petition was considered by us on 24 th March, 2025, for the

first time. On the oral prayer of Dr. Singhvi, learned senior counsel, GRT

Hotels was impleaded as the respondent no.8 in the special leave petition.

On the same date, while directing relisting of the special leave petition on

28th March, 2025, we invited GBJ Hotels and GRT Hotels to improve their bids

and submit the same in sealed covers by 27 th March, 2025. Obviously, this

was in exercise of our inherent power to fetch the best of offers when the

secured asset was reportedly worth much more than what was offered before

the High Court.

9. Order dated 28th March, 2025 passed by us recorded as follows:

“1. Pursuant to the earlier order dated March 24, 2025, GBJ Hotels Private Limited/petitioner and GRT Hotels and Resorts Pvt. Ltd./respondent no.8 have submitted their offers in sealed covers.

2. Respondent no.8 outbids the petitioner by almost Rupees seventeen crore by offering Rupees one hundred fifty-three crore.

3. We call upon the respondent no.8 to deposit, with the Registry of this Court, Rupees thirty-three crore by 9 th April, 2025. In default, the bid of the petitioner will be considered together with forfeiture of such amount out of Rupees one hundred twenty crore deposited by the 4

respondent no.8 earlier as this Court would deem fit and proper.

4. In case the deposit is made by the respondent no.8, Registry shall invest the said amount in a short-term fixed deposit interest bearing account of a nationalized bank on auto renewal basis, until further order.

5. Relist the special leave petition on 17th April, 2025.”

10. The next order dated 17 th April, 2025 went on to record that GRT Hotels had,

in compliance with the order dated 28 th March, 2025, deposited in the

Registry an additional sum of Rupees 33 crore, which was invested in

compliance with the directions contained in such order. GRT Hotels was

declared to be the successful bidder. However, Edelweiss ARCL was called

upon to file an affidavit within a week from date indicating therein the sum

that the respondents 1 and 2 as borrowers owed to it on the date the

impugned order was passed by the High Court, with particulars. It was also

recorded that Rs. 27 crore had been paid by Edelweiss ARCL to GBJ Hotels on

18th March, 2025 and that the question of awarding interest on the said sum

of Rs. 27 crore shall be considered on the next date. The special leave

petition was directed to be relisted on 28th April, 2025.

11. In compliance with the order dated 17 th April, 2025, Edelweiss ARCL has filed

an additional affidavit. In paragraph 10 of such affidavit, it is pleaded that the

debt is to the tune of Rs.1,86,23,72,734.

12. Having regard to the current position when GRT Hotels has put in what was

required of it in terms of the order dated 28 th March, 2025 but Edelweiss ARCL

claims that the debt much exceeds what it has received from GRT Hotels, we

have heard objections being raised with regard to the contents of the

additional affidavit of Edelweiss ARCL as well a contention that the secured

asset has been sold to GRT Hotels at a throwaway price.

13. At this juncture, we do not consider it necessary to examine the quantum of 5

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.

14. Learned counsel appearing for Edelweiss ARCL has left the rate of interest to

be awarded to our discretion. We direct that the sum of Rs.27 crore which has

been returned to GBJ Hotels, shall carry interest at the rate of 18% per annum

as follows:

a. on Rs. 10.80 crore, from 18.05.2024 to 18.03.2025; and

b. on Rs. 16.20 crore from 23.05.2025 to 18.03.2025.

15. Let the sum on account of interest be paid within 7 (seven) days.

16. We are informed that sale certificate has been issued in favour of GRT Hotels

by Edelweiss ARCL.

17. Sale certificate having been issued, steps for delivery of peaceful and vacant

possession of the assets of the respondent no.4 in favour of GRT Hotels and

all other consequential steps, if any, shall be taken by Edelweiss ARCL in

accordance with law within a month from date.

18. We clarify not having examined the claim of Edelweiss ARCL that the debt is

now somewhere near Rs.186 crore + and that only Rs.153 crore could be

recovered in course of the process of bidding that was undertaken pursuant

to our order dated 28th March, 2025.

19. All questions, except the sale which stands confirmed, are left open for the

parties to agitate before an appropriate forum in accordance with law, if so

advised.

6

20. Edelweiss ARCL shall be at liberty to approach the Registry with a prayer for

withdrawal of Rs.33 crore deposited by GRT Hotels. Once such approach is

made, the said amount with accrued interest, if any, shall be released in

favour of Edelweiss ARCL as early as possible.

21. With the aforesaid directions/observations, the special leave petition stands

disposed of.

22. This order is passed in the special facts and circumstances of this case and is

not to be treated as a precedent.

………..…………………J. (DIPANKAR DATTA)

…….……..………………J. (MANMOHAN) NEW DELHI.

APRIL 28, 2025.

7

ITEM NO.52 COURT NO.14 SECTION XII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal(C) No(s). 7301/2025

[Arising out of impugned final judgment and order dated 06-03-2025 in WP No. 1001/2025 passed by the High Court of Judicature at Madras]

GBJ HOTELS PRIVATE LIMITED Petitioner(s)

VERSUS

SRIHARAN SRIPATHMANATHAN & ORS. Respondent(s)

IA No. 66602/2025 - EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT IA No. 67567/2025 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ ANNEXURES

Date : 28-04-2025 This matter was called on for hearing today.

CORAM : HON'BLE MR. JUSTICE DIPANKAR DATTA HON'BLE MR. JUSTICE MANMOHAN

For Petitioner(s) :Mr. G. Balaji, AOR Mr. Neeleshwar Pavani, Adv.

Ms. Arzu Paul, Adv.

For 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 And 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 8

Mr. Satish Parasaran, Sr. Adv.

Mr. Vishnu Mohan, Adv.

Mr. Ravi Raghunath, AOR

UPON hearing the counsel the Court made the following O R D E R

1. The special leave petition stands disposed of in terms of the reportable

order.

2. Pending application(s), if any, stand disposed of.

(JATINDER KAUR) (SUDHIR KUMAR SHARMA) P.S. to REGISTRAR COURT MASTER (NSH)

[Signed reportable order is placed on the file]