PATNA: In an embarrassment for the Bihar government, a portion of the Madhubani district Collectorate, which houses key administrative and law enforcement offices, is set to be auctioned on November 26 to recover Rs 4.17 crore in unpaid dues to a private company.
The auction will proceed after the Supreme Court dismissed the state government's Special Leave Petition (SLP) seeking a stay on the execution proceedings. A Bench comprising Justices Arvind Kumar and Vipul M Pancholi declined to interfere in the matter.
Following the order, the Madhubani District and Sessions Court issued a revised sale proclamation, fixing November 26 for the auction of around 10 kattha of land and a two-storey building in the southern part of the Collectorate complex.
The dispute dates back to 1982, when the state government entered into an agreement with Kolkata-based M/s Radha Krishna Exports Pvt Ltd to revive the closed Pandaul cooperative cotton mill in Madhubani. The company provided capital and raw materials worth around Rs 28.90 lakh.
However, the mill failed to sustain operations and eventually shut down in 2000, leaving the company's investment unrecovered. The company initiated arbitration proceedings against the state government and the mill authorities in 2012.
In August 2014, a sole arbitrator appointed by the Patna High Court, retired Justice Ghanshyam Prasad, directed them to pay Rs 33.44 lakh, including the principal amount of Rs 28.90 lakh, compensation and legal expenses.
The award also stipulated interest at 18 per cent per annum in case of delayed payment. With the dues remaining unpaid, the company filed an execution petition before the Madhubani Civil Court in 2016. Accumulated interest subsequently pushed the liability to Rs 4.17 crore by July 2025.
In August 2026, the Madhubani District Court ordered the attachment and auction of around 10 kattha of land and the two-storey southern block of the Collectorate.
The state challenged the order before the Patna High Court, which dismissed its petition. Bihar has witnessed similar instances of court-ordered attachment of government properties over unpaid liabilities.
In 2019, proceedings targeted the Patna Old Secretariat, including the Chief Secretary's office, over a Rs 664.85 crore default to a cooperative bank. In 2026, the Aurangabad Collectorate was attached over unpaid land acquisition compensation owed to a farmer.
In both cases, the proposed auctions were averted after the state secured judicial relief or deposited the required amount with the courts.