Material irregularity in court sale: inadequate publicity and depressed price justified setting aside the sale in liquidation.

A court sale in execution against a company in liquidation may be set aside where inadequate publicity, a drastic reduction in reserve price, and a sale at a price far below later offers amount to material irregularity causing substantial injury. Separate leave for execution was not required once leave to sue had already been granted, so the sale was not void on that ground under section 537 of the Companies Act. The application to set aside the sale was also treated as not barred by limitation in the special winding-up context. The court further noted the statutory protection of workmen's dues and the pari passu operation of section 529A in winding up.

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Issues: Whether the sale held by the execution court in proceedings against a company in liquidation was liable to be set aside for want of proper leave, limitation, and material irregularity in publication and conduct of the sale.

Analysis: The company court held that, once leave had been granted to institute the suit, separate leave for execution was not required and the sale was not void under section 537 of the Companies Act. The application to set aside the sale was held not barred by limitation, as the application before the company court was a special proceeding under the Companies Act and the Limitation Act did not govern it in the manner urged. On the merits, the court found that the reserve price had been drastically reduced, that the property was sold at a price far below the value indicated by later offers, and that the sale had not been given adequate publicity. The court also emphasised the statutory protection of workmen's dues and the pari passu operation of section 529A of the Companies Act in winding up.

Conclusion: The sale was liable to be set aside because material irregularity in publishing and conducting the sale caused substantial injury.

Ratio Decidendi: A court sale in execution against a company in liquidation may be set aside where inadequate publicity and an unduly depressed sale price amount to material irregularity causing substantial injury, even though the sale is not void merely for want of fresh leave after permission to sue has already been granted.

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