2003 (2) TMI 325 - SC - Companies Law

Supreme Court Upholds Higher Bid for Company Assets, Ensuring Creditor Interests

The Supreme Court directed the Company Court to accept the appellant's offer of Rs. 4.25 crores for the sale of company assets, emphasizing the need to ... Winding up - Power of liquidator - sale of assests - Held that:- Appeal allowed. The company was wound up as far back as on 28-2-1986 and the creditors of the company have not been able to receive anything only because of the fact that the assets of the company could not be sold. The value of the assets of the company has come down from Rs. 7.5 crores to Rs. 4.25 crores which is the best offer received as on today; whereas the offer made by the first respondent is only Rs. 3 crores and he is not willing to enhance it. In the above fact situation, without going into the legality of the questions involved, bearing in mind solely the interest of the creditors, we think the offer made by the appellant of Rs. 4.25 crores should be accepted. Therefore, allowing this appeal and setting aside the impugned judgment, we direct the Company Court to accept the offer of Rs. 4.25 crores made by the appellant and on the appellant depositing the balance amount, necessary documents may be executed in its favour. Issues:1. Appellant's contention regarding the acceptance of their offer for the sale of company assets.2. First respondent's challenge against the High Court's order on the grounds of best offer.3. Consideration of diminishing property value and creditor interests.4. Decision on the acceptance of the appellant's offer and refund of deposited amount in a related application.Issue 1:The appellant contended that their offer of Rs. 4.25 crores, which was the highest and above the valuation price, should have been accepted instead of remanding the matter to the Company Judge. The High Court had remanded the issue back to the Company Judge by setting aside the sale confirmed in favor of the first respondent. The Appellate Bench had earlier set aside the sale, considering the first respondent's offer of Rs. 3 crores as significantly lower than the property value. The Supreme Court noted the diminishing property value and the need to safeguard creditor interests, ultimately directing the Company Court to accept the appellant's offer of Rs. 4.25 crores.Issue 2:The first respondent challenged the High Court's order, arguing that their offer was the best and should not have been set aside. The Supreme Court considered the offers made, with the first respondent's offer being Rs. 3 crores, significantly lower than the appellant's offer of Rs. 4.25 crores. Despite the first respondent's refusal to enhance their bid, the Court emphasized the importance of creditor interests and decided in favor of accepting the higher offer for the benefit of the creditors.Issue 3:The Court highlighted the long-standing issue of the company being wound up in 1986, leading to creditors not receiving any amounts due to the unsold assets. The property value had decreased from Rs. 7.5 crores to Rs. 4.25 crores, with the appellant's offer being the best available. Considering the creditor's interests paramount, the Court directed the acceptance of the appellant's offer to ensure the best outcome for the creditors, despite legal complexities.Issue 4:In a related application, the applicant had offered Rs. 8.75 crores for the company's assets in 1990, but the bid was set aside by the Court. The applicant had deposited Rs. 87.50 lacs towards the sale consideration, which was to be refunded. The Court directed the Official Liquidator to refund the deposited amount to the applicant within two months, emphasizing that the money did not belong to the Company and should be returned in the interest of justice.This detailed analysis of the Supreme Court judgment addresses the various issues involved, including the acceptance of offers, creditor interests, and the refund of deposited amounts, providing a comprehensive overview of the legal complexities and decisions made by the Court.