2003 (7) TMI 577 - HC - Companies Law

Court approves highest bid for sale of Hukumchand Mills Limited assets, rejects late bid application

The Court approved the highest bid of Rs. 4,21,50,000 from M/s. Varun Texport Pvt. Ltd. for the sale of goods by the Official Liquidator in the winding up ... Winding-up - Delivery of property to Liquidator Issues:1. Approval of the highest bid for the sale of goods by the Official Liquidator.2. Consideration of a late application by a tenderer to increase the bid amount.3. Sale of assets belonging to the company in liquidation.Issue 1: Approval of the Highest Bid for Sale of Goods by the Official LiquidatorThe judgment pertains to the winding up of a company, M/s. Hukumchand Mills Limited, under the supervision of the Court following a reference from B.I.F.R. The Court had ordered the winding up of the company as it was deemed unfit for rehabilitation or commercial operation. Subsequently, the Court appointed an official liquidator to oversee the disposal of the company's assets. A Sale Committee was formed to manage the sale process, and after receiving multiple tenders, the highest bid of Rs. 4,21,50,000 from M/s. Varun Texport Pvt. Ltd. was accepted. The Court emphasized the importance of fair valuation, extensive publicity for the sale, and the involvement of experts in financial matters to ensure the best price for the goods. The judgment rejected a late application from another tenderer, M/s. Dhiraj Cotton Waste Company, to increase their bid, stating that all parties had a fair chance during the negotiation process. The Court sanctioned the highest bid and directed the Official Liquidator to proceed with the sale.Issue 2: Consideration of a Late Application by a Tenderer to Increase the Bid AmountThe judgment addressed an application by M/s. Dhiraj Cotton Waste Company, a tenderer, seeking to offer a higher bid than the accepted highest bid by M/s. Varun Texport Pvt. Ltd. The Court noted that M/s. Dhiraj Cotton Waste Company had ample opportunity during the negotiation process to raise their bid but failed to do so. The Court emphasized that the Sale Committee, comprising financial experts and representatives from various institutions, conducted fair negotiations with all tenderers to ensure the best price for the goods. Rejecting the late application, the Court highlighted the importance of avoiding endless bidding processes in courtrooms and ensuring equal opportunities for all tenderers. The judgment concluded that accepting the late bid would be unfair to other participants and upheld the approval of the highest bid.Issue 3: Sale of Assets Belonging to the Company in LiquidationThe judgment also addressed the sale of assets, including a flat in Mumbai, plant machinery, land, and building belonging to the company in liquidation. The Official Liquidator requested permission to sell these assets to realize their value for distribution among the creditors. The Court granted the request, directing the Official Liquidator to advertise the sale in national newspapers and form a Sale Committee to oversee negotiations with potential buyers. The Court emphasized the need for transparency in the sale process and the involvement of secured creditors in approving the sale of assets pledged as security. Additionally, the Court authorized the Official Liquidator to take possession of the flat in Mumbai and make necessary payments for maintenance charges. The judgment set a timeline for completing the sale formalities and instructed the Official Liquidator to inform the relevant creditors about the sale process.This detailed summary provides an in-depth analysis of the judgment, covering the key issues and the Court's decisions regarding the winding up of the company, approval of bids, and sale of assets.