Court-supervised auction bidders may be heard before termination, and sale proceedings should be kept in abeyance pending revival scrutiny.

A court-supervised auction participant was held entitled to be heard before termination of the sale process, because the bidder was directly affected by the court's change in course and was not a stranger to the proceedings. The cancellation of the sale notification and termination of the auction were found unwarranted where no feasible revival proposal had been placed before the court and the sale itself was not shown to be irregular; the appropriate course was to keep the proceedings in abeyance pending proper consideration of revival. The bid was not confirmed, as delay, changed market conditions, and valuation concerns required further examination by the company court.

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Issues: (i) whether the order cancelling the sale notification and terminating the sale proceedings was justified; (ii) whether the bidder had locus standi and was entitled to be heard in challenging that order; (iii) whether the bid could be accepted and the sale confirmed.

Issue (i): whether the order cancelling the sale notification and terminating the sale proceedings was justified.

Analysis: The State Government had sought only stay of the sale proceedings pending a revival proposal, but no feasible revival plan had been placed before the court when the sale was cancelled. The sale proceedings themselves were not shown to be irregular or invalid. In these circumstances, outright cancellation and termination of the auction was held to be unwarranted; the more appropriate course was to keep the proceedings in abeyance until the revival question was properly examined.

Conclusion: The cancellation of the sale notification and termination of the sale proceedings was not justified.

Issue (ii): whether the bidder had locus standi and was entitled to be heard in challenging that order.

Analysis: The bidder had participated in a court-supervised public auction after notice of the pending applications of the State Government. Even though no contractual right arose from an unaccepted bid, the bidder was not a stranger to the proceedings. Fair play required that a person whose bid had been accepted for consideration by the official liquidator and who stood to be affected by the court's change in course be heard before the proceedings were terminated.

Conclusion: The bidder had locus standi and was entitled to be heard.

Issue (iii): whether the bid could be accepted and the sale confirmed.

Analysis: The bid could not be confirmed at that stage because considerable time had elapsed and the market situation had changed. The court observed that the issue of valuation and the propriety of any future sale would depend on the revival proposal and any fresh valuation, and that the matter was better left to the company court.

Conclusion: The bid was not directed to be accepted and the sale was not confirmed.

Final Conclusion: The bidder was added as a party, the cancellation order was recalled, and the sale proceedings were kept in abeyance pending further consideration of the revival proposal and the winding-up proceedings.

Ratio Decidendi: A participant in a court-supervised auction who is directly affected by a subsequent order terminating the process is entitled to be heard in the interests of fair play, and where no feasible revival plan is before the court, the proper course is to keep the sale in abeyance rather than cancel it outright.

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