Court cancels property sale order, accepts higher offer for secured creditors and workers. Refund directed with stay.

The Court recalled the order confirming the sale of property to respondent No. 2 and accepted the applicant's higher offer of Rs. 1.51 crores, directing the sale in favor of the applicant for the benefit of secured creditors and workers. The Court found the transaction incomplete as possession and sale deed formalities were pending, leading to the decision to cancel the sale confirmed in favor of respondent No. 2. The Official Liquidator was instructed to refund Rs. 1.27 crores to respondent No. 2 with interest, with a stay on implementation to allow for potential further review.

---

---

Issues Involved:
1. Recalling of the order confirming the sale of property.
2. Acceptance and confirmation of the higher offer by the applicant.
3. Re-auction of the property.
4. Legal contentions raised by respondent No. 2.
5. Consideration of higher bids in the interest of secured creditors and workers.

Detailed Analysis:

1. Recalling of the Order Confirming the Sale of Property:
The applicant sought to recall the order dated 30-8-2007, which confirmed the sale of lot No. A to respondent No. 2 for Rs. 1.27 crores. The applicant argued that since the full consideration had not been paid and the sale deed had not been executed, no rights or title had vested with the successful bidder. The applicant offered a higher price of Rs. 1.51 crores, which would benefit the secured creditors and workers of the company. The Court, after considering the submissions and the judgment in Divya Manufacturing Co. (P.) Ltd. v. Union Bank of India, decided to recall the order and cancel the sale confirmed in favor of respondent No. 2.

2. Acceptance and Confirmation of the Higher Offer by the Applicant:
The Court noted that the applicant had previously participated in the auction but could not deposit the required amount, leading to the rejection of Company Application No. 450 of 2007. However, the applicant later offered Rs. 1.51 crores and deposited the amount with the Official Liquidator, demonstrating bona fides. The Court, emphasizing the duty to fetch the maximum price for the property, accepted the higher offer and confirmed the sale in favor of the applicant.

3. Re-auction of the Property:
The applicant alternatively prayed for a re-auction of the property. However, the Court did not find it necessary to order a re-auction since the applicant's higher offer was accepted, ensuring the property fetched a better price than the previous bid.

4. Legal Contentions Raised by Respondent No. 2:
Respondent No. 2 opposed the application, arguing that the applicant's earlier application for similar relief was rejected and not challenged, making the present application barred by principles of estoppel. Respondent No. 2 also contended that the sale was confirmed, and the entire sale consideration had been paid. The Court, however, found that the transaction was not complete as the possession and sale deed formalities were pending. The Court also considered various judgments cited by respondent No. 2 but concluded that the higher offer from the applicant warranted reconsideration.

5. Consideration of Higher Bids in the Interest of Secured Creditors and Workers:
The Court emphasized that the primary criterion was to ensure the property fetched the maximum price for the benefit of secured creditors and workers. The Court cited the Division Bench's view in O.J. Appeal No. 80 of 2007, where higher offers were considered. The Court thus accepted the applicant's higher offer of Rs. 1.51 crores, directing the Official Liquidator to hand over possession and execute the sale deed in favor of the applicant.

Conclusion:
The Court allowed the application, recalling the order dated 30-8-2007, and confirmed the sale of lot No. A in favor of the applicant for Rs. 1.51 crores. The Official Liquidator was directed to refund Rs. 1.27 crores to respondent No. 2 with 12% interest per annum on the amount lying with the Official Liquidator. The implementation of the order was stayed until 5-12-2007 to allow respondent No. 2 to approach a higher forum.

---