Strict compliance with binding sale conditions required before confirming sale of sick company assets despite bidder non-compliance.

Where sale of sick company assets is conducted under binding rehabilitation conditions, strict compliance with the prescribed terms is required. The appellate authority cannot treat a mandatory bank guarantee requirement or payment schedule as redundant, or confirm sale in favour of a bidder who has not complied with those material conditions and has not challenged them. Because public assets and secured creditors' funds were at stake, the sale conditions had to be enforced as framed. The writ petition succeeded, the appellate order was set aside, and the refusal to confirm the sale was restored, leaving the assets to be dealt with afresh in accordance with law.

---

---

Issues: Whether the appellate authority could confirm the sale of sick company assets in favour of the successful bidder despite non-compliance with the binding sale conditions fixed by the Board for Industrial and Financial Reconstruction, including the requirement of furnishing bank guarantee and payment within the stipulated schedule.

Analysis: The sale of the company's assets had been directed under the statutory scheme for sick industrial companies and was to be conducted through a transparent process on conditions fixed by the Board. Those conditions required public advertisement, time for inspection, earnest money, payment in instalments, furnishing of bank guarantee within the stipulated period, and transfer of possession only after full payment. The successful bidders did not comply with these material conditions and instead sought alteration of the terms. The appellate authority treated the bank guarantee requirement as redundant and effectively relaxed a mandatory condition, although the bidder had neither complied with the payment schedule nor challenged the condition itself. When public assets and secured creditors' money are involved, the selling agency and appellate forum were bound to insist on strict adherence to the prescribed terms.

Conclusion: The appellate authority was not justified in waiving the mandatory sale conditions or in directing confirmation of sale in favour of the bidder despite substantial non-compliance.

Final Conclusion: The writ petition succeeded, the appellate order was set aside, and the original refusal to confirm the sale was restored; the assets were left to be dealt with afresh in accordance with law.

Ratio Decidendi: Where sale of sick company assets is governed by binding conditions fixed under the statutory rehabilitation process, the appellate authority cannot dilute or waive a material condition and confirm the sale in favour of a bidder who has failed to comply with the prescribed terms.

---