Court modifies order for additional payment, sets structured plan for default

The court modified the original order, directing Siddheswari to pay an additional amount to match the refund to Bharat Metal. The appeal partially succeeded, setting aside the Single Judge's order and modifying the previous directive. A structured payment plan was established for Siddheswari, with repossession and public auction in case of default. Appeals were disposed of without costs.

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Issues Involved:
1. Demarcation of land belonging to the company in liquidation.
2. Validity of sale by private treaty versus public auction.
3. Legal standing of workers and secured creditors in challenging the sale.
4. Authority of a Coordinate Bench to recall an order of another Judge.
5. Impact of the purchaser's investments post-sale confirmation on the validity of the sale.

Issue-wise Detailed Analysis:

1. Demarcation of Land Belonging to the Company in Liquidation:
The Official Liquidator faced difficulties in demarcating the land belonging to Anantapur Textile Limited, which was in liquidation, and Siddheswari Cotton Mills Private Limited. The Official Liquidator attempted to take possession of 11.73 acres of land, but Siddheswari objected, claiming two acres of the land. Despite several attempts, the land could not be demarcated, leading to complications in the sale process.

2. Validity of Sale by Private Treaty Versus Public Auction:
The learned Company Judge initially directed the sale of the land by private treaty to Siddheswari for Rs. 37 lakhs without holding a public auction. This decision was based on the frustration and inordinate delay in the beneficial winding up of the company. The reasons included the applicant's willingness to pay the purchase price matching the valuation, the difficulty in finding a better purchaser due to the lack of demarcation, the empowerment of the Official Liquidator under Section 457(1)(C) of the Companies Act, 1956, and the absence of objections from secured creditors.

3. Legal Standing of Workers and Secured Creditors in Challenging the Sale:
The workers challenged the sale by private treaty, arguing that it was contrary to earlier court orders and that the revenue records indicated more land belonging to the company in liquidation. They insisted on a public auction to get the best possible price for realizing their dues. The court recognized the workers' locus standi to challenge the sale and insist on a public auction.

4. Authority of a Coordinate Bench to Recall an Order of Another Judge:
The appeal raised the issue of whether a Coordinate Bench could recall or set aside an order of another Judge. The court acknowledged that an order of the court should have sanctity and that a Coordinate Bench should not ordinarily recall the order of another Judge unless there was an apparent error on the face of the record. The court found that the recall of the order by the Coordinate Bench was irregular but not illegal.

5. Impact of the Purchaser's Investments Post-sale Confirmation on the Validity of the Sale:
Siddheswari had already spent substantial sums in putting the unit into operation after the sale was confirmed. The court considered the purchaser's investments and the stamp duty paid on the Deed of Conveyance as relevant factors. The court emphasized that a sale once confirmed should not be upset except on cogent reasons, and the purchaser's altered position due to investments was a significant consideration.

Conclusion:
The court modified the original order dated January 17, 2011, directing Siddheswari to pay an additional Rs. 33 lakhs with interest to match the amount refunded to Bharat Metal. The appeal succeeded in part, setting aside the order of the learned Single Judge passed on August 24, 2012, and modifying the order dated January 17, 2011. The court directed a structured payment plan for Siddheswari and provided for repossession and public auction in case of default. Appeals were disposed of without any order as to costs.

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