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        Companies Law

        2014 (6) TMI 781 - HC - Companies Law

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        Court-confirmed auction and bona fide purchaser protection prevent later denial of conveyance based on an ? omission in notice. A court-confirmed auction cannot be defeated later by the notifying authority on the basis of an omission in the sale notice, where the purchaser ...
                        Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                          Provisions expressly mentioned in the judgment/order text.

                              Court-confirmed auction and bona fide purchaser protection prevent later denial of conveyance based on an ? omission in notice.

                              A court-confirmed auction cannot be defeated later by the notifying authority on the basis of an omission in the sale notice, where the purchaser participated, paid the bid amount, and proceeded as a bona fide purchaser for value. The land had been held under a lease-cum-sale arrangement, but the notice broadly described the assets and did not clearly confine the sale to leasehold rights alone. In these circumstances, the authority could not rely on that omission to refuse conveyance after the sale had been confirmed and acted upon, as that would amount to approbating and reprobating. The purchaser was therefore entitled to execution of the conveyance deed.




                              Issues: Whether the auction purchaser was entitled to a direction requiring KIADB to execute the deed of conveyance, and whether the sale could be denied on the ground that only leasehold rights, and not absolute title, were available for sale.

                              Analysis: The land had originally been allotted under a lease-cum-sale arrangement, but the lease period had long expired and there was no clear basis to treat the property as available for outright sale by the company in liquidation. However, the auction notice issued under the court's leave described the assets broadly and did not make it clear that the sale was confined only to leasehold rights. The purchaser participated in the auction, paid the bid amount, and acted as a bona fide purchaser for value on the footing that the sale was effective and confirmed. In these circumstances, KIADB could not rely on the omission in the advertisement to deny the consequence of the confirmed sale, as that would amount to approbating and reprobating.

                              Conclusion: The purchaser was entitled to the conveyance, and KIADB could not refuse to execute the deed on the ground now asserted.

                              Ratio Decidendi: Where a court-confirmed auction is acted upon by a bona fide purchaser for value, the notifying authority cannot later defeat the sale by relying on an omission in the notice when the purchaser was led to believe that the sale was effective as advertised.


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                              ActsIncome Tax
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