Private sale sanction in winding-up requires notice and valuation inquiry; improper ex parte approval can be set aside with the sale.

A court's discretion to sanction a private sale in winding-up must be exercised on proper notice, full disclosure, and adequate inquiry into value, especially where the asset is the company's principal property. An ex parte sanction made hastily and without sufficient material was treated as vulnerable to appellate interference and set aside because a public sale was likely to realise a better price for the estate. The resulting sale also fell with the sanction despite part-performance by the purchaser, because the transaction depended on an improper approval. Delay in appeal was excused on the facts, and the estate was protected by directing sale by public auction.

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Issues: (i) whether the District Judge's sanction of a private sale of the company's mill property, granted without proper notice and without adequate inquiry into value, could be sustained; (ii) whether the sanction and the resulting sale were liable to be set aside despite part-performance by the purchaser, and whether the appeal was maintainable with delay excused.

Issue (i): whether the District Judge's sanction of a private sale of the company's mill property, granted without proper notice and without adequate inquiry into value, could be sustained.

Analysis: The power to sanction a private sale under the Companies Act was a judicial discretion to be exercised with regard to the interests of the company and its creditors. The sanction should ordinarily be preceded by a proper application, disclosure, and notice to persons interested, especially where the property was the company's principal asset. The order was made hastily, ex parte, and without sufficient material to justify acceptance of the offer at a private price. The rules governing liquidator's applications and the prohibition against prejudicial ex parte orders reinforced the requirement of notice and proper inquiry. The later evidence showed that the property was likely to fetch a materially higher price by public sale.

Conclusion: The private-sale sanction could not be sustained and was rightly set aside.

Issue (ii): whether the sanction and the resulting sale were liable to be set aside despite part-performance by the purchaser, and whether the appeal was maintainable with delay excused.

Analysis: The purchaser had paid money and the transaction had progressed, but the sale depended upon a sanction that was subject to appellate scrutiny. A contract founded on such a sanction could not be treated as beyond the court's power to undo when the sanction itself was shown to be improper and prejudicial to contributories and creditors. The appeal was also entertained by excusing delay because the objecting parties had acted promptly and in good faith in pursuing the remedy before the District Judge and then before the appellate court. The appellate court therefore could interfere with both the sanction and the sale, and direct a public auction to protect the estate.

Conclusion: The sale fell with the sanction, the delay was excused, and appellate interference was justified.

Final Conclusion: The judgment set aside the private-sale sanction and the sale made under it, directed a public auction of the mill property under the District Judge's supervision, and protected the purchaser's payment by providing for repayment with interest from the auction proceeds or, failing that, confirmation of his purchase only as a fallback.

Ratio Decidendi: A court sanctioning a private sale in winding-up proceedings must exercise a judicial discretion on proper notice and sufficient inquiry into value, and a sanction granted ex parte and to the prejudice of creditors or contributories is liable to be set aside on appeal, with the resulting sale also failing.

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