Court upholds company property sale in liquidation to highest bidder under SARFAESI Act, justifying valuation.

The Court confirmed the sale of a company's property in liquidation to the highest bidder after finding no irregularities in the auction process conducted under the SARFAESI Act. The bank, seeking confirmation of the sale, had obtained legal permission to proceed with the asset liquidation. Despite objections raised by the Official Liquidator regarding reduced valuation, the Court justified the valuation based on natural depreciation of machinery and allowed the sale in favor of the auction purchaser, directing the Official Liquidator to take necessary steps for sale confirmation.

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Issues:
Confirmation of sale of property in liquidation to highest bidder.

Detailed Analysis:
The Application was filed by the petitioner, a bank, seeking confirmation of the sale of property of a company in liquidation to the highest bidder, M/s Lakshmi Engineering Enterprises. The company had become a non-performing asset, leading to initiation of proceedings under the SARFAESI Act. The bank had sought and obtained permission from the High Court to sell the properties in association with the Official Liquidator. Despite efforts from 2014 to 2018, a successful bidder emerged in 2018, depositing the bid amount and complying with auction conditions. The bank sought permission to receive the balance sale consideration and register the sale certificate in favor of the highest bidder.

The auction purchaser detailed their participation and successful bid in an affidavit, expressing intent to revive the company. The Official Liquidator filed a counter-affidavit, alleging the bank failed to follow procedures and associating with them during the auction. The Official Liquidator questioned the reduced valuation of the property and raised objections to the sale confirmation.

The bank's counsel refuted the Official Liquidator's allegations, providing a detailed chronology of events, valuations, and auction attempts. The bank had revalued assets due to nonoperation, setting a reserve price of Rs. 7 crores. The successful auction was conducted after multiple failed attempts, with no objections raised by the Official Liquidator during the process.

The auction purchaser's counsel emphasized the need for swift confirmation to revive the company, justifying the valuation offered and requesting immediate sale confirmation.

After considering submissions and documents, the Court noted the bank's communication with the Official Liquidator regarding developments. The Court highlighted the limited role of the Official Liquidator and the legal permission granted to the bank to proceed with asset liquidation. The Court found no irregularities in the auction process conducted under the SARFAESI Act and Rules. Valuation reports indicated natural depreciation of machinery, justifying the reduced valuation and rejecting objections raised by the Official Liquidator.

The Court allowed the Company Application, confirming the sale of the property in favor of the auction purchaser and directing the Official Liquidator to take necessary steps for the sale confirmation.

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