1942 (12) TMI 7 - HC - Companies Law

Court dismisses appeal in business asset sale case, allows new offers post-tender. Precedent distinguished.

MCTM Chidambaram Chettiar Versus Official Receiver, High Court Madras

The Court dismissed the appeal in a case concerning the sale of business assets through a tender process. The Official Receiver initially accepted the ... Winding up – Powers of liquidator Issues:Sale of business assets through tender process, acceptance of highest tender, extension of time for submission of tenders, legality of process followed by Official Receiver.Analysis:The judgment pertains to a case where the assets of a company were being sold through a tender process. Initially, the Official Receiver advertised the sale without specifying that the highest tender would be accepted or setting a reserve price. The appellant submitted the highest offer of Rs. 46,000. However, before a decision was made, another bidder expressed willingness to increase their offer to Rs. 50,000. The Court then allowed a week's extension for the submission of fresh offers. The appellant argued that the case should follow the precedent set in Soundararajan v. Mohamed Ismail Sahei, where the highest bid at an auction was accepted without allowing for increased bids post-auction. However, the Court distinguished the present case as no sale had yet occurred, and the advertisement did not guarantee acceptance of the highest tender. The Court recommended that future tender sales should mirror public auctions, with clear terms on acceptance and, if possible, a reserve price. Despite the extension and receipt of additional tenders, the appellant was granted a week to submit a fresh tender. The judgment dismissed the appeal, allowing for the submission of further tenders but not beyond the specified timeline. No costs were awarded in the case.