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of <h1>Court upholds auction sale confirmation despite higher bid; fraud not proven. Parties to bear own costs.</h1> <h3>Simla Banking & Industrial Co. Ltd., In re.</h3> The court considered an application under section 460(6) of the Companies Act, 1956, regarding an auction sale of a property. Despite a subsequent higher ... Winding up – Exercise and control of liquidator’s powers Issues:- Application under section 460 (6) of the Companies Act, 1956 regarding auction sale of property.- Consideration of subsequent offer and highest bid in the auction sale.- Decision to confirm the bid of the highest offeror.- Challenge to the confirmation order under section 460 (6) of the Companies Act.- Legal principles governing confirmation of auction sales by the court.- Requirement of fraud for setting aside a confirmation order.Analysis:The judgment involved an application under section 460 (6) of the Companies Act, 1956, concerning the auction sale of a property known as the Simla Roller Flour Mills in connection with the winding up of a company. The auction sale was conducted, and the highest bid of Rs. 1,40,000 was made by a group of bidders who deposited Rs. 35,000. Subsequently, a higher offer of Rs. 1,50,000 was received from another party. The official liquidator recommended accepting the higher bid, leading to a confirmation order in favor of the new offeror.The main issue was whether the court should set aside the confirmation order in light of a subsequent higher offer made after the auction sale. The court analyzed the legal provisions and relevant case law to determine the appropriate course of action. The court emphasized that the application was akin to a review under Order XLVII, rule 1 of the Civil Procedure Code, as it sought to challenge the court's own order rather than the liquidator's decision.The court considered the conduct of the original bidders who failed to make a higher offer during the auction sale despite having the opportunity to do so. Citing precedents, the court highlighted that confirmation of an auction sale should not be overturned merely based on a subsequent higher bid unless there is evidence of fraud. The court noted that the original bidders had sufficient notice and opportunity to revise their offer but failed to do so, leading to the confirmation of the higher bid.Ultimately, the court dismissed the application to set aside the confirmation order, emphasizing that fraud was not established, and the original bidders had ample time to reconsider their bid. The court upheld the principle that a confirmation order should not be disturbed solely based on a subsequent higher offer unless there are compelling reasons such as fraud. The parties were directed to bear their own costs in the matter.
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