Liquidation sale by private treaty may be allowed where beneficial winding-up and public interest justify departure from public auction.

In liquidation, sale of a company's assets is ordinarily by public auction, but the Court recognised that this rule is not inflexible. Where exceptional circumstances show that a worker co-operative has preserved the undertaking as a going concern, improved production, secured employment, and acted in furtherance of beneficial winding-up, the Court may permit a private treaty sale if a reasonable price is obtained and public interest is served. The decision therefore treats the mode of sale as a matter of judicial discretion, capable of departing from the usual auction process on special facts.

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Issues: Whether, in the winding up of a company, the assets could be directed to be sold by private treaty to the worker co-operative society that had been running the undertaking on licence, instead of being sold only by public auction.

Analysis: The application arose in the context of a company in liquidation whose business had been revived and continued by the applicant co-operative society under a court-granted licence. The Court noted that the object of the licence had been beneficial winding-up and preservation of the undertaking as a running concern. It further considered the special facts that the society had improved production, secured orders, created employment, and obtained financial and technical support, while the opposition was found to be motivated and not bona fide. On that basis, the Court held that the rule requiring sale by public auction was not inflexible and that, in an exceptional case, discretion could be exercised to permit sale by private treaty if a reasonable price was secured and public interest was served.

Conclusion: The Court accepted the applicant society's case and permitted it to make a sealed offer to the official liquidator for purchase of the undertaking, with consideration of a private treaty sale at a reasonable price by the Court.

Final Conclusion: The decision recognised an exception to the ordinary course of sale by public auction in liquidation proceedings and allowed the applicant an opportunity to purchase the undertaking, subject to the Court's determination of a reasonable price.

Ratio Decidendi: In liquidation, the power to direct sale of assets is discretionary, and where exceptional circumstances show that private sale better serves beneficial winding-up, preservation of the undertaking, employment, and public interest, the Court may depart from the ordinary rule of public auction provided a reasonable price is obtained.

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