TaxTMI 
TaxTMI 
2004 (3) TMI 420
X X X X Extracts X X X X
X X X X Extracts X X X X
....liquidation and with respect to which winding up order has been passed in the above referred Company Petition No. 412 of 1985 in January 1997. The assets of the company are in possession of the Official Liquidator since March 1997. Thereafter on the Liquidator making a report dated 19th February, 2002, the learned Company Judge at that time (Deshmukh J.) by his order dated 14th March, 2003 directed the Official Liquidator to call for the prevailing rates of the property from the Sub-Registrar, Sangli. This was for the purpose of effecting sale of the properties of the said mill company which were situated within the jurisdiction of the Sub-Registrar, Sangli. 3. Thereafter, on the liquidator making another report dated 22-7-2003, the then Company Judge (Radhakrishnan J.) held the auction concerning the properties of the company in Court on 22-8-2003. The bids of respondent No. 2 came to be accepted with respect to two parcels of property i.e., (a) Lot No. IV, (Sub-lot No. 3) comprising of land bearing Survey No. 203/4 consisting of 65340 sq. feet and (b) Lot No. IV (Sub Lot No. 5) comprising of land bearing R.S. No. 197 to 202(1) consisting of 937629 sq. feet. The bid of Respondent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The learned Judge took that report on record. It was then noticed that as per that report as far as Lot No. III (Manager's Bungalow) is concerned, the valuation was shown at Rs. 8,64,000 Lot No. IV (Sub-lot 3) was valued at Rs. 29,96,000 and for Lot No. IV (Sub-lot 5) it was valued at Rs. 2,35,27,000. The learned Judge thereupon noted that the bids offered by the successful bidders and which were accepted by him earlier were somewhat comparable. Thus, for the Manager's Bungalow as against Rs. 8,64,000 the bid accepted was Rs. 7,55,000, for Lot No. IV (Sub lot No. 3), instead of Rs. 29,96,000 it was accepted at Rs. 31,00,000 and for Lot No. IV (sub lot No. 5) instead of Rs. 2,35,27,000 the bid was accepted at Rs. 2.31 crores. The learned Judge noted that the Appellant Bank offered to pay better amounts as recorded by the learned Judge in his order. He, however, held that the price at which the bids had been confirmed could not be said to be grossly inadequate as according to him there was a difference of only 5 per cent to 10 per cent more than that of the highest offers accepted by him. In paragraph 12 of the order the learned Judge accepted that the Court could review its order, h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....done by the valuer appointed by the Official Liquidator of Lot No. IV (Sub lot No. 5) was Rs. 1,96,05,000, the one now obtained was Rs. 2,35,27,000. He submitted that if these figures were available earlier, the bids would have been tested on these figures and the property would have got much better price. In any case the respondents offer for lot No. III and lot No. IV (sub lot No. 5) would not have been accepted. He further submitted that the auction ought to have been held at the site rather than holding it in the Court. He further drew our attention to the fact that as far as item No. 2 is concerned, another party had offered an amount of Rs. 37,00,000 though it withdrew that offer subsequently. 7. To understand the factual position with respect to the property involved and the amounts at which it was expected to be sold and the price offered, it would be better to take on record the following figures in the form of a chart. Sr. No. Lot No. and Description of the immovable property Area in sq. feet Valuation as per valuer appointed by Official Liquidator Valuation as per Govt. reckoner (as claimed by the Bank) Offer received from the successful bidders Name of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Judge on 14-3-2002. The Liquidator was expected to act accordingly. Instead he obtained the report from other valuers and they were placed before the learned Single Judge who sold the concerned property on the basis of such reports and when this was brought to the notice of the learned Single Judge he has declined to review the order by holding that the variation in the price is not much. Mr. Tulzapurkar, therefore, submitted that this was a fit case where this Court ought to interfere in appeal and set aside the sale and direct the auction to be held by the liquidator. 9. Mr. Anney, the learned Senior counsel appearing for Respondent No. 2 submitted that there was no error of law in the impugned order and when the learned Judge took the view that the properties were sold not at any grossly inadequate value there was nothing wrong in confirming the sale which he has done by the impugned order. He submitted that there has to be some certainty in the matter of sale through Court and the appellants having deposited good amount in pursuance to the confirmation of the sale, could not now be told that the sale is to be interfered. He submitted that the application made by the appellant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l the property without this information becoming available from the Sub-Registrar, and only on the basis of the valuation which was obtained by the Liquidator. When this was pointed out to the learned Judge in review, he did call for the information from the Sub-Registrar, but at that stage he reconfirmed the sale which he had effected earlier by observing that there was no much variation between the figures now received from the Sub-Registrar and the offers which he had accepted. There is a clear fallacy in this approach. Firstly, there was no reason to depart from the normal and the correct procedure to get the correct market price from the government official concerned. That apart, when these figures became available to the learned Judge he ought to have noted as can be seen from the Chart which we have reproduced above that as far as properties at item Nos. 1 and 2 is concerned, the valuation given by the valuer of the Official Liquidator was less than 50 per cent as against the valuation given by the Sub-Registrar. He also ought to have noted that with respect to the third lot as against the valuation of Rs. 1,96,25,000 made by the valuer of the Official Liquidator, there was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e claim of certainty if it is going to work against the interest of the Company, its creditors and its employees. Besides those who have put in their money do not stand to suffer since they will get it back with interest. The allegation of mala fides is also adequately answered by Mr. Tulzapurkar by pointing out that at the first instance it was not possible for the bank to take immediate decision of participating in the bidding in open Court. The bank has averred so in the review application. It has also pointed out that only when it received the copy of order dated 22-8-2003 that it learnt as to what was the valuation done by the liquidator. When it was found to be too much low that the bank decided to move for review. The bank was a secured creditor and its monies were at stake. To show its bona fides it has offered to deposit the requisite amount. The learned Single Judge was clearly in error in holding that the application moved by the bank was not bona fide. In our view in the facts of the present case, the appellant bank was fully justified in moving for review. Mr. Tulzapurkar pointed out that larger public amounts were at stake and the claim of Bank of Maharashtra against ....