TaxTMI 
TaxTMI 
2008 (5) TMI 408
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....o. 1 went into liquidation. Official Liquidator was appointed by the Court who is joined as Respondent No. 1 in the present proceedings. In view of the liquidation of the Company and dues to be paid by it, proceedings were initiated for sale of property of the Company. Sale notice was issued by the Company Court on 19-10-2004 which was published in various newspapers inviting sealed tenders for the sale of property of the Company situated at NOIDA (U.P.). Twelve bids were received which were opened on 16-11-2004. The bid of the appellant for Rs. 1.47 crore for immovable as well as movable property was the highest. One of the creditors, namely, Pradeshiya Industrial and Investment Corporation of U.P. Ltd. (PICUP) granted 'no objection' to the sale price. Since the appellant was the highest bidder, it wrote a letter to the Official Liquidator on 19-12-2004 followed by a reminder dated 20-1-2005 requesting him to expedite the process and issue letter of acceptance of the offer of the appellant so that possession of the Unit can be given to the appellant and the property could be made ready for commencement of production. It is the case of the appellant that there was no reply by the O....
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....o the Official Liquidator and requested him to immediately comply with the order of the Company Judge confirming sale and handing over possession to the appellant. Instead of complying with the order of the Court and handing over possession of the property, the Official Liquidator sent a letter purported to have been written on 5-5-2005, stating therein that possession would not be given to the appellant on 6-5-2005 as higher bid of Rs. 1.55 crore had been received and order for handing over possession to the appellant had been stayed by the Hon'ble Court. The appellant made enquiries and it was found that it was at the instance of the Official Liquidator himself that Company Application No. 178 of 2005 before the Company Judge was moved and he created obstruction in delivery of possession of property to the appellant on the alleged ground that he had received higher offer. The appellant stated that other two persons also offered more amount. The appellant, in the circumstances, filed Company Application No. 407 of 2005 under Rule 9 of the Company Court Rules, 1959 read with section 151 of the Code of Civil Procedure, 1908 stating therein that it had paid full amount, sale was conf....
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.... 9. According to the counsel, once the bid was accepted and sale was confirmed, it could not be set aside except on the grounds of fraud, material irregularity, etc. It is not even the case of the Official Liquidator, submitted the counsel, that there was fraud or material irregularity in sale and hence, sale could not have been set aside. It was urged that the only ground put forward by the Official Liquidator was that he had received a higher offer of Rs. 1.55 crore from another person. The said offer was received after about seven months. The difference in price was 5.44 per cent. 10. According to the counsel, judicial notice can be taken that price of real estate increases day by day and increase of 5 per cent after seven months could not justify the Court in setting aside auction sale which was conducted in consonance with law. On that ground alone, therefore, both the orders are liable to be set aside by ordering handing over possession of property to the appellant. 11. It was also submitted that mala fide action on the part of the Official Liquidator was apparent and from the records and proceedings, it was clearly established. On 6-5-2005, the officers of the appel....
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....y Judge, fresh tenders were invited, and in the said process, respondent No. 3-Society offered Rs. 3.5 crore which was accepted and no interference is called for. 16. A counter-affidavit is also filed by respondent No. 3 stating that the appellant had not approached the Court with true and full facts. Sale notice which was issued on 19-10-2004 was incomplete and invalid. It did not state valuation of movable and immovable properties. Reserve price was also not fixed. No inventory of plant and machinery was made. There was no full description of movable properties. Necessary material was not made available at the site nor in the office of the Official Liquidator. In view of those irregularities, the property could not fetch fair price. When all the above defects were brought to the notice of the Company Judge, the Company Judge was satisfied that the process undertaken was not proper and hence fresh bids were invited. 17. It was also submitted that no formal order of confirmation in favour of the appellant was at any time made by the Court. But even if it is assumed for the sake of argument that the order of the Company Judge issuing direction to the Official Liquidator to han....
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....r were disclosed at the time of sale notice. They related to valuation of movable and immovable properties, fixation of reserve price, non-inventory of plant and machinery, etc. The attention of the Company Judge was invited by other bidders by filing Company Applications. The Company Judge considered the objections and having prima facie satisfied, ordered fresh auction. We find no illegality in the said approach. When fresh bids were received, it was found that the highest offer was of respondent No. 3-Society which was of Rs. 3.5 crore. The Company Judge extended an opportunity to the appellant to raise its bid. It, however, appears that the appellant was adamant to get the property for Rs. 1.47 crore on the ground that the said offer was highest and all the proceedings taken by the Official Liquidator and Company Judge thereafter were totally illegal and unlawful. In our opinion, the respondents are right that in such cases, the approach of the Company Judge should be to get highest price so as to satisfy maximum claims against the Company in liquidation. The procedure followed by the Company Judge, therefore, cannot be said to be illegal. 22. It may be observed at this stag....
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....sons. It was further held that the Court should exercise judicial discretion to ensure that sale of property should fetch adequate price. For deciding what would be reasonable price, valuation report of an expert is essential. The Company Judge himself must apply his mind to the valuation report. The Court observed that the High Court did not interfere with the auction sale on the ground of sympathy for the workers which was not proper. The auction sale was, therefore, set aside by this Court and Official Liquidator was directed to re-sell the property after obtaining fresh valuation report and after furnishing copy of such report to secured creditors. 28. In Divya Mfg. Co. (P.) Ltd. v. Union Bank of India [2000] 26 SCL 280 , this Court held, that even confirmed sale can be set aside. In that case, highest bid by a party was accepted by the Court and the sale was confirmed, but before possession was delivered to the auction purchaser and execution of sale deed, other parties offered much higher price. The High Court required the subsequent bidders to deposit an amount of 25 per cent which was done. Considering the facts in their entirety, the High Court set aside the confirmatio....