TaxTMI 
TaxTMI 
TaxTMI 
2008 (7) TMI 579
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.... price. It was further directed that the said offer so received in sealed cover should be placed before the Asset Disposal Committee (for short "the ADC") of IDCOL who shall open and consider the same and submit a report to the company judge with regard to acceptability of any of the offer so made. The final decision with regard to acceptance of such offer shall be taken up by the court in compliance of the said direction of the company judge, offers were invited with upset price of Rs. 5,60,28,000 and in response to said advertisement, the following bidders participated : (i)M/s. Collin Traders (P.) Ltd.; (ii)M/s. S.B. Overseas Ltd.; and (iii)M/s. Piyush Suppliers (P.) Ltd. 3. The appellant's bid was for Rs. 6.02 crores which was increased from time to time up to Rs. 9.40 crores with upfront payment of Rs. 92 lakhs and the balance amount in sixty equal monthly instalments along with interest and secured by letter of credit. On 15-12-2005, IDCOL filed an affidavit recommending the acceptance of appellant's offer of Rs. 9.40 crores in Company Act Case No. 36 of 2001. According to the appellant, the company judge vide order dated 13-1-2006, on consideration of the affidavit filed....
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....stalments as approved by the company judge. On 15-9-2006, various parties appeared before the company judge and the company judge directed the appellant and other parties to take instruction as to whether the said purchasers were ready and willing to offer more than the amount offered before. Vide impugned order dated 2-2-2007, the company judge held that no finality had been arrived at for sale and handing over of the unit to the appellant and, therefore, the company judge has decided to hold a fresh auction in open Court. 4. Learned counsel appearing for the appellant submits that the Company Judge should not have directed for holding of a fresh auction before considering the prayer and the contention made by appellant-SBOL in their affidavit dated 4-8-2006. Learned counsel emphatically submitted that since SBOL never backed out the same process as per its offered terms and conditions, the impugned order dated 2-2-2007, was unwarranted and, hence, is liable to be set aside. In support of his contention, he relied upon a decision of this Court in the case of Varsha Fabrics (P.) Ltd. v. State of Orissa [2006] 102 CLT 137. According to him, in view of the affidavit dated 15-12-2006....
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....assing of the impugned order no finality has been arrived between appellant-SBOL and IDCOL in respect of sale of KJL in favour of appellant. At this juncture other intending parties come forward with higher bid amount and higher upfront payment. Needless to say that in absence of concluded sale no right accrues in favour of a negotiating purchaser. Therefore, the appellant cannot claim any exclusive right to purchase the company under the process of winding up. 9. Another important aspect of the case is that KJL which is put to auction is under the process of winding up. Winding up of a company arises when the concerned company is not able to satisfy its creditors. Thus, in the event of winding up of a company, it is always fair and desirable that all attempts should be made to get maximum price. In the present economy, upfront payment assumes great importance and is always preferable to deferred payments even with interest. More is the upfront payment better for the company under winding up. During winding up process of a company the Court is the custodian on behalf of the secured and unsecured creditors and the workmen. It is the duty of the Court to see that maximum price is fe....
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....ourt. In that view of the matter, the company court is always clothed with power to set aside any sale for the betterment of the company under winding up, when the Court comes to the conclusion that price offered by the auction purchaser is inadequate. 11. In the present context, it will be useful to refer to some of the decisions of the Hon'ble Supreme Court and the High Courts. 12. In the case of Union Bank of India v. Official Liquidator [2000] 101 Comp. Cas. 3171 while setting aside a confirmed sale, the Hon'ble Supreme Court held as follows : "At the outset, we would state that in proceedings for winding up of the company under liquidation, the Court acts as a custodian for the interest of the company and the creditors. Therefore, before sanctioning the sale of its assets, the Court is required to exercise judicial discretion to see that properties are sold at a reasonable price. For deciding what would be a reasonable price, the valuation report of an expert is a must. Not only that, it is the duty of the Court to disclose the said valuation report to the secured creditors and other interested persons including the offerors. Further, it is the duty of the Court to apply it....
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....irmed sale in the interest of the company and its creditors. 15. The Punjab and Haryana High Court in the case of Punjab Wireless Systems Ltd. (in liquidation) v. Indian Overseas Bank [2005] 126 Comp. Cas. 554, held as follows : "It is thus obvious that the power of the Court to set aside even a confirmed sale is unassailable. The judgment of the Supreme Court in Navalkha and Sons' case [1970] 40 Comp. Cas. 936 ; [1970] 3 SCR 1, has not dealt with such a power. However, in Union Bank of India's case [2000] 101 Comp. Cas. 317 (SC), the view taken in Navalkha and Sons' case [1970] 40 Comp. Cas. 936 ; [1970] 3 SCR 1, has been considered. Emphasising that the object of sale is to apply the sale proceeds to meet the claims of the creditors of the company, the Supreme Court in the case of Allahabad Bank v. Bengal Paper Mills Co. Ltd. [1999] 96 Comp. Cas. 804; [1999] 4 SCC 383, has held that it is the duty of the courts to ensure that the best possible price is realised by sale of the assets and the properties of the company in liquidation as it is obliged to the creditors for undertaking such a course. It was noticed that the learned Company Judge had ordered possession to be delivered....