TaxTMI 
TaxTMI 
2008 (8) TMI 562
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....nder liquidation, and an official liquidator was appointed for it. The assets of the company were proposed to be auctioned, and hence the Court asked the official liquidator to obtain a valuation report. The official liquidator after obtaining the valuation report submitted it to the Court. The valuation of these assets, according to the official liquidator, was Rs. 2.55 crores. The property was then put up for auction on 25-3-2003 after advertising it in various well-known newspapers having wide circulation, including 'The Economic Times' which is a well known newspaper having wide circulation in the business community. 5. Several bids were received and were opened in the Court. The highest bid was that of the appellant M/s. Valji Khimji and Company amounting to Rs. 3.51 crores. With the consent of the learned advocates representing the secured creditors, the said bid was accepted and the sale was confirmed on 30-7-2003. The Court directed the appellant to deposit 25 per cent of the purchase price i.e. Rs. 63,98,000 within 30 days from the said day and to deposit the balance amount within the next three months. The Court also directed that the amount may be deposited in instalm....
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....ut they did not do so. There is no allegation of fraud either in this case. Hence, in our opinion, there was no justification to set aside the confirmation of the sale. 13. It appears that the reasoning of the learned Single Judge, as also of the Division Bench, was that the valuation of the assets of the company was made as if these assets were scrap. The reasoning of the learned Single Judge of the High Court thus seems to be that the assets in question was wrongly given out to be scrap and thus a proper bid was not obtained. 14. In our opinion, there is nothing to show that the assets in question which were auctioned-sold were ever given out to be scrap. They are not mentioned as scrap in the advertisement or sale notice, nor is there any material to show that the valuer valued them treating them to be scrap. 15. We have carefully perused the sale notice and we find that it is nowhere mentioned therein that the assets in question are scrap. 16. No doubt, the assets of M/s. Hindustan Nitro Product (Gujarat) Limited offered to be sold in the auction sale were offered in lots (as mentioned in the sale notice). The first lot was plant, machinery and all other movables ex....
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.... benefits like sales tax exemption and Modvat. The learned Single Judge has observed that the company M/s. Hindustan Nitro Product (Gujarat) Limited had made huge investments in development of an effluent treatment plant, and received permission for supply of gas for fuel from GAIL. The learned Single Judge was of the view that the intangible assets were required to be considered while fixing the value of the property. 22. We fail to understand how all this is relevant at all. After all, what was being sold was the assets of the company, and not the shares of the company, and these assets were fully described in the sale notice. 23. The learned Single Judge in our opinion also wrongly observed that while doing the valuation the potential of the company was overlooked. Such potential has really no relevance in our opinion. 24. The learned Single Judge has observed that the valuation was made as if the assets of the company to be sold were scrap, and instead the valuation should have been done as if it was a going concern. We have already observed above that this observation is really based on no material as there is nothing to show that the valuation of the assets was done ....
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....hat every confirmed sale can be set aside the result would be that no auction sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. 32. It could have been a different matter if the auction had been held without adequate publicity in well-known newspapers having wide circulation, but where the auction sale was done after wide publicity, then setting aside the sale after its confirmation will create huge problems. When an auction sale is advertised in well-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they will be themselves be to blame if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed after the bidding (or confirmation) is over to offer a higher price. 33. Of course, the situation may be different if an auction sale is finalized say for Rs. 1 crore, and subsequently somebody turns up offering Rs. 10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers 10 crores, then an inference can be drawn that an attempt had been made to acquire that pr....