TaxTMI 
TaxTMI 
2011 (3) TMI 1477
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....s passed by the learned company judge on May 7, 2007, declining permission to the appellant Assets Reconstruction Company (India) Ltd. (for short "the ARCIL") to sell the assets of the company in liquidation under section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act"). On appeal being filed against the said order dated May 7, 2007, the Division Bench of this court vide order dated August 6, 2007, passed in Company Appeal No. 4 of 2007 permitted the appellant to sell the secured assets of the first respondent-company in liquidation in accordance with the provisions of the SARFAESI Act. The Division Bench issued the following directions : "1. The appellant shall endeavour to obtain/realise maximum price from the assets which can be alienated under the provisions of sub-section (4) of section 13 like a prudent man in respect of his own property. 2. The appellant shall on realising the amount, apply to the company court to inform the appellant as to the dues of the workmen of the industry concerned. 3. The appellant shall also place before the learned company judge a list of the other secu....
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.... security amount to all the bidders who had participated in the process of auction. The learned company judge further ordered to the official liquidator to get the fresh valuation report. Aggrieved, this company appeal has been filed by the ARCIL. Company Appeal No. 7 of 2010 is filed by the highest bidder Wearit Global Ltd., in whose favour the confirmation of sale was proposed by the sale committee. 7. Shri M. L. Verma, learned senior counsel for the highest bidder Wearit Global Ltd., and Shri Manoj Munshi, learned counsel for the ARCIL have contended that the learned company judge has committed a gross error in not confirming the sale as proposed by the sale committee in favour of Wearit Global Ltd., who's offer was much more than the fair market value of the properties in question. They argued that the order passed by the learned company judge is not a speaking order as no reasons have been assigned by the learned company judge for not accepting the offer of the highest bidder when the offer of the highest bidder was much more than the fair market value of the properties in question. They also urged that the learned company judge has committed an error in not confirming the sa....
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....this could have been a reason to accept the proposal of the sale committee. There cannot be any doubt to the proposition that in every case it is the duty of the court to satisfy itself that having regard to the market value of the property the price offered is reasonable. Unless the court is satisfied about the adequacy of the price, the act of confirmation of the sale would not be a proper exercise of judicial discretion. However in the order of the learned company judge there is no whisper as to there is possibility of getting higher price or that the price offered by the highest bidder is not reasonable. 12. In the case of Kayjay Industries (P.) Ltd. v. Asnew Drums (P.) Ltd. [1974] 2 SCC 213, the Supreme Court has held as under (headnote) : "A court sale is a forced sale and, notwithstanding the competitive element of a public auction, the best price is not often forthcoming. The judge must make a certain margin for this factor. A valuer's report, good as a basis, is not as good as an actual offer and variation within limits between such an estimate, however careful, and real bids by seasoned businessman before the auctioneer are quite on the cards. Businessman makes uncanny ....
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....nal liquidator was appointed. The court may have an inherent power to approve a transaction of sale entered into by and between the company and the third party; but it is beyond any cavil of doubt that while doing so the company court must bear in mind its duties towards the creditors. While exercising jurisdiction under section 433 of the Companies Act, the company court remains the custodian of the interest of the company and its creditors. It has, thus, a duty to satisfy itself that having regard to the market value of the property, the price offered is reasonable. (See Kayjay Industries P. Ltd. v. Asnew Drums P. Ltd. [1974] 2 SCC 213). It is furthermore required to be borne in mind that upon liquidation, the assets and properties of the company vest in the official liquidator for the benefit of its creditors. (See Allahabad Bank v. Bengal Paper Mills Co. Ltd. [1999] 96 Comp Cas 804 ; [1999] 4 SCC 383). The satisfaction as regards adequacy of the price is one of the relevant factors for proper and reasonable exercise of the judicial discretion vested in it. There cannot be any doubt or dispute that when an auction is held upon compliance with the statutory provisions, withholdi....
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....t they apply with equal force and, in fact with a greater degree of precision to judicial pronouncements. The orders of the court must reflect what weighed with the court in granting or declining the relief claimed by the applicant. It is the reasoning alone that can enable a higher or an appellate court to appreciate the controversy in issue in its correct perspective and to hold whether the reasoning recorded by the court whose order is impugned, is sustainable in law and whether it has adopted the correct legal approach. 17. Considering the impugned order passed by the learned company judge in the light of the aforesaid pronouncements of the Supreme Court we find that the order impugned in this company appeal is not sustainable. The sale committee comprising of representative of ARCIL and the official liquidator after giving wide publicity in various newspapers including newspapers of wide circulation in the country to the proposed auction received various offers. After evaluation and inter se bidding it found the offer of Wearit Global Ltd. (appellant in Company Appeal No. 7 of 2010) to be the highest. The offer was also found to be much more than the fair market value. In the....