TaxTMI 
TaxTMI 
2014 (12) TMI 1302
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....he land in question of the company in liquidation, fixing the upset price at Rs. 214 Crores and the EMD at Rs. 21.4 Crores, the appellant herein - original opponent No.9 - Vedica Procon Private Limited, whose earlier offer of Rs. 148 Crores was accepted by the learned Company Court vide order dated 17.12.2013, has preferred the OJ Appeal No.36/2014. [1.1] Feeling aggrieved and dissatisfied with the impugned order 11.08.2014 passed by the learned Company Court in OJ Civil Application No.283/2014 by which the learned Company Court has dismissed the said application preferred by the appellant herein - Narmada Fintrade Pvt. Ltd. in which the appellant prayed to permit it to be joined as party respondent in OJ MCA No.89/2014 as necessary and/or proper party, the appellant herein - original applicant Narmada Fintrade Pvt. Ltd., who is claiming to have 92% of the shareholding of the Company in liquidation has preferred the OJ Appeal No.66/2014. [2.0] Facts leading to the present appeal in nutshell are as under: [2.1] That the company named Omex Investors Limited (hereinafter referred to as "company in liquidation") was ordered to be provisionally wound up by the order dated 26.10....
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....se bidding is not appropriate offer looking to the fair market price and the valuation of the assets of the Company in liquidation. It appears that over and above the aforesaid three offerers, other 8 bidders made offer and deposited EMD along with the late fee charges which came to be permitted by the learned Company Court. That the aforesaid OLR No.43/2013 was heard by the learned Company Court on 17.12.2013. The learned Company Court was pleased to conduct the auction accordingly in the open Court, wherein 11 participants including the respondent No.1 herein as well as the appellant herein [original opponent No.9 - Vedica Procon Private Limited] participated. Ultimately, after inter se bidding, the appellant herein - original opponent No.9 emerged to be the highest bidder at Rs. 148 Crores. That as the appellant herein - original opponent No.9 was the highest bidder who offered Rs. 148 Crores, the learned Company Court by order dated 17.12.2013 accepted the offer / bid of the appellant herein - original opponent No.9 - Vedica Procon Private Limited being the highest bidder who offered Rs. 148 Crores for the land in question and disposed of the aforesaid OLR No.43/2013. It appear....
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....nd also in one English newspaper "Times of India" in the State of Gujarat and in the city of Mumbai. It further appears from the record that accordingly, the Official Liquidator published advertisement on 10.4.2013 in Gujarati dailies "Gujarat Samachar" and "Divya Bhaskar" and "Mumbai Samachar" and "Gujarat Samachar" in the city of Mumbai and "Times of India" in the State of Gujarat and city of Mumbai for sale of the aforesaid lands of the Company under liquidation. The record further reveals that in response to the said advertisements, 12 tender forms were sold, however, only 1 tender was received from M/s. Jay Bholenath Project Pvt. Ltd. in a sealed cover. It further appears that thereafter, Company Application No.151 of 2013 was filed, wherein it was prayed by the said offerer to accept the offer of Rs. 45 crores. Considering the said application, this Court was pleased to refix the upset price at Rs. 45 crores and directed the Official Liquidator to issue a fresh advertisement in the same newspapers in English and Gujarati as provided in the earlier order, inviting offers for sale of the lands in question on same terms and conditions and the Official Liquidator was further dire....
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....uction. It is contended that the applicant is ready and willing to shell out an amount of Rs. 160 crores for the land in question which has already been deposited as per the order passed by the Hon'ble Division Bench. (c). In Paragraph 3 of the application, as such factual aspects are contended by the applicant and it is contended that the applicant has filed this application to apply for a fresh bid as per the order of the Hon'ble Division Bench. It is also contended that even though Vedica Procon Pvt. Ltd. has deposited the entire amount on 16.4.2014, the sale of the land in question is not yet confirmed by this Court and no sale deed is yet executed. It is also reiterated that Vedica Procon Pvt. Ltd. has committed gross material irregularity by not adhering to the terms and conditions of the tender documents more particularly, as regards nomination. It is also reiterated that during the interregnum period, there is increase in Floor Space Index which has enhanced the original value of the property in question. The applicant has candidly submitted that the order dated 31.3.2014 has lost its efficacy in view of the subsequent development and it is specifically contended by t....
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.....2014, the opponent No.1 herein - original applicant deposited Rs. 160 Crores with the Official Liquidator. [2.6] That after hearing the learned advocates appearing for respective parties and considering the submissions made / contentions raised by the opponent No.1 herein - original applicant as well as the appellant herein - original opponent No.9, in exercise of the inherent powers conferred upon the Company Court under the provisions of the Companies (Court) Rules, 1959 (hereinafter referred to as "Companies Court Rules") more particularly Rule 9 and specifically observing that at the time of accepting the offer of the appellant herein - original opponent No.9 on 17.12.2013 at Rs. 148 Crores, the learned Company Court did not consider the potentiality of the land in question as on that date FSI in GCR was likely to be changed and that the price received [Rs.148 Crores] at the sale process was grossly inadequate and the factor like FSI which had a direct impact and effect on the potential development could not be considered by the Court, by impugned order has recalled its earlier order dated 17.12.2013 accepting the bid of the appellant herein - original opponent No.9 at Rs. ....
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....arned Company Court has recalled its earlier order dated 17.12.2013 passed in OLR No.43/2013 by which the learned Company Court accepted the offer / bid of the appellant herein - original opponent No.9 at Rs. 148 Crores, the appellant herein - original opponent No.9 has preferred the present appeal. [3.0] Shri Mihir Joshi, learned Senior Advocate has appeared with Shri Sandip Singhi, learned advocate appearing on behalf of the appellant herein - original opponent No.9 and Shri Kamal Trivedi, learned Senior Advocate has appeared with Ms. Sangita Vishen, learned advocate appearing on behalf of the respondent No.1 herein - original applicant. Ms. Amee Yajnik, learned advocate has appeared on behalf of the Official Liquidator of the Company in liquidation and Shri Dhimant Vasavada, learned advocate has appeared on behalf of the Worker Union. [4.0] The impugned judgment and order passed by the learned Company Court has been challenged by the appellant herein - original opponent No.9. [4.1] Shri Mihir Joshi, learned Counsel appearing on behalf of the appellant herein - original opponent No.9 has vehemently submitted that the learned Company Court has materially erred in passing ....
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.... had not issued any directions suggesting that the application to be preferred by the Balleshwar Greens Pvt. Ltd. should be entertained by the Company Court without deciding the issue of its maintainability. It is further submitted by Shri Mihir Joshi, learned Counsel appearing on behalf of the appellant herein - original opponent No.9 that even otherwise the application was not maintainable as it seeks a belated review of the judgment on the basis of the subsequent facts which is not permissible, and therefore, styled as a recall though none of the requirements for recall of the judgment are satisfied. [4.7] It is submitted that first of all, no grounds, required for recall of an order, have been raised in the application. It is submitted that it was not the case of Balleshwar Greens Pvt. Ltd. that the order dated 17.12.2013 was obtained by fraud practiced upon the Court or that the Hon'ble Court was misled by any party or that the Hon'ble Court had committed any mistake which prejudices any party. It is further submitted that there was no ground raised in the application that the order dated 17.12.2013, passed by the Court, suffer from inherent lack of jurisdiction or that a n....
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....original applicant is ready and willing to shell out more amount than that offered by the appellant herein and confirmed by this Court. It is submitted that though by that itself do not give any right for recall of the order dated 17.12.2013. It is submitted that a proposed change in FSI become public pursuant to the notification dated 04.03.2014 issued by Government of Gujarat. It is submitted that no explanation is given in respect of the filing of OJMCA No.89/2014 though being aware of the notification dated 04.03.2014. [4.11] It is further submitted by Shri Mihir Joshi, learned Counsel appearing on behalf of the appellant herein - original opponent No.9 that a subsequent higher offer by itself, without any allegation of material irregularity or fraud, does not justify reopening the auction but even if it is accepted that a substantial increase may establish material irregularity in the confirmation of the sale, even the said proposition does not support reopening the auction in the facts of the present case. It is further submitted that the price offered by Balleshwar today is admittedly on the basis of the increased value of the property due to the subsequent event of incre....
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....ate. It is submitted that in fact there is no such finding by the learned Company Court and therefore, the confirmation of the auction vesting valuable rights in appellant herein could not have been set aside. [4.14] It is further submitted that auction was conducted after fixing the reserved price, giving wide publicity and by open, public and competitive bidding and none of these aspects have been questioned by Balleshwar. It is submitted that as such the bid of the appellant - Vedica, much above the reserve price was considered fair and deserving acceptance by all stakeholders including the secured creditors, workmen and the Official Liquidator. It is submitted that even it was not the case of the Balleshwar that the Company Court as a custodian had not taken the interest of the creditors, workers etc. into consideration while passing the order dated 17.12.2013. [4.15] It is further submitted that even the learned Company Court in the impugned order has not found that the price at which the sale was confirmed was inadequate at the time of confirmation. It is submitted that the learned Company Court has set aside the confirmation on the ground that in view of the subsequent....
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....the case of Balleshwar itself was that all bidders were aware of the likely change in FSI, and therefore must be presumed to have bid on such basis, and there is no allegation of unfair bidding or cartelisation. It is further submitted that admittedly, Balleshwar was aware of the pending change, despite which it did not seek postponement of auction and having participated without objection, failed to match the highest bid. Balleshwar did not seek review of the order of confirmation on this basis forthwith but only after the FSI was in fact increased much after the auction, that the application was filed. It is submitted that apart from indicating the lack of bonafides of Balleshwar, the conduct establishes that the price was adequate at that time and there was no justification in setting aside the order and such is not even Balleshwar's case and the finding if at all it is considered to be so is clearly beyond the pleadings of the parties. In support of his above submissions, Shri Joshi, learned Counsel has relied upon the following decisions of the Hon'ble Supreme Court as well as this Court. 1. Navalkha & Sons v. Ramanuja Das & Ors. (1970)40 CC 936 (Pages 941942) 2. Kayj....
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....and Conditions which stipulates that acceptance of bid by the learned Company Court is separate and distinct from the confirmation of sale by the learned Company Court. It is submitted that on perusal of clauses 5, 8, 9, 13, 17, 20, 23, 29 and 33 of the Terms & Conditions, it is clear that on acceptance of the highest bid by the learned Company Court, the learned Company Court confirms the sale in favour of the highest bidder. [4.19] Now, so far as the exercise of inherent powers by the learned Company Court is concerned, Shri Joshi, learned Counsel has vehemently submitted that the learned Company Court has failed to appreciate that mere offering higher price at a later stage on second though would not automatically lead the learned Company Court to exercise its inherent powers under Rule 9 of the Company Court Rules and that too without considering the settled principles for recall, delay and laches, suppression, waiver, estoppel and acquiescence. [4.20] It is further submitted that mere offering high price by an out bid unsuccessful bidder, based on subsequent events and that too without there being any averments to the effect that the price offered during the auction w....
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....mpany Court for doing complete justice in the matter. It is submitted that in exercise of inherent powers, limitation like waiver, estoppel, acquiescence or the limitations for entertaining a review application, are not applicable while entertaining the application for recall under the aforesaid provisions. [5.2] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent No.1 herein - original applicant that there is a major difference between "review" of the order and "recall" of the order. It is submitted that in review, the Hon'ble Court has to enter into the merits of the case to find out whether an error apparent on the face of record has been committed, whereas in case of recall what is required to be seen with reference to the order under recall is (a) violation of principles of natural justice; (b) illegality; (c) irregularity; (d) suppression of facts and (e) exercise of fraud. It is submitted that to do the complete justice the Court can recall its earlier order and that is exactly what has been done by the learned Company Court in the present case. In support of his above submissions, Shri Trivedi, learned Counsel has heavily ....
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....a Ashok Hurra v. Ashok Hurra reported in (2002)4 SCC 388 (Para 64) and in the recent decision in the case of Subrata Roy Sahara v. Union of India reported in (2014)8 SCC 470 (Para 7). It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent No.1 herein - original applicant that in view of the above, the judgments cited on behalf of the appellant herein viz. (1) State of Punjab v. Davinder Pal Singh Bhullar and others etc. reported in (2011) 14 SCC 770; (2) K.K. Velusamy v. N. Palanisamy reported in (2011)11 SCC 275; and (3) Swain and others v. Gopinath Deb and others reported in (1999)4 SCC 396 cannot be pressed into service to negate the case of the respondent herein and inasmuch as they suggest that power of recall in present circumstances can very well be exercised. [5.6] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent No.1 herein - original applicant that in the facts and circumstances of the case, the learned Company Judge is right in law in allowing the respondent's recall application. It is submitted that in the present case as such the learned Company Judge has taken upon himself and ....
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....ation" and "acceptance" occurring at several places in the said Terms & Conditions, are not nebulous and surplusage but are required to be interpreted literally. [5.11] It is further submitted that therefore, from the order dated 17.12.2013, it can be said that learned Company Judge accepted the higher offer of the appellant herein only, the learned Company Judge is absolutely right in law in observing in paras 36 and 37 that "the draft of such a sale deed is to be placed before the concerned Company Court for its approval.....", "that the sale deed is not executed and thus, as per the Terms & Conditions of auction, the sale procedure is yet not complete". [5.12] It is further submitted that even otherwise, if the order dated 17.12.2013 of the learned Company Court had been an order of "confirmation of sale" of the property in question in favour of the appellant herein, in that case, the said order would have definitely reflected upon following aspects, as opined by the Apex Court and this Court in various judgments. "1. 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 ....
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....ave been confirmed in favour of the appellant herein at Rs. 148 Crores, higher offer of Rs. 160 Crores of the respondent No.1 herein with upfront deposit thereof came on record on 17.04.2014, which was followed by further deposit of Rs. 40 Crores and Rs. 14 Crores by the respondent, totaling its offer at Rs. 214 Crores. It is submitted that therefore the property worth more than Rs. 214 Crores [atleast] would be sold in favour of the appellant herein at a throw away price of Rs. 148 Crores only, if the order dated 17.12.2013 stands. It is submitted that therefore there is nothing wrong on the part of the learned Company Judge to have directed the fresh auction with the upset price of Rs. 214 Crores. Shri Trivedi, learned Counsel has heavily relied upon the decision of the Hon'ble Supreme Court in the case of LICA No.(1) reported in (1985) Comp. Cases 788. It is submitted that the situation in the present case and the situation which were there before the Hon'ble Supreme Court in the case of LICA No.(1) (Supra), are almost identical. It is submitted that in the aforesaid case, the subsequent higher offer of the bidder i.e. LICA (P) Ltd. (No.1) was directed by the Apex Court to be tr....
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....f the respondent No.1 herein - original applicant has further submitted that even in the case of Chaudhary Brothers (Supra), this Court has held that in a given case offer for a higher price even in cases when there is no allegation about fraud or irregularity may provide a good and justifiable ground to cancel the confirmed sale, however that would be only in exception and rare case where the subsequently offered higher price is significantly higher than the received price. It is submitted that in the present case offer made by the respondent No.1 herein - original applicant had Rs. 214 Crores is and can be said to be significantly higher than the offer made by the appellant at Rs. 148 Crores. It is submitted that therefore the learned Company Judge has not committed any error in ordering any reauction by recalling its earlier order dated 17.12.2013 and by fixing the upset price at Rs. 214 Crores. In support of above submissions, Shri Trivedi, learned Counsel has heavily relied upon the following decisions of the Hon'ble Supreme Court. 1. Divya Manufacturing Company (P) Ltd. (2000)6 SCC 69 (Para 16) 2. Valji Khimji & Co. (2008) 9 SCC 299 (Para 28) 3. FCS Software Solution....
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....ubmitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent No.1 herein that in the order under challenge in the present appeal, the learned Company Judge has taken into account the strong probability of likely increase in FSI, existing as on 17.12.2013 and not the subsequent event of notification dated 04.03.2014 when FSI was actually increased. It is submitted that it is not correct to say that the learned Company Judge has as such taken into account the subsequent event of 04.03.2014 and actual increase in the FSI. [5.21] It is further submitted that at the time of rendition of the order dated 17.12.2013 by the learned Company Judge, the perception of the bidders as regards the price quoted then, was factually incorrect inasmuch as, even as per the submission made on behalf of the Appellant herein before the learned Company Judge, all the concerned, including the parties / bidders were very much aware as on 17.12.2013 about the likely possibility of increase/change in FSI, resulting in the enhancement in the value of the property in question, which eventuality took place on 4.3.2014, when the FSI came to be increased to 1.8. It is therefore submitted that ....
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....ing the aforesaid development of increase in FSI which was in the offing, though uncertain, could not be considered by this Court, which in opinion of this Court has led to insufficient determination of the true and correct market value of the land in question......" (Emphasis supplied) It is further submitted that the learned Company Judge in para 41 at Pg.Z16 proceeds to observe as under: "... However, such a vital factor of potentiality of development which could not be considered by this Court in the circumstances narrated hereinabove, has resulted into inadequacy of price fetched which is amply clear from the substantial gap between the price fetched at the auction held on 17.12.2013 and the price now offered as an upset price. The increase from the price fetched by the highest bidder opponent No.9 at Rs. 148 Crore and now offered by the applicant at Rs. 214 Crore is a substantial wide gap which has resulted into insufficiency of price fetched which even according to the Apex Court amounts to irregularity. The Company Court is the custodian of the property of the Company under liquidation and therefore, such factors need to be considered even at this stage. ...." (Emphas....
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....id public auction could not take place as scheduled and thereafter till August, 1969, because of dilatory tactics adopted by the judgmentdebtor by moving various authorities including the High Court, when neither the Judgmentdebtor could find out any person with better offer at any point of time nor had any other party or bidder come forward with better offer. It is further submitted that it was in context of the aforesaid facts that the Apex Court observed to the effect that it is not right to judge the unfairness of the price by hindsight wisdom and that the Court should not go on adjourning the sale till a good price is got. It is further submitted that similarly, the judgment dated 06.03.1990 of the Calcutta High Court in case of Sharawan Kumar Agrawal v. Shrinep Investment Ltd., reported in 1990 (68) Company Cases 521, 2 Comp. LJ 231, cited on behalf of the appellant herein cannot have any efficacy in the present matter, since a judgment of another Division Bench of the Calcutta High Court rendered later in point of time, i.e. on 15.09.1992 by following the above referred judgment in case of Sharawan Kumar Agrawal (Supra) came to be set aside by the Hon'ble Supreme Court on....
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.... learned Counsel appearing on behalf of the appellant has submitted that none of the judgments relied upon by the respondent No.1 herein - original applicant - Balleshwar Greens Pvt. Ltd. would be applicable to the facts of the present case. [7.0.1] It is submitted that in the case of LICA1 (supra) one of the terms of the offer was that even confirmation of sale is liable to be set aside by the High Court as per clause 11 of the conditions of offer. It is submitted that no clause similar to clause 11 is found in the facts of the present case. It is further submitted that in that case the Court, at first instance, had never confirmed the sale and, opportunities were granted to the parties to increase their offer. Therefore, the principle laid down in LICA1 (supra) would not be applicable to the facts of the present case. [7.0.2] It is further submitted that even in the case of LICA2 (Supra) one of the terms of the offer was that even confirmation of sale is liable to be set aside by the High Court as per clause 11 of the conditions of offer. Clause 11 as extracted in the said judgment reads as under: "11. The High Court may set aside the sale in favour of the purchaser/purc....
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....resent case there is no allegation of fraud made by Balleshwar and further, the Hon'ble Supreme Court of India in the case of Valji Khimji (Supra) has stated that the decision in Divya Manufacturing (Supra) cannot be treated as laying down any absolute rule that a confirmed sale can be set aside in all circumstances. [7.0.5] It is further submitted that even the Division Bench of this Hon'ble Court in the case of Sarvariya Exports (Supra) had the occasion to consider the judgment of the Apex Court in the case of Divya Manufacturing (Supra). It is further submitted that on the perusal of the said judgment of the Division Bench of this Hon'ble Court, it would be clear that the ratio laid down in the judgment of Divya Manufacturing (Supra) would not be applicable to the facts of the present case. [7.0.6] It is further submitted that the learned Single Judge of this Court in the case of Chaudhary Brothers (Supra) considered the ratio laid down by the Apex Court in the case of Divya Manufacturing (Supra). It submitted that on perusal of the facts it is evident that in the case of Divya Manufacturing (Supra), the correct market value of the property was not properly known to the Co....
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....ent was passed in the peculiar facts of that case and further, the Hon'ble Supreme Court of India reiterated the principle that ordinarily, the Court hates to accept the offer made by any bidder or a third party after acceptance of the highest bid/offer. It is submitted that in the said judgment, the Hon'ble Supreme Court of India observed that if the order of the Division Bench is sustained, the creditors of the company are bound to suffer. It is submitted that in the facts of the present case, no averment is made by Balleshwar that by confirming the sale in favour of Vedica, the creditors of Omex Investors Limited (in liquidation) are bound to suffer. It is submitted that on the contrary, in the facts of the present case, the Official Liquidator, workers and the secured creditors expressed that the bid of Vedica be accepted by this Hon'b1e Court. It is submitted that as the said judgment was passed in the peculiar facts of that case, the same would have no bearing on the facts of the present case. [7.0.10] It is further submitted that the judgment of Shradhha Aromatics (Supra) is also referred to by this Hon'ble Court in the case of Chaudhary Brothers (Supra). It is submit....
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....f Petel Phoschem and Patel Phoschem requested the Court to direct Manu to deposit some amount. It is submitted that thereafter the learned Single Judge further carried out inter se bidding between Manu and few other bidders and ultimately, the bid of Manu was accepted at Rs. 2.70 Crores by order dated 24.01.2008. It is submitted that being aggrieved, Patel Phoschem challenged the order of the learned Single Judge in appeal and at the time of hearing of the appeal, Patel Phoschem showed its willingness to increase its bid upto Rs. 2.70 Crores. It is submitted that in light of the said facts, the Division Bench of this Hon'ble Court, by its order dated 27.08.2012, confirmed the sale in favour of Patel Phoschem. It is further submitted that aggrieved by the order passed by the Division Bench, Manu filed appeal before the Hon'ble Supreme Court of India. It is submitted that the Hon'ble Supreme Court of India by its order dated 08.10.2012 noted that the sum of Rs. 2.70 Crores deposited by Manu with the Official Liquidator have now earned interest @ 8% per annum and thereby accumulated to a sum of Rs. 3.78 Crores. It is submitted that the Hon'ble Supreme Court also noted that Manu is....
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.... order dated 24.08.2012. It is submitted that Manoj filed an appeal before the Hon'ble Supreme Court of India against the orders dated 30.08.2011 and 24.08.2012. It is further submitted that at the time of hearing before the Hon'ble Supreme Court, Manoj submitted that he is willing to match the valuation of report of Rs. 6.25 Crores. It is submitted that at the time of hearing other bidders also appeared and made the offers of Rs. 25 Crores and Rs. 30 Crores, respectively. It is submitted that the Hon'ble Supreme Court of India directed the parties to deposit a sum of 10 Crores. It is in these circumstances, the Hon'ble Supreme Court of India directed the Official Liquidator to proceed with the fresh auction. It is further submitted that first of all the bid of Manoj was never accepted by the Company Court or by the Division Bench of the High Court and that there was no confirmation of sale in favour of Manoj. It is submitted that Manoj before the Hon'ble Supreme Court increased the offer from Rs. 1.03 Crores to Rs. 6.25 Crores. It is submitted that by such increase there was never any confirmation or acceptance of the bid by the Hon'ble Supreme Court of India and that there were o....
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....8.0] It is further submitted by Shri Joshi, learned Counsel appearing on behalf of the appellant that even the submissions made by Shri Trivedi, learned Counsel appearing on behalf of the original applicant - Balleshwar that by order dated 17.12.2013, the learned Company Court had not confirmed the sale in favour of the appellant herein is absolutely baseless and without any merit. [8.1] It is submitted that as such by order dated 17.12.2013, the learned Company Court accepted the bid of Vedica as being the highest bidder. It is submitted further that the bid of Vedica is accepted as per the tender conditions. It is submitted that by the said order the sale is confirmed in favour of Vedica. [8.2] It is further submitted that no where it has been stated by the learned Company Court in its order dated 17.12.2013 that the learned Company Court has not yet confirmed the sale in favour of Vedica or that the learned Company Court would confirm the sale subsequently. It is submitted that on the contrary, the learned Company Court by its aforesaid order dated 17.12.2013 directed Official Liquidator to take appropriate actions as envisaged under the conditions of the tender notice, mo....
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....r that any fraud or mischief has been played by Vedica with the Court. [8.4.2] It is further submitted that in the case of Girish Bhagwatprasad (Supra), Girish Bhagwatprasad and one another were the shareholders of the company in liquidation. It is submitted that the said shareholders had pledged their shares with IDBI. It is further submitted that subsequently, IDBI executed the deed of assignment in favour of River Front Properties Pvt. Ltd. by transferring all the rights of IDBI in respect of its claim against the company with security interest including the pledge of the equity shares. It is submitted that IDBI moved the Company Court with an application to ratify its action in respect of the deed of assignment under section 536 of the Companies Act, 1956. It is further submitted that though the aforesaid shareholders were directly concerned with the deed of assignment, more particularly the equity shares, the said shareholders were not made parties by IDBI. As the aforesaid shareholders were not heard, the Company Court recalled its earlier order. It is submitted that the learned Company Court recalled the order as the proper and necessary party was not heard. In the presen....
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.... It is submitted that there is no quarrel to the proposition that a Company Court has inherent powers. It is further submitted that the Court can exercise its inherent powers provided the case falls within the four comers of exercise of inherent powers and that too after considering the principles of recall, delay and laches, suppression, waiver, estoppel and acquiescence which may arise in the facts of a given case. [8.4.5] It is submitted that in the case of Fertilizers & Chemicals (Supra), Official Liquidator invited bids and the highest offer was made by State Bank of India for Rs. 52 lacs. It is further submitted that Fertilizers & Chemicals offer was for Rs. 26.76 lacs. It is submitted that the Official Liquidator sought permission of the Court to confirm the sale in favour of State Bank of India. It is submitted that at this juncture, an application was filed by Fertilizers & Chemicals seeking a direction to the Official Liquidator that the Official Liquidator should sell the land to Fertilizers & Chemicals on paying the said price as quoted by State Bank of India. It is further submitted that Fertilizers & Chemicals also stated that it was willing to offer Rs. 66.09 lacs....
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.... Making above submissions and relying upon above decisions, Shri Joshi, learned Counsel appearing on behalf of the appellant herein - Vedica has requested to allow the present appeal more particularly when at the relevant time i.e. on 17.12.2013 nobody raised an objection that the price offered by the appellant of Rs. 148 Crores is inadequate. [9.0] Heard learned Counsel appearing on behalf of respective parties at length. At the outset it is required to be noted that what is challenged in the present appeal is the impugned order passed by the learned Company Court recalling its earlier order dated 17.12.2013 by which the learned Company Court accepted the higher bid/offer made by the appellant herein of Rs. 148 Crores for the land/property of the Company in liquidation. It is also required to be noted at this stage that while passing the impugned order the learned Company Court has exercised the inherent powers conferred under Rule 9 of the Company (Court) Rules by taking upon itself the burden and accepting that certain relevant aspects which have a direct bearing on the market value / price of the land in question as on that day, such as potentiality of the land etc. were....
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.... to execute the sale deed within one month from the date of payment of full sale consideration after confirmation of sale by this Court. Thus, as per the terms and conditions of auction at the first instance, the highest bidder is to be identified. It is no doubt true that thereafter, as per the conditions, on payment of full price, the highest bidder is to be handed over the possession of the lands in question which, as per condition No.33, is to be followed by execution of a sale deed. In the instant case, opponent No.9 emerged to be the highest bidder and offered priceof Rs. 148 crores. The facts reveal that as per condition No.9, opponent No.9 paid 25% of the purchase price on 6.1.2014. As the facts emerge in this application thereafter, opponent No.9 approached this Court by way of filing O.J. Misc. Civil Application No.53 of 2014, which came to be disposed of on an undertaking filed by opponent No.9, whereby opponent No.9 was granted 4 installments as provided in Para 5 of the order dated 31.3.2014 and opponent No.9 was also directed to pay interest at the rate of 10% starting from 16.4.2014 till the last installment of Rs. 24.5 crores is received, to be calculated proportion....
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....s to consider this application in order to secure ends of justice between the parties. The Company Court while conducting the auction is the trustee and custodian of the property of the erstwhile Company more particularly, it has to protect the interest of the workers, secured creditors, unsecured creditors and the shareholders. In light of glaring difference in the price offered by the applicant and the price obtained in the auction, this Court cannot rely upon any technicalities and in opinion of this Court, on the contrary, it owes a duty to exercise inherent powers under Rule 9 of the Companies (Court) Rules, 1959. On appreciating the ratio laid down by the judgments cited by the applicant as well as opponent No.9, in facts of this case, the present application is held to be maintainable...". "...as the as the paramount consideration of the Company Court is to see that maximum market price is fetched and considering the gap between the price determined in the auction and the price now offered, the price fetched in the auction is grossly inadequate. As noted hereinabove, it is an admitted position that the sale deed is not executed and thus, as per the terms and conditions of au....
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....sidered. With the increase in FSI even if it is roughly calculated, the extent of possible/permissible construction would increase from 13,895 sq. mtrs. to 24,840 sq. mtrs., meaning thereby, the permissible construction would be 11,040 sq. mtrs. more. On the date on which, the auction came to be held by this Court and while accepting the highest bid of opponent No.9, the change in FSI was not sanctioned but was only in offing and therefore, this Court have had no occasion to consider the said factor. While determining the market value, factor of potential development is an important factor. Considering the aforesaid development of increase in FSI which was in offing, though uncertain, could not be considered by this Court, which in opinion of this Court has led to insufficient determination of the true and correct market value of the lands in question. Though the increase in FSI is an event which has occurred after acceptance of highest bid still however, the vital factor of potentiality of development could not be considered, which has resulted into irregularity as well as injury and as held by Division Bench of Calcutta High Court in the case of Sharawan Kumar Agarwal (supra), th....
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....of Rs. 148 Crores which came to be accepted vide order dated 17.12.2013 was an inadequate price. That the factum of change in the FSI was in offing and the aforesaid relevant factor of change in the FSI which would have a direct bearing on the potential development of the land was not considered by the Court which has resulted into irregularity and injury. While observing as stated herein above, the learned Company Court has taken everything upon itself and has accepted that the relevant factors like potential development of the land even as on 17.12.2013 were not considered by him which has resulted into accepting the inadequate price and irregularity and injury and therefore, this is a fit case to exercise the inherent powers conferred under Rule 9 of the Companies (Court) Rules. Therefore, as such the learned Company Court has tried to correct the error committed by it and has recalled its earlier order dated 17.12.2013 accepting the higher offer of the appellant of Rs. 148 Crores [market price of Rs. 148 Crores which is held to be grossly inadequate and substantially low] and has passed the order to reauction the land by fixing the upset price at Rs. 214 Crores. Under the circu....
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....rtainly not put us to shame. In para 7 the Hon'ble Supreme Court has observed and held as under: "7. Now the embarrassment part. Having gone through the pleadings of the writ petition we were satisfied, that nothing expressed therein could be assumed, as would humiliate or discomfort us by putting us to shame. To modify an earlier order passed by us, for a mistake we may have committed, which is apparent on the face of the record, is a jurisdiction we regularly exercise under Article 137 of the Constitution of India. Added to that, it is open to a party to file a curative petition as held by this Court in Rupa Ashok Hurra v. Ashok Hurra, (2002) 4 SCC 388. These jurisdictions are regularly exercised by us, when made out, without any embarrassment. Correction of a wrong order, would never put anyone to shame. Recognition of a mistake, and its rectification, would certainly not put us to shame. In our considered view, embarrassment would arise when the order assailed is actuated by personal and/or extraneous considerations, and the pleadings record such an accusation. No such allegation was made in the present writ petition. And therefore, we were fully satisfied that the feeling e....
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....(Supra) would be applicable to the facts of the case on hand. As observed herein above in the present case the learned Company Court has recalled its earlier order dated 17.12.2013 in exercise of inherent powers on the ground that certain relevant factors which had a direct bearing on the determination of the market price were not considered by him and therefore, it has resulted into irregularity in accepting the offer of the appellant of Rs. 148 Crores, which was inadequate. Considering the aforesaid facts and circumstances, as such it cannot be said that the learned Company Court has committed any error in exercising the inherent jurisdiction and in recalling its earlier order dated 17.12.2013 and directing to reauction the land in question by fixing the upset price of Rs. 214 Crores. [9.8] Number of submissions have been made by the learned Counsel appearing for respective parties on the issue whether the confirmed sale can be deconfirmed or not on the basis of the subsequent higher offer. It is also contended on behalf of the appellant that the learned Company Court has relied upon the subsequent development of increase in FSI which has resulted into increase in the market p....
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....present case the learned Company Court has in exercise of inherent powers under Rule 9 accepting and/or taking upon itself that certain relevant factors like potential development and the change in the FSI which had a direct bearing on the determination of the market price was not considered by him on 17.12.2013 when the offer of the appellant of Rs. 148 Crores was considered. Under the circumstances, the aforesaid aspect is not required to be considered and/or gone into detail. [9.10] Even otherwise while considering the impugned order it appears that learned Single Judge has considered in detail the decisions of the Hon'ble Supreme Court on the point more particularly in the case of Shraddha Aromatics Pvt. Ltd. (Supra), LICA (P) Ltd. No.1 (Supra) and LICA (P) Ltd. No.2 (Supra), Divya Manufacturing (Supra) and Valji Khimji and Company (Supra). The learned Company Court has also considered the decisions which were relied upon by and which are relied upon by the learned Counsel appearing on behalf of the appellant. Considering the aforesaid decisions and even the decisions which are relied upon by the learned Counsel on behalf of the appellant referred to herein above on the poin....
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....o be noted that the increase in the market price from Rs. 148 Crores accepted by the learned Company Court on 17.12.2013 has been increased substantially at least to Rs. 214 Crores within a span of only four months. The aforesaid would confirm the finding recorded by the learned Company Court that the market price offered by the appellant of Rs. 148 Crores and accepted by the learned Company Court on 17.12.2013 was inadequate. As observed by the Hon'ble Supreme Court in catena of decisions that in proceedings for winding up of a company in liquidation, the Company Court acts as a custodian for the interest of the company and the creditors etc. Therefore, before sanctioning the sale of its assets, the Court is required to exercise its judicial discretion to see that the properties are sold at a reasonable price. It is also observed and held by the Hon'ble Supreme Court in catena of decisions that the Company Court has to see that the best price of the property is fetched. Under the circumstances and in the facts and circumstances of the case, narrated hereinabove, more particularly when the learned Company Court has recalled its earlier order of accepting the offer of the appellant ....
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....e present case the learned Company Court has exercised its inherent jurisdiction conferred under Rule 9 of the Companies (Court) Rules and has recalled its earlier order and the learned Company Court has not exercised the powers of review jurisdiction. The aforesaid aspect is already discussed hereinabove. Under the circumstances, OJ Appeal No.36 of 2014 deserves to be dismissed. [10.0] Now, so far as OJ Appeal No.66/2014 preferred by the Narmada Fintrade Pvt. Ltd. shareholders who are having approximately 92% shareholding is concerned, considering the impugned order passed by the learned Company Court in OJ Civil Application No.283/2014, it appears that the learned Company Court has not decided anything on merits whether the appellant herein can be said to be a necessary and/or proper party or not. The said application preferred by the applicant i.e. OJ Civil Application No.283/2014 has been dismissed by the learned Company Court solely on the ground that the application submitted by the applicant earlier for joining party in Company Application No.475/2011 in OL Report No.36/2011 by which the applicant prayed to join it as a party in the said proceedings was rejected. However,....
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....e and the matter is required to be remanded to the learned Company Court to decide the said application afresh in accordance with law and on merits. It is made clear that we have not expressed anything on merits whether the appellant herein i.e. appellant of OJ Appeal No.66/2014 can be said to be a necessary and/or proper party or not. We have simply remanded the matter to the learned Company Court to decide the said application afresh in accordance with law and on merits as, as observed hereinabove, the learned Company Court has not decided anything on merits whether the appellant can be said to be a necessary and/or proper party or not. Consequently, OJ Appeal No.66/2014 deserves to be allowed and is, accordingly, allowed to the aforesaid extent. [11.0] In view of the above and for the reasons stated above, OJ Appeal No.36/2014 filed by Vedica Procon Private Limited is hereby dismissed and the impugned judgment and order dated 11.08.2014 passed by the learned Company Court passed in Miscellaneous Civil Application No.89/2014 in OLR No.43/2013 by which the learned Company Court has recalled its earlier order dated 17.10.2013 passed in OLR No.43/2013 and issued the directions fo....