TaxTMI 
TaxTMI 
2020 (2) TMI 1079
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.....07.2019 passed by the learned Company Judge in CA No. 611/2019 in CO. PET. 329/2011. The aforenoted application had been moved by Respondent No.1 - Bhupinder Singh, the Ex-Director of Koutons Retail India Ltd. - the company in liquidation, to make a better offer of Rs. 26 crores without disclosing the name of the prospective bidder. The application had been made with a view to seek recall of the confirmation of sale of the property in favour of the Appellant herein for an amount of Rs. 21.83 crores, which amount had already been deposited by the Appellant. On 30.05.2019, the Court while issuing notice in CA No. 611/2019 passed the following order: "CA No. 611/2019 1. By this application, the applicant who states himself to be one of the former directors and promoters of the respondent company, seeks to set aside the sale of the property being Plot Nos.539-539A, Sector 37, Udyog Vihar, Phase-II, Gurgaon and rejection of the bid of Sh.Narender Kumar Nehra. 2. The grievance of the applicant is that the reserve price of the said property of Rs. 21.83 crores was below even the circle rate. The learned senior counsel appearing for the applicant states that the applicant is ready t....
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....orth to offer a higher amount for the same property. 4. All that the learned Single Judge has done by the impugned order is to list the matter on 25th July, 2019 for a bidding to happen in the Court in the presence of the said Applicant and the present Appellant. 5. The Court sees no reasons to interfere in the matter at this stage. 6. Any submission that the present Appellant has to oppose the said sale can be raised before the learned Single Judge in accordance with law at the appropriate stage. The bona fides of the fresh bidder will be examined by the learned Single Judge. 7. The appeal is dismissed." 4. It is clear that the Division Bench did not rule upon the submissions of the Appellant with regard to his grievance regarding the reopening of the sale, which stood confirmed in his favour. All issues were left to be decided by the learned Single Judge. 5. Thereafter, the impugned order dated 25.07.2019 came to be passed, which reads as follows: "CA No.611/2019 1. Pursuant to the order of this court dated 30.05.2019, the learned counsel for Mr.Narender Kumar Nehra has appeared. He has denied the contention of the learned senior counsel for the applicant about any ....
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....order, the sale was confirmed in favour of Respondent No. 3 - Fashion Accessories, and the Official Liquidator was directed to handover physical possession of the property to Fashion Accessories within a period of three weeks from the date of the said order and to also execute the necessary sale deed. 7. It appears that property No. 539-539A, Sector-37, Udyog Vihar, PhaseIV, Gurgaon, Haryana was advertised for sale by auction by the Official Liquidator with a view to liquidate the assets of the company under liquidation. The auction notice was published on 22.03.2018 by the Official Liquidator. The reserved price of the said property was fixed at Rs. 21,83,24,000/-. It appears that no tenders were received and, consequently, no auction took place on the fixed date i.e. on 03.05.2018. As a result, the property could not be sold and the auction failed. At that stage, the Appellant proposed to purchase the property at the reserve price of Rs. 21,83,24,000/- by moving an application i.e. CA No. 976/2018 in CO.PET. 329/2011 on 23.08.2018. This application was allowed by the learned company Judge on 06.09.2018 in the presence of and with the consent of the Official Liquidator. It appear....
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....No. 3 offered a lesser amount of Rs. 23 crores and, keeping in view the fact that the Appellant had already deposited the amount of Rs. 21.83 crores, the difference between the amount offered by Respondent No. 3 for purchase of the property in question was only about 5%, and not substantial. 9. Learned counsel for the Appellant has placed reliance on the decisions of the Supreme Court in Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Limited and Others, (2008) 9 SCC 299 and in Vedica Procon Private Ltd. v. Balleshwar Greens Private Ltd. and Ors., (2015) 10 SCC 94 to submit in in the aforesaid background, that there was no justification for undoing the confirmed sale in favour of the Appellant when he had already deposited the entire amount and all that remained to be done was the handing over of the vacant and peaceful physical possession of the property by the Official Liquidator and completion of the sale transaction by execution of the relevant sale deed. 10. On the other hand, Ms. Sindhwani has placed reliance on Divya Manufacturing Company (P) Ltd. Tirupati, Woolen Mills Shramik Sangharsha Samiti and Anr. V. Union Bank of India and Ors.,....
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.... accepted the bid of the applicant to the tune of Rs. 21,83,24,000/- for property located at Plot No.539539A, Sector-37, Udyog Vihar, Phase-VI, Gurugaon, Haryana. Part sale consideration of Rs. 7,65,00,000/- has been deposited with the Official Liquidator. On 4.12.2018 this court granted further extension of two months w.e.f. 6.12. 2018 to the applicants to deposit the balance sale consideration to the tune of Rs. 14,18,24,000 with directions that the applicants would pay simple interest @ 8% per annum w.e.f. 6.12.2018. In the interest of justice, time is granted till 31.3.2019 to pay the balance amount. Applicant will also pay the necessary simple interest @ 8% per annum, for the period. The above order to the extent it directs payment of simple interest @ 8% per annum w.e.f. 6.12.2018 would stand satisfied in case the necessary payment is made by 31.3.2019. Application stands disposed of. ORDER 09.04.2019 CA No. 355/2019 By this application, the applicant-Mr.Narendar Kumar Nehra seeks extension of time for depositing the balance sale consideration of Rs. 14,18,24,000/-. This court had on 08.02.2019 directed the applicant to deposit the necessary bid amount on or before....
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....e sale process that was undertaken by the Company Court in favour of the Appellant, or in the acceptance of the bid of the Appellant. In absence of any such allegations, there was no ground for recalling the order accepting the appellant's bid, especially at the instance of the party, who on a later date was willing to offer only a marginally higher price. If we are to permit such a practice, it would imply that a completed transaction can be reopened merely because a slightly better price is available. The certainty and finality attached to the bidding process undertaken by the court, would be adversely affected. Such a course of action undermines the sanctity of the sale process. Adopting such a path is also bound to have serious repercussions that could be detrimental to the process of public auction and also to the public interest. Merely because there is a possibility of getting a marginally better offer, it cannot be a valid ground to upset a concluded transaction. The situation may be different if a substantially higher genuine offer is received, as that would itself be indicative of the earlier successful bidder making a considerably lower offer compared to the market price....
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....ainst the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. 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. In Gordhan Das Chuni Lal v. S. Sriman Kanthimathinatha Pillai [AIR 1921 Mad 286] it was observed that where the property is authorised to be sold by private contract or otherwise it is the duty of the Court to satisfy itself that the price fixed is the best that could be expected to be offered. That is because the Court is the custodian of the interests of the Company and its creditors and the sanction of the Court required under the Companies Act has to be exercised with judicial discretion regard being had to the interests of the Company and its creditors as well. This principle was followed in Rathnaswami Pillai v. Sadapathi Pillai [(1925) Mad 318] and S. Soundarajan v. Roshan & Co. [AIR 1940 Mad 42] In A. Subbaraya Mudaliar v. K. Sundarajan [A....
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....ction of the Respondent No.1 regarding the property being undervalued is without merit, since neither Respondent No 3 nor any bidder came with a substantially higher offer. The difference in the amount offered by the Appellant, and that offered by Respondent No.3 is not more than 5%. The Supreme Court in the aforesaid decisions i.e. Valji Khimji and Co (supra) and Navlakha and Sons (supra) has carved out an exception of fraud for annulling the bidding process. The Court has observed that if subsequent to an auction, an offer is made, which is substaintially higher than what has been finalized, the situation may indicate fraud or some collusion. However, if the price offered is only little over the auction price, that cannot, by itself, suggest that fraud has been done. Concededly, in the present case, the difference between the two bids is only about Rs. 1.16 crores which is not more than 5 % of the bid amount of the Appellant. Hence, the reopening of the auction bid of the Appellant, was improper and unlawful and the impugned order deserves to be set aside. 18. Further, we may add that we also do not find anything improper in the conduct of the Appellant. Much has been said about....