TaxTMI 
TaxTMI 
2013 (10) TMI 1600
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....e Court (hereinafter referred to as successful bidder) may be recalled and cancelled and instead his (i.e. the applicant's) offer, which is for higher amount (i.e. about Rs. 9.90 lacs more than the highest bid which came to be accepted vide order dated 21.6.2013 during auction / inter-se bidding) may be accepted. 1.1 Considering the request made in the application, order dated 30.7.2013 was passed and office was directed to issue process to the opponent No.2 i.e. the said successful bidder and to the secured creditors as well as official liquidator (OL for short). 1.2 Having regard to the request in the application and the issue raised by the applicant, Rule. Mr. Rao, learned advocate for the opponent No.2, Mr. Dave, learned advocate for opponent No.4 and Ms. Yajnik, learned advocate official liquidator have waived service of Rule. In view of the request by learned advocates, application is heard finally. Service of process is waived by learned advocates for opponent No.2, opponent No.4 and opponent No.1. 2. Before proceeding further, it is relevant to mention at this stage that the date on which this application was taken up for hearing i.e. on 30.7.2013 the sale deed....
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.... 3.4 After considering the valuation report, the sale committee decided to put up the assets for sale in three different lots namely (a) Lot No.1 being freehold non-agricultural land, (b) Lot No.2 being plant, machineries, furniture, fixtures, raw materials, finished goods, etc. and (c) lot No.3 composite offer for lot No. 1 and 2. In light of the said valuation report the sale committee accepted valuer's opinion about market value and recorded its views to fix the reserved price at Rs.422.00 Lacs for lot No.1 and EMD was fixed at Rs.42.20 lacs while upset price for plant and machinery i.e. lot No.2 was Rs.16.50 lacs and EMD was Rs.1.65 lacs and for lot No.3 the upset price was fixed at Rs.438.50 lacs. It was on the basis of the views and opinion of the sole committee the OL filed OLR No. 21 of 2013 and submitted that the market value of the property / lot No. II is Rs.16.50 lacs. 3.5 In the said OLR No.21 of 2013 the OL prayed, inter alia, that:- 9 (a) That, this Hon'ble Court may be pleased to take on records the action taken by the official liquidator for sale of assets of the company; (b) That this Hon'ble Court may be further pleased to direc....
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....the said advertisement dated 15.3.2013 are (1) Omar Steel (2) G.K. Traders (3) Adinath Enterprise (4) Monali Textile (5) V.L. Intext and (6) Chechani Trading Company. After the last date for receiving the offers OL filed report being Official Liquidator's Report No.54 of 2013 wherein the OL prayed inter alia that:- 16 (a) That this Hon'ble Court may be pleased to consider the views of the secured creditors of the company in respect of the highest bid that may be received in the inter-se bidding and may also be pleased to confirm, if found fit and proper, the sale of Lot No.II in favour of the highest bidder on the terms and conditions of sale as per tender document and / or such other and further terms and conditions as may be considered appropriate by this Hon'ble Court; (b) If this Hon'ble Court finds that the highest offer received in the inter-se bidding is not the appropriate offer looking to the fair market price and the valuation of assets of the company as per valuation report of 4.12.2012, this Hon'ble Court may be pleased to direct the official liquidator to re-advertisement the sale on such terms and conditions and with such further ....
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....s permitted to deposit the cheques of EMD received from 6 bidders. S.O. to 20.6.2013." 3.11 At this stage it is relevant to recall that According to the advertisement reserved price for Lot No. 2 i.e. the goods in question was fixed at Rs.16,50,000/-. 3.12 On the next hearing, i.e. on 20.6.2013, the proceedings were adjourned for the reasons mentioned in the order dated 20.6.2013. On the next date, ie on 21.6.2013, the inter-se bid amongst the said six bidders was conducted and during the said inter-se bidding (auction) present opponent No.2 emerged as highest bidder with revised offer at Rs. 20,10,000/- as against the reserved / upset price of Rs.16,50,000/-. On conclusion of the said inter-se bidding / auction, the Court passed the order dated 21.6.2013 confirming sale in favour of M/s. Omar Steel who was one of the said six bidders (i.e. opponent No.2 in present proceedings). The relevant part of said order dated 21.6.2013 reads thus:- 1........... 2. At the outset, it is necessary to mention that the 6 bids / offers in question which are under consideration are restricted to lot No. II ( i.e. only for movable such as plant, machineries, furnitur....
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....able and binding to the successful bidder and are to be treated as part of present order as if they all are specifically and expressly incorporated and mentioned in this order. The conditions in this order are in addition to the conditions in the advertisement and tender document. 11. Though not necessary, so as to remove any doubts or confusion or any future dispute or controversy, it is clarified that the term plant used in the advertisement and in this order means only manufacturing facility (i.e. machines / equipments for manufacturing process) and not the building and / or permanent or temporary super structure or any material being part of or used in the building and / or permanent or temporary superstructure. 12. In view of the above following order is passed:- (A) The said highest bidder i.e. Omar Steel shall, as per the condition in the advertisement / tender document pay 25% of purchase consideration to the OL within 30 days from today and balance amount of purchase sale consideration shall be paid within 3 months thereafter. (B)......... (C) ........ (D) The stamp duty, registration charges, AUDA / Society charges and....
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.... allegation is not made by anyone. In this application also there is no allegation about any irregularity and / or any mischief and / or any illegality or fraud. Even the applicant has not made such allegation and that is not even the ground in the application for request to recall the sale confirmation order in favour of the highest bidder. 6. Now, at this stage it is necessary to mention that according to present applicant, it is not one of the six bidders who had submitted the bids before the last date for submission of the bids as per the advertisement inviting bids and it had not participated in the auction / inter-se bidding on 21.6.2013 however the opponent has disputed said submission and alleged that actually the applicant is proxy of one of the bidders (viz. M/s. V.L. Intex) who, though present, did not increase its bid during the auction. Re:- Belated offer / application 7. Even if, only for the sake of consideration, the applicant's assertion is assumed to be true then also the fact remains that: (a) the applicant has woken-up at highly belated stage i.e. the applicant did not submit its offer in response to the invitation to bid within prescribed ....
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.... say and submit that the present application is not maintainable as the order passed by this Hon'ble Court has been fully executed and the answering opponent has deposited the entire amount with the official liquidator on 24.7.2013 and therefore once the order has been fully complied with, the present application for recalling the order passed by this Hon'ble Court at the instance of the present applicant is not maintainable as right has been created in favour of the opponent by virtue of the order passed by this Hon'ble Court and therefore the present application is not maintainable. 3. I say and submit that on 21.6.2013, this Hon'ble Court has in OLR NO. 54 of 2013 confirmed the sale in favour of the answering opponent after finalizing interest bidding between the parties present at the time of auction in the open Court. I say and submit that after the auction has been concluded by the Hon'ble Court for Rs.20,10,000/- and order was passed and thereafter the deponent has deposited the amount and the contract is concluded. Therefore now the present application is not maintainable for recalling of the order merely on the ground that the present applicant....
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....opponent No.2 came to be passed and that therefore there is no justification to cancel the said process and the order dated 21.6.2013. The learned advocate for opponent No.2 also submitted that it has paid the entire amount towards sale consideration, as per order dated 21.6.2013 and this is not a case where successful bidder has defaulted in making payment of sale consideration. Mr. Rao, learned Counsel for opponent No.2 also submitted that actually the applicant herein is a disgruntled and dissatisfied person who wants to unnecessarily cause difficulties and hurdles for opponent No.2. It is also claimed that the opponent No.2 is acting at the behest of one of the bidders who had submitted its bid during earlier process and who at the time of inter-se bidding did not increase its offer and the process of inter-se bidding was closed / concluded by order dated 21.6.2013 and now by way of this application the said bidder, through the applicant, is trying to play second innings and that therefore such attempt should not be permitted and such malafide intention may not be entertained by the Court. Mr. Rao, learned Counsel for opponent No.2 also submitted that the sale in its favour (i.....
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.... auction process, the confirmed sale deserves to be / can be cancelled or not, it would be necessary and appropriate for the Court to examine and find out as to whether the offer / price accepted by the Court is inadequate (because the price accepted by the Court is higher than the fixed/reserved upset price) and for that purpose, it would also be useful to know, in light of relevant details, as to whether the upset price which was settled on the basis of valuation report was proper and adequate. A look at the valuation report would be of help in considering this aspect and would lead to the answer to the question related to the price suggested by the valuer. 2. ......... 3. Though the applicant has offered Rs.3 lakh and also submitted that he is willing to offer more, the applicant has, however, kept the cards close to his chest and not revealed his highest / final offer if any. 4. The applicant's obvious attempt is to give an impression that higher price can be fetched. However, it is also a matter of record that even at auction limited number of bidders participated, even amongst those who were present some of them did not proceed to quote more and....
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....n the case of Divya Manufacturing. Thus it would be useful to borrow the said summation of fact which read thus:- "12......In the case of Navalkha and Sons (supra), after appellants offer was accepted, a fresh offer from one Gopaldas Darak for higher amount was received by stating that he could not offer in time because he came to know of the sale only 2 days prior to the date of the application and there was possibility of higher bids. Instead of directing a fresh auction or calling for fresh offers, the learned Judge thought it proper to arrange an open bid in the Court itself on that very day as between M/s Navalkha and higher offeror Gopaldas Darak. M/s Navalkha thereafter offered higher bid at Rs.8,82,000 and its bid was accepted and the learned Judge concluded the sale in its favour with a direction to pay the balance amount. Thereafter an application was filed offering Rs.10 lakhs. A contention was raised that due publicity of the sale of the property was not made, but that application was rejected by the Court. Hence, an appeal was filed by the applicant who made an offer of Rs.10 lakhs and another by one contributory against the order of confirmation. Both appeals....
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....at the auction held in pursuance of its orders, should see that the price fetched at the auction, is an adequate price even though there is no suggestion of irregularity or fraud. It is well to bear in mind the other principle which is equally well-settled namely that once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received. (See the decision of the Madras High Court in Roshan & Co's case)" From the above quoted decisions it emerges that in the said decision, which is, almost in all cases, consistently considered and followed by the Apex Court, it emerges that in view of the fact that the Court is the custodian of interest of the company and creditors it is not only proper but necessary for the Court to ensure that the price fetched at the auction is best and higher price though there is no suggestion of irregularity or fraud. Thus, the said observation by the Apex Court emphasizes that the paramount duty of the Court is to protect best interest of the company, creditors (i.e. shareholders and contributories) and the workers and ....
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....d a better price could have been obtained, and in fact the price is substantially inadequate, there is the presence of both the elements of irregularity and injury. But it is not as if the Court should go on adjourning the sale till a good price is got, it being a notorious fact that Court sales and market prices are distant neighbours. Otherwise, decree-holders can never get the property of the debtor sold. Nor is it right to judge the unfairness of the price by hindsight wisdom. May be, subsequent events, not within the ken of the executing Court when holding the sale, may prove that had the sale been adjourned a better price could have been had. What is expected of the Judge is not to be a prophet but a pragmatist and merely to make a realistic appraisal of the factors, and, if satisfied that, in the given circumstances, the bid is acceptable, conclude the sale. The Court may consider the fair value of the property, the general economic trends, the large sum required to be produced by the bidder, the formation of a syndicate, the futility of postponements and the possibility of litigation, and several other factors dependent on the facts of each case. Once that is done, the matt....
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.... that would be sufficient justification to deconfirm the sale even though there is no suggestion or allegation about fraud. The same principle would be applicable to the case of sale by company court for properties of the company in liquidation. (c) In the decision in case of Sharwan Kumar Agarwal v. Shrineap Investment Ltd. [1990] 68 Comp. Cas 52 (Cal.), Hon'ble High Court of Calcutta, speaking through the Chief Justice Hon'ble Mr. Justice P.D.Desai (as his Lordship then was) observed thus:- "44. Now, it is true that the Court must satisfy itself that having regard to the market value of the property, the price offered and accepted is adequate. The Court being the custodian of the interests of the company and its creditors, the power to confirm a sale or to withdraw the confirmation has to be exercised with judicial discretion regard being had to the fact that the price fetched is the best that can be expected to be offered even though there may be no suggestion of irregularity of fraud. It is also true that in the present case, there is a specific provision incorporated in the terms and conditions of sale that the sale in favour of a purchaser was liable to be....
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....nality of actions of Court. We see no reason, therefore, to set aside the orders under appeal passed by the Court. In the above decision by High Court of Calcutta (Coram: Honourable the Chief Justice Mr. P.D. Desai, as his lordship then was) the Court did not accept the subsequent higher offer though it had support of the secured creditors and the Court observed that power and discretion to take steps to fetch best price does not mean that the Court should review and set aside the order confirming sale which has already taken place, merely because at a later stage on second thought someone comes forward and says that he is willing to pay more. The Court emphasized the requirement of something more than merely higher offer which means infection in the decision of sale confirmation by way of illegality or fraud. (d) In the decision between Lica (P.) Ltd. (No.1) v. Official Liquidator [1996] 85 Comp. Cas 788, Hon'ble Apex Court observed thus:- "The purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that p....
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....to Rs. 1.3 crores by the appellant. This indicates that appellant was keen to purchase the property, however by paying only the bare minimal amount and to take advantage of sale by the liquidator in the hope that if there are no other purchasers, it would purchase the Company at a price which is abnormally below the market price. It is also true that on 2nd July 1998, the offer made by the appellant was accepted and it was ordered that sale in its favour be confirmed, but at the same time, before possession of the property could be handed over, orbefore the sale deed could be executed in its favour, respondent Nos. 7 and 8 pointed out that the assets and properties could be sold at Rs. 2 crores. For showing their bona fides, they were directed to deposit Rs. 40 lakhs each and also to pay Rs. 70 thousand each as damages to the appellant. Further, the application for setting aside the sale was filed within a few days of the order accepting the bid of the appellant. In these set of circumstances, when correct market value of the assets was not properly known to the Court and the sale was confirmed at grossly inadequate price, it was open to the Court to set it at naught in the interes....
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....deposited in the office of the learned Company Judge on or before 27.9.1993 and the balance amount of Rs.25 lakhs shall be deposited on or before 11.10.1993 making up the total sum of Rs.1.50 crores. Learned Single Judge is requested to conduct the auction afresh between the parties immediately after the reopening of pooja holidays fixing the upset price at Rs.1.50 crores. The highest bidder should deposit the balance amount on the same day before the working hours are closed. On deposit so made the Court would confirm the sale. No appeal thereon shall be entertained on any ground whatsoever." (g) In the case between Union Bank of India v. Official Liquidator [2000] 25 SCL 431 (SC), the Hon'ble Apex Court observed, inter alia, that:- '6. Against that order appellant preferred an appeal before the Division Bench. Before the Division Bench a contention was raised with regard to the inadequacy of the price and the Court observed that the Court would be rather loath to interfere and intervene in a Court Sale where a question of inadequacy of the price is to be considered by observing that: "Court sale has taken place for the benefit of the employees concern....
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....page 198).In our view, if the object of S. 29 of the Act is to obtain the best possible price then the Corporation ought to have called for the valuation report. This has not been down. There is no inventory of assets produced before us. The mortgaged assets of the company could be sold on itemized basis or as a whole whichever is found on valuation to be more profitable. No particulars in that regard have been produced before us. If publicity and maximum participation is to be attained then the bidders should know the details of the assets (or itemized value). In the absence of the proper mechanism the auction sale becomes only a pretence...." (i) In the decision in case of Valji Khimji & Co. v. OL of Hindustan Nitro Product (Gujarat) Ltd. [2008] 86 SCL 81 (SC) Hon'ble Apex Court, considered the case of the bidder who did not participate in auction proceedings but after the sale was confirmed by the Court in favour of one of the bidders (who participated in auction proceedings and whose offer was highest during auction) he belatedly came forward with higher offer coupled with request to cancel the sale. In the said decision Hon'ble Apex Court observed that:- "3....
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....e or terms of the auction) the auction is not complete and no rights accrue until the sale is confirmed by the said authority. Once, however, the sale is confirmed by that authority, certain rights accrue in favour of the auction purchaser, and these rights cannot be extinguished except in exceptional cases such as fraud." What emerges from the observations by the Apex Court in the said decision is that sanctity of the confirmed sale is important and merely because offer for higher price is placed before the Court then in absence of fraud or illegality confirmed sale ought not be disturbed and set aside otherwise any auction cannot be finalized and any auction will not attain finality. Besides the exception on aground of fraud and illegality other exception, which the Apex Court in the decision, found acceptable is grossly inadequate price with emphasis on the expression gross. This would mean that if slightly higher price is offered by any interested purchaser then the Court should not readily agree to set aside the confirmed sale. (j) In the decision by the Hon'ble Division Bench of this Court dated 25.7.2013 rendered in OJ CA No.299 of 2013 in OLR No.34 of 2013 wher....
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....Division Bench observed that: "7. Thus in light the above price fetched by the property/land in question has to be considered adequate or not. The impugned order as observed above has indirectly suggested that the price fetched is inadequate while observing that the property could have fetched more price and that the Company Court could have ordered for revaluation of the property under the sale. In our opinion this is sufficient to indicate whether the price fetched in the auction can be said to be adequate. We are in agreement with the observation in the impugned order that the property under sale could have fetched more price than Rs.4,05,00,000/-. It need hardly be said that the effort of the Company Court has to be in the direction of obtaining the maximum price of the property in the auction for the benefit of workers, secured, unsecured creditors and the company, and the entire class of creditors would stand to benefit by the higher price received by the property under the sale." The above mentioned observations in the said order are made in factual background which is recorded in the order. The relevant part of the order reads thus:- "in the auction whe....
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....cision in case between FCS Software Solutions Ltd. v. LAS Medical Devices Ltd. [2008] 85 SCL 401 (SC), Hon'ble Apex Court found that:- "But it is also clear that certain facts which were necessary to be brought to the notice of intending purchasers were not set out in the proclamation of sale nor were disclosed at the time of sale notice. They related to valuation of movable and immovable properties, fixation of reserve price, non-inventory of plant and machinery, etc. The attention of the Company Judge was invited by other bidders by filing Company Applications. The Company Judge considered the objections and having prima facie satisfied, ordered fresh auction. We find no illegality in the said approach." It was in the backdrop of the said fact that order passed by learned Company Judge for fresh auction in the said decision was found to be justified. In present case the facts are materially different. Hence the said decision does not help the applicant. (m) Learned Counsel for the applicant has relied on the decision in case of Shraddha Aromatics (P.) Ltd. v. Official Liquidator for Global Arya Industries Ltd. [2011] 6 SCC 207. In the said decision the Court ha....
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....should not be interfered with by cancelling sale confirmation order. (e) Merely on the ground that after confirmation of sale, someone comes forward and offers higher price, the confirmed sale and concluded contract, without anything more, should not be cancelled because mere offer for higher price is not a good and valid ground to interfere with and to cancel confirmed sale and concluded contract. (f) If any fraud is perpetrated or if any other similar illegality is committed or any serious irregularity which would vitiate the sale process has occurred, then the Court would be, in given case, justified in interfering with and cancelling confirmed sale and concluded contract. (g) The other reason or circumstance in which the Court may interfere with and may cancel the confirmed sale and concluded contract is that the Court, upon consideration of relevant facts, finds unto its satisfaction, that the price offered and received / accepted in the sale process is grossly inadequate. (h) If Court were to interfere with the confirmed sale upon subsequently receiving higher offer, then a moderate or slight variation or increase over accepted price, witho....
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....not be the yardstick and guiding factor for the Court to cancel confirmed sale and concluded contract inasmuch as in many cases even business rivalry and strange commercial considerations may tempt someone to come forward and offer some higher price as against the amount of sale consideration and in cases where after sale confirmation, offer for higher price is made, then the Court should consider as to whether the reserved priced and / or price offered - received at the sale process can be said to be grossly inadequate. The extent of the gap between the higher offer and accepted price (i.e. price accepted at auction) in itself should be the convincing factor evidence to satisfy the Court that the accepted price is grossly inadequate. Once the Court is satisfied about adequacy of the price then mere higher offer will not be good and valid ground to cancel confirmed sale / concluded contract. 12.3 Court has to keep in focus that despite inherent presence of competition in process of auction it often does not yield best price and therefore Court has to allow some leeway a margin to take care of and hedge against this possibility eventuality. Confirmation of sale should not be inte....
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....a substitute of the paramount requirement viz. grossly in adequate price. 13. The case on hand and the applicant's request have to be examined in light of the above quoted observations, and the principles which emerge from the said observations, by Hon'ble Apex Court. From the observations by Hon'ble Apex Court it comes out that so as to decide whether a confirmed sale should be cancelled or not the Court will have to first find out whether the sale is vitiated by irregularity or fraud or illegality and / or whether the price offered and received (at auction) is grossly inadequate 14. From the facts of the case a very pertinent aspect has emerged viz. that this case and the applicant's request rests on only one premise viz. an intending or prospective purchaser (belatedly) offers higher price and it has come forward with modest increase of Rs.9.90 Lacs. 14.1 Another relevant aspect is that in present case there is no allegation or suggestion, from any side-including the applicant about any irregularity and / or fraud and / or illegality in auction process. 14.2 The above quoted observations and the principles unanimously say that mere higher offer, witho....
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....es, Furniture and Fixtures, Raw material and finished goods stated in the valuation report are as under: Description of property Valuation(Rs.) price Freehold-non-agricultural admeasuring about 18274 Sq. Mtrs situated at Block No.222, Village Vadavswami, P.O. Isand, Tal. Kalol, Dist. Gandhinagar 366.00 Lacs Building super structure 56.00 Lacs Plant, Machineries and other movables 13.57 lacs Furniture and Fixtures 0.67 Lacs Raw Material and Finished goods 1.79 Lacs. 7. After perusal of the valuation report it was decided to put the assets on sale in three different lots as under: Lot No. Description of property Upset Price (Rs.) Earnest Money Deposit (Rs.) I Freehold - non - agricultural land admeasuring about 18274 Sq. Mtrs....... 422.00 Lacs 42.20 Lacs II Plant, Machineries and all other movables including furniture , fixtures, Raw material and finished goods except records. 16.50 Lacs 1.65 Lacs III Composite Offer of Lot No. I & II. 438.50 Lacs 43.85 Lacs" 15. On perusal of valuer's report it appears that the valuer seems to have considered the physical condition, age, worki....
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.... Electrification having main panel board, DB switches, starters, tube fittings, cables etc. Lot Bee Gee Traders Pvt. Ltd. and others 1993 Poor 0.20 lacs All panels are in skeleton condition and cables missing at many places 12 Misc. items such as Ladder, power pack base plate, hand trolleys, MS drum, cup boards, racks, cabinets, V Belts, Electrical hoist Etc. Lot Local - Poor 0.15 lacs Without motor 13 Various sizes of MS/GI Pipes with accessories and fittings Lot Local - Poor 0.15lacs - 14 Various size of moulds Lot Local - Poor 0.03lacs - 15 Industrial Exhaust Fan Pedestal and wall mounting type Lot Eng. Equipment 1993 Poor 0.18lacs Some motors and fan blades missing 16 315 KVA Capacity outdoor type transformer with DP structure 1 Mahi Electricals 1993 Poor 0.15Lacs Core and winding missing, lying skeleton on ground 17 Lathe machine cone pulley type, 4 ft bed length without motors 2 J K Engineers - Poor 0.18Lacs One machine only 18 Shaping machine having 24 inch stroke 1 Climax Engineers - Poor 0.10....
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....g the market / fair value of the property. Upon considering the age of the property and the property's physical condition described by the valuer, it appears that valuation of the fair / market value of the property by the valuer was reasonable and in view of the facts of the case it cannot be said to be grossly inadequate. It is pertinent that before the said report was placed before the Court and before it was considered by the Court the sale committee had considered and accepted it and recommended the reserved price which came to be approved by the court vide order dated 30.4.2013. 15.4 At this stage it is relevant to mention that in present case property in question is plant and machinery, furniture and fixtures and therefore its resell value or market value will depend on its age and physical condition at the relevant time. In such case it would not be possible for the Court to ascertain market value of such property in same manner as it can be decided in case of immovable property like land. Therefore, court has to rely on valuation or estimation by qualified valuer. 15.5 After having examined the said report, it appears that in the facts of the case and having rega....
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....her hand the opponent has alleged that the applicant is proxy of one of the bidders who did not increase its offer at the auction and now the said bidder is trying to sabotage the sale confirmation in favour of the opponent. On this count there are allegation and counter allegation and therefore Court would not enter into said aspect. The fact remains that the applicant has not demonstrated satisfactorily that the property's valuation is grossly inadequate. 18. Under the circumstances, the primary and fundamental requirement which, in light of the observation by the Apex Court, in all decisions, consistently appear to be sine qua non is absent in present case. Differently put the paramount requirement viz. the price offered and received at the auction is, grossly inadequate is found to be absent, and is not available, in present case. 18.1 The applicant has failed to establish the said aspect. Actually, the applicant has not even expressly pleaded such case. Without such clear and specific assertion the applicant has merely offered higher price. 18.2 In view of this Court, higher offer made after confirmation of sale will not necessarily and automatically mean that res....
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....arket value of the assets was not properly known to the Court and that therefore it would be in the interest of the company, secured and unsecured creditors and the employees that the confirmed sale may be quashed so that correct and adequate price can be received. Thus, what emerges is the clear principle that in the cases where there is no allegation about fraud and where the sale is not infected by fraud, it would not be just and proper for the Court to cancel the confirmed sale unless and until it is satisfactorily established that the sale was effected at grossly inadequate price. The said criterion is a consistent and continuous thread which is passing thorough as a common factor in all decisions which are referred to hereinabove. 19.3 In this context, it would be appropriate to recall the observation by the Calcutta High Court wherein, the Court observed that:- "... merely because on second thoughts on the next day, the appellant came forward with an offer to pay more, there would be no justification, without more, to deconfirm the sale already made... In the said decision the Court also observed that:- "..... However, the investment of such power doe....
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....ting bids the valuation of property is made by duly certified and expert persons such as government approved and registered valuer and on base of his estimation / valuation the reserved price is settled and thereafter offers are invited with clear stipulation that offer should not be lesser than the reserved price and sale is confirmed in favour of an offer which is higher than the reserved price and also highest amongst the offers made during the sale process, there would be little scope for interference with confirmed sale except in above mentioned two eventualities. 19.8 In present case after considering relevant material and details it is not possible to hold that the reserved price settled by the Court after taking into consideration valuer's report as well as the suggestion / recommendation by sale committee (comprising OL, representative of secured creditors) is grossly inadequate and when it has emerged from the facts and from the record that the price offered and received at the time of inter-se bidding is not less than the reserved price, the corollary would be that the sale price cannot be said to be grossly inadequate. Thus, in present case on one hand there is c....
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....ation to maintain sanctity of concluded contract. 19.11 However, when the sale is neither vitiated by fraud nor it is established that the sale was effected at grossly inadequate price, then the Court would not be justified in cancelling confirmed sale and concluded contract merely because someone has subsequently come forward with higher offer and at relevant time he / it, without any justification, did not participate in the sale process. If the Court starts setting aside confirmed sale in such cases also then not only the sanctity of concluded contract would be lost but the very bases and foundation of sale by the Court will be shaken and the trust of the bidders to come forward and participate in sale by Court will also be shaken, if not completely lost. The entire process would get paralyzed. 19.12 At this stage it is relevant to recall that at the initial stage of hearing learned counsel for the opponent No.2 i.e. successful bidder had stipulated before the Court that opponent No.2 will match the offer of the applicant. In pursuance of the said stipulation Mr. Rao, learned Counsel for the opponent No.2 again reiterated that the opponent No.2 will match the said applican....