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2003 (4) TMI 431 - SUPREME COURTWhether the acceptance of the proposal involving the sale of the Company’s surplus land to CMS Ltd. and the consequential directions issued by the High Court are supportable in law? Whether the directions of the High Court can be given effect to at all at this point of time? Held that:- Appeal allowed. The pre-requisites laid down under the Companies Act for passing the order under section 391 or 394 cannot be treated as empty formalities which can be thrown to winds at the whim of the Judge. The most objectionable part of the impugned order is to consider one or two offers placed before the Court by the Company without giving due publicity. If the peculiar circumstances of the case required that the normal procedure of calling for bids through advertisement or other means of publicity was to be dispensed with, the Court should have at least recorded reasons for the same. But, nothing of that sort was done. The Division Bench should have acted with the awareness that there could be no arbitrary selection of the prospective purchaser, even assuming that an order for sale could be lawfully made. No provision for monitoring the revival has been made. At the same time all the pending proceedings were terminated. There can be no doubt that the Division Bench out-stepped the limits of its jurisdiction and passed orders of extraordinary nature. The other important reason why the impugned order of the Division Bench cannot be sustained is the subsequent developments that have taken place. It appears that CMS Ltd. (6th Respondent) is no longer interested in the deal. They have not entered appearance before this Court though notice was served. Secondly, the learned counsel for United Bank of India has made it clear that the bank is no longer agreeable to abide by the terms agreed to earlier under which the bank had to receive Rs. 1.80 crore in full settlement of their claim. Thus as the substratum and underlying basis of the order under appeal has disappeared and it is no longer possible to give effect to the directions given by the Division Bench in the Company Appeal. For all these reasons, the order passed in the company appeal is liable to be set aside. The High Court did not consider the relevance and effect of the guidelines issued by the State Government in regard to the exercise of power under section 20 vis-a-vis excess land held by sick industrial units. The High Court was not justified in describing them as ‘unknown guidelines’, because the orders containing the guidelines were very much on the record and they were adverted to in the pleadings, etc.
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