TMI Blog1992 (6) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... bears the cause title as between the official liquidator and Karnataka State Small Scale Industries Development Corporation ("KSSIDC" for short). The copy of the report was not served on the petitioner bank or its counsel. The report states that the respondent-Corporation had granted an industrial plot to the company-in-liquidation, on lease-cum-sale basis for 10 years and the lease commenced from December 10, 1971, and that the company's shed contained a Kilburn make oven. The report itself states that this oven was quite costly "perhaps more than Rs. 50,000". In the report the official liquidator further stated that having regard to the policy of the KSSIDC the ownership of the industrial shed may be transferred to the official liquidator so that the shed may fetch a good price at the time of its disposal. The report suggests the payment of arrears, interest, etc., due to the said Corporation to facilitate the transfer of the shed. Appropriate orders on this report was sought for. A copy of this report was served on the KSSIDC on October 20, 1986, as could be seen from the acknowledgment of the said Corporation in the file of the original proceedings. A perusal of the order sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er just makes a reference to the advertisement dated August 21, 1990, and then states that the words "938 square feet" may be read as "938 square yards" and nothing more. This corrigendum, if read by itself, would not convey anything unless it is read along with the earlier advertisement. The date to send the tenders was not extended. In response to the advertisement six tenders were received by. the official liquidator and thereafter the official liquidator seems to have addressed all the persons who sent the tenders to be present in his office on November 5, 1990, on which date at 11 a.m. the tenders were to be opened. At that time one of the tenderers, Mr. V.D. Kamath, wrote a letter stating that he was not pressing his tender and therefore his tender need not be opened. After the five tenders were opened, the official liquidator found the tender offered by Super Enterprises was the highest. This tenderer had offered a sum of Rs. 1,25,000 towards plot and shed and Rs. 25,000 for the oven. Consequently, the official liquidator filed his report No. 196 of 1990 dated November 8, 1990, seeking the approval of the court for the acceptance of this highest offer of Super Enterprises (h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al liquidator informed counsel for the petitioner-bank about the order of the court on the O.L.R. No. 196 of 1990. According to the appellant, counsel came to know of the order only by this communication received from the official liquidator and immediately steps were taken to obtain the certified copy of the order which was obtained on January 29, 1991. The appeal was filed on February 6, 1991, along with an application for condonation of delay. There was also a prayer for the stay of the operation of the order of the learned company judge made on O.L.R. No. 196 of 1990. The said application also sought a direction to the official liquidator not to give possession of the property in question. On this the court ordered notice. However on March 19, 1991, the second respondent took possession of the property in question and according to the second respondent it received the notice of the appeal only June 26, 1991. It is obvious that even the official liquidator received the notice after June, 1991. On September 10, 1991, the delay in filing the appeal was condoned and on September 24, 1991, the appeal was admitted and a direction was issued to the second respondent not to alter the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be Rs. 4,00,000. In addition to this, according to this deponent, machinery for running a powder coating unit has also been installed in the new shed. These facts are brought to our notice by learned counsel to plead equity in favour of the second respondent and according to the learned counsel, the second respondent is in no way responsible for the alleged failure to comply with the procedural requirements of law governing the sale of the properties by the official liquidator. Having regard to the above contentions two questions require to be considered : 1. Whether it is a mandatory requirement that the petitioner should have been notified of the proceedings for the approval of the sale of the property belonging to the company-in-liquidation, when the sale was ordered earlier after obtaining an appropriate direction from the court. ? and 2. If the requirement of the notice as above is mandatory, whether this court should refrain from declaring the sale as void by recourse to any principle of equity ? Reg. Question No, 1 : Before considering the scope of rule 139 referred to by learned counsel for the appellant it is necessary to refer to a decision of the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmation of the court the offer does not, by mere acceptance, get any vested right in the property so that he may demand automatic confirmation of his offer. The condition of confirmation by the court operates as a safeguard against the property being sold at an 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, having regard to the market value of the property, that 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 its judicial discretion. In this connection it is also necessary to note that as per rule 272, unless the court otherwise orders in any winding up no property belonging to the company shall be sold by the official liquidator without the previous sanction of the court and every sale shall be subject to confirmation by the court. From this it is quite clear that confirmation by the court is absolutely necessary to complete the sale and this is because, as the Supreme Court pointed out in the above case, the court is the custodian of the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete unless the offer is judicially accepted. According to Mr. Vijaya Shankar, if there is already a direction by the court to sell the property by public auction or by inviting tenders, at subsequent stages the winding up petitioner need not be notified because the petitioner could as well watch the activities of the official liquidator and take proper steps at any stage if the petitioner so thinks it necessary. It is not possible to accept this line of thinking. The petitioner who filed the winding-up petition has no obligation to watch the proceedings and activities of the official liquidator throughout. Law does not expect the petitioner to wait at the door steps of the official liquidator at all. The official liquidator, being the officer of the court, is expected to exercise his powers having regard to the purpose behind such a power vested in him. The starting point for the sale of the property will be an order of the court permitting the official liquidator to sell the property by following a particular method. But the sale will be complete only after the official liquidator obtains the confirmation under rule 272 and takes steps to execute the sale deed, if any, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common knowledge that there can be no estoppel against the statute and no equity would result out of proceedings conducted in violation of the law. Mr. Vijaya Shankar, however, contended that confirmation of the sale is a matter of discretion and that discretion has been exercised by the learned company judge. Again, this principle is not applicable here because the condition precedent for the exercise of the power by the official liquidator has not been complied with at all in the instant case. The doctrine of discretion is attracted only when other mandatory requirements are complied with. It was further contended that the price fetched at the sale is quite proper and no injustice would result by keeping alive the sale. Here again it is not possible for us to go into the said question. The appellant has pointed out that on an earlier occasion there was a bid of Rs. 3,00,000 for the same property but the sale could not be completed due to certain objections by one of the directors of the company. Learned counsel for the appellant pointed out that the advertisement for sale itself was not clear and conveyed the impression that only 938 square feet of land was proposed to be sold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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