TMI Blog2010 (1) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... KUMAR DATTA, J. Y.V. Giri, Suraj Samdarshi, Lalit Kishore and Mukul Prasad for the Appearing Parties JUDGMENT Ramesh Kumar Datta, J. The interlocutory application has been filed by the Bihar Industrial Area Development Authority (in short "the BIADA") for re-tender of schedule I property of the company in liquidation, namely, Bahubali Cements Ltd., with respect to which the highest offer of Rs. 50 lakhs made on behalf of Symbiosis' Electronic (P.) Ltd., was accepted by this court on August 21, 2009. In the said application the BIADA has made an offer to purchase the aforesaid property at a price of Rs. 55 lakhs and accordingly, it is prayed that the sale of schedule property of said Bahubali Cement Ltd., accepted on August 21, 2009, be cancelled and a fresh auction for getting a better value of the property in question be ordered. 2. The short facts relevant for consideration of the present matter is that a sale notice was published on May 4, 2009, for the sale of leasehold land measuring 2.50 acres along with godown and certain constructions on "as is where is and whatever there is" basis with respect to schedule I property of the company in liquidati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned and thus as the process of bidding has already been concluded the same should not normally be set aside. It is submitted that once the confirmation of sale is made, it should not be set aside on the ground that a higher offer was made by any other party. 5. The further stand is that within the time granted by the court Symbiosis Electronics (P.) Ltd., has already deposited the balance amount of Rs. 45 lakhs. 6. Mr. Lalit Kishore, learned senior counsel appearing for the BIADA submits that the court is the custodian of the interest of the company and its creditors and it is the duty of the court to see that an adequate price is received at the auction even in the absence of any suggestion of fraud or irregularity. It is contended that since in the earlier auction the price obtained was Rs. 50 lakhs only, against the written offer of BIADA of Rs. 55 lakhs which he has now been instructed to raise to Rs. 65 lakhs, which is much higher than Rs. 50 lakhs offered by Symbiosis Electronics (P.) Ltd., thus in the interest of the company and its creditors the higher offer should be accepted. 7. Learned counsel further submits that even in the sale notice issued by the offici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant Divya had withdrawn its earlier offer the court permitted it to take part in making further offer as noted in the order dated July 2, 1998. In these set of circumstances, there was no need to confine the bid between three offerors only. In LICA (P.) Ltd. (No. 1) v. Official Liquidator [1996] 85 Comp. Cas 788 (SC), this court dealing with a similar question observed thus (page 791) : 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 path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large: The court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case.' The matter was again brought before this court and in LICA (P.) Ltd. (No. 2) v. Official Liquidator [1996] 85 Comp Cas 792 (SC) and the court held (page 794) : Proper control of the proceedings and meaningful intervention by the court would prevent the formation of a syndicate, underbidding and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r also made a bidding up to Rs. 35 lakhs and thereafter it had withdrawn from, the process and even withdrawn the earnest money. In the said circumstances, it should not be permitted to again enter into the fray, after, the offer of Symbiosis Electronics (P.) Ltd.," has been accepted by this court. 10. It is further submitted that the action of the BIADA amounts to waiver and acquiescence of its right and it is not open to it to re-agitate the question by getting the previous sale reopened and the earlier tender cancelled. Learned counsel also submits that no fraud or irregularity have been alleged in the process of earlier bidding and its acceptance by the court and hence the same should not be set aside. 12. It is also, the contention of learned counsel that the price offered by Symbiosis Electronics (P.) Ltd., of Rs. 50 lakhs is certainly not an inadequate price and what has been offered by the BIADA is not abnormally high. It is thus submitted by learned counsel that the application filed by the BIADA should be rejected. 13. In support of the aforesaid stand learned counsel relies upon a decision of the Supreme Court in the case of Valji Khimji and Co. v. Officia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. 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." 14. Learned counsel further submits that in the aforesaid case the decision of the apex court in the case of Divya Manufacturing Co. (P.) Ltd. [2000] 102 Comp Cas 66 ; [2000] 6 SCC 69, was also considered and it was observed that the ratio in Divya Manufacturing Co. (P.) Ltd. case [2000] 102 Comp Cas 66 ; [2000] 6 SCC 69, is that if there is fraud then even after the confirmation, the sale can be set aside, since it is well-settled that fraud vitiates everything. It is urged by learned counsel that in the present matter there is no allegation of fraud nor a price differential of the extent so that the court could come to such conclusion. 15. Learned official liquidator, on the other hand, submits that while he has no objection to consider the application of BIADA but according to him even if the application of BIADA is accepted the further bidding should not be confined to BIADA and Symbiosis Electronics (P.) Ltd., rather there should be a fresh advertisement as lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; [2008] 9 SCC 299, the apex court observed that the ratio in Divya Manufacturing Co. (P.) Ltd. case [2000] 102 Comp. Cas. 66 ; [2000] 6 SCC 69, was that if that is fraud even after confirmation of sale the same can be set aside, since it is well-settled that fraud vitiates everything, but the specific statement to the contrary was made in Divya Manufacturing Co. (P.) Ltd. case [2000] 102 Comp Cas 66 ; [2000] 6 SCC 69, paragraphs 13 to 16 of which as quoted above clearly go to show that irrespective of there being any suggestion of irregularity or fraud the court may set aside the confirmation of sale if it is found that the earlier offer is inadequate. In the case of Divya Manufacturing Co. (P.) Ltd. case [2000] 102 Comp Cas 66 ; [2000] 6 SCC 69, an offer of Rs. 1.30 crores was considered inadequate in comparison to the subsequent offer of Rs. 2 crores, i.e., a difference of about 50 per cent, from the earlier sale price whereas in the present matter the difference between the earlier offer of Rs. 50 lakhs and the present offer of Rs. 65 lakhs is to the extent of 30 per cent. I, however, consider the previous offer totally inadequate not only in terms of the present offer m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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