TMI Blog1969 (10) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... with the minimum offer or with the starting bid of ten lakhs of rupees. For these reasons we hold that the judgment of the Division Bench of the Andhra Pradesh High Court, dated 24th September, 1965, is correct and these appeals must be dismissed with costs - 1085 AND 1086 OF 1967 - - - Dated:- 27-10-1969 - V. RAMASWAMI AND I.D. DUA, JJ. V.S. Desai and P.C. P.hariari for the Appellant. P. Ram Reddy, A.V.V. Nair and R.V. Pitted for the Respondent. JUDGMENT Ramaswami, J. These appeals are brought by certificate from the judgment of the Andhra Pradesh High Court, dated 24th September, 1965, in O.S.A. Nos. 3 and 4 of 1965. In the winding-up proceedings of Hyderabad Vegetable Products Company Ltd. (in liquidation) the 5th respondent (official liquidator) sought permission of the court for the sale of the immovable and movable properties and actionable claims of the company. This application was Company Application No. 67 of 1963. A shareholder of the company, one Sirajuddin Babu Khan, also made an application, Company Application No. 93 of 1964, to a similar effect. On these applications an order was passed by Jagan-mohan Reddi J. on 17th April, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the end of November, 1964, at the instance of the commissioners. The appellant, Navalkha and Sons, happened to be the sole offerer. It had offered a sum of Rs. 7,91,001 which was made of Rs. 2,50,000 for the immovable. property and Rs. 5,41,001 for the machinery. It made no offer for the actionable claims. The appellant made deposit of Rs. 50,000 in the shape of a demand draft drawn on the State Bank of Hyderabad. The offer was accepted by the commissioners on 2nd December, 1964. The appellant was called upon to deposit 15 per cent. of the amount of the offer as initial deposit immediately and the balance together with the amount required for non-judicial stamp paper within 15 days from the date of acceptance. The appellant did make the initial deposit. The commissioners then made an application on 3rd December, 1964, to the High Court for confirmation of the sale. On 11th December, 1964, the High Court extended time for payment of the balance amount for two weeks. On 24th December, 1964, one Gopaldas Darak made an offer of Rs. 8,50,000 saying that he could not offer in time because he came to know of the sale only two days prior to that date and it was due to the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1964. These appeals were allowed by Letters Patent Bench consisting of the Chief Justice and Kumarayya J. and the order of the learned single judge, dated 19th February, 1965, read with his previous order, dated 24th December, 1965, was set aside. It was directed that the learned judge should take fresh steps for the sale of the property either by calling sealed tenders or by auction in accordance with law. The tenders would be called or the auction would take place with the requisite condition of minimum offer or starting bid of Rs. 10,00,000. It was argued by Mr. V. S. Desai on behalf of the appellants that the discretion of the learned company judge was not erroneously exercised when he accepted the bid of the appellant in the auction held on 24th December, 1964, and consequently there was no justification for the Division Bench to interfere with the order of the learned single judge. We are unable to accept this argument as correct. Rule 273 of the Companies (Court) Rules, 1959, is to the following effect: " Procedure at sale. Every sale shall be held by the official liquidator, or, if the judge shall so direct, by an agent or an auctioneer approved by the court, and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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 Company's case ( supra )). In the present case the Division Bench has come to the conclusion that publicity was not as wide as originally proposed by the commissioners in their affidavit. The publication was made in four dailies, namely, The Hindu, The Indian Express, The Hindustan Times and The Statesman. There was no publication in The Times of India. Further, out of the four newspapers in which publication was made, only in two there were two insertions and in the remaining two there was only one insertion. This was contrary to what the commissioners have promised in their affidavit, dated 8th July, 1964. No doubt, other efforts were made for giving publicity but these efforts were not sufficient to attract more than one offer. When the case came for confirmation an 24th December, 1964, there was an application by Babu Khan that the property was of much higher value and that fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken part in the auction bid but for want of notice is a serious matter. In our opinion, the learned judge having decided on 24th December, 1964, that the property should be put to auction should have directed auction by public sale instead of confining it to two persons alone. Since there was want of publicity and there was lack of opportunity to the public to take part in the auction, the acceptance of the highest bid by the learned judge was not a sound exercise of discretion. It is contended on behalf of the appellant that confirmation was discretionary with the court and the Division Bench ought not to have interfered with the discretion exercised by the company judge. It is true that the discretion exercised by the judge ought not to be interfered with unless the judge has gone wrong on principle. As already pointed out the learned company judge having decided to put the property to auction went wrong in not holding the auction as a public auction after due publicity and this has resulted in prejudice to the company and the creditors in that the auction did not fetch adequate price. The prejudice was inherent in the method adopted. The petition of Padam Chand Agarwal also sug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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