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TMI Blog2008 (8) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies (Special Provisions) Act, 1985 and Board for Industrial and Financial Reconstruction (BIFR), by its order dated June 28, 1993, held that there was no possibility of rehabilitation of the company and the company must be ordered to be wound up. Recommendation was made to that effect by BIFR and it was forwarded to the High Court of Allahabad. Pursuant to the said recommendation, the High Court passed an order for winding up of the company on September 5, 1994. An official liquidator was appointed under the Companies Act, 1956. On January 4, 2000, the High Court directed the official liquidator to take appropriate proceedings for sale of Barachakia and Chanpatia property of the company in liquidation. An advertisement was issued and tenders were invited. On January 31, 2001, the matter was taken up by the company judge. On behalf of one Hanuman Industries (India), its counsel Ms. Geeta Luthra stated that the Hanuman Industries was prepared to pay Rs. 3.51 crores. In support of the said bid, three bank drafts totalling to Rs. 10 lakhs were deposited. Vishnu Kant Gupta, respondent No. 1 herein, had also made offer of Rs. 3.51 crores payable in four equal quarterly instalment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-invite tenders. Accordingly, he passed an order for re-advertisement of tenders and re-invitation of offers. The respondent herein was very much aggrieved by the order passed by the company judge. He felt that his offer of February, 2001 was the highest and more than six years had passed. Even according to the company judge, the offer made by the first respondent in 2001 was "reasonable" and hence it was accepted and there was no ground to interfere with the said action and the order passed by the company judge was illegal. He, hence, preferred an appeal against the order of the company judge. The Division Bench of the High Court considered the facts and circumstances of the case and held that the grievance of the appellant was well-founded and the company judge was not justified in setting aside the highest offer made by the respondent and accepted by the company judge. The court noted that respondent No. 1 had not paid the amount, but it was because of stay granted by the Division Bench in February, 2001. When appeals were dismissed, respondent No. 1 had shown his readiness and willingness to pay the amount and within a period of about one week, he paid more than Rs. 3 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f offer by the highest bidder does not confer vested right in him to get the property. It is not only the power, but the duty of the company court to ensure that proper, adequate and reasonable price is fetched in respect of the property which is to be sold in public auction. It is in the interest of the company, its shareholders, creditors and workers as well as in larger public interest. It was also submitted that this court has held that even if sale is confirmed by a court and it has been brought to the notice of the court that property has not fetched proper, adequate and reasonable price, even confirmed sale can be set aside (Divya Manufacturing Co. P. Ltd. v. Union Bank of India [2000] 6 SCC 69 ([2000] 102 Comp Cas 66 (SC)). The appellants herein are secured creditors. The said fact ought to have been taken into consideration by the Division Bench. As the impugned order is not in consonance with well-established principles of law, the appellants are constrained to approach this court. It was, therefore, submitted that the appeal deserves to be allowed by setting aside the order passed by the Division Bench of the High Court by restoring the order of the company judge direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t deems fit can also be paid by the first respondent. Having heard learned counsel for the parties, in our opinion, the appeal deserves to be partly allowed. So far as principles relating to auction sale and confirmation thereof are concerned, the law is well-settled. Very recently, in FCS Software Solutions Ltd. v. La Medical Devices Ltd. [2008] 7 JT 499 ([2008] 144 Comp Cas 391 (SC)), we have elaborately dealt with all these principles and it is not necessary to burden this judgment by referring to all the cases by reiterating the said principles. On the facts and in the circumstances of the case, however, one very eloquent fact cannot be lost sight of highest bid of Rs. 5 crores by respondent No. 1 was accepted by the company judge on January 31, 2001. But the record discloses that an amount of Rs. 10 lakhs only had been paid by the successful bidder-respondent No. 1. Ordinarily, when the highest bid of intending purchaser has been accepted, he is required to pay 25 per cent, of purchase-price immediately. It had not been done. The amount was substantial inasmuch as the highest bid was of Rs. 5 crores and the first respondent was required to deposit an amount of Rs. 1.25 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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