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TMI Blog2010 (1) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-12-2007, and the company was unable to pay the same. The applicant could not pay the amount immediately on receipt of the summons; but the applicant has made part payments to the first respondent on various dates and has settled the entire amount due to the first respondent in full quit, and a sum of Rs. 45,000 was paid to the Counsel for the first respondent on 27-8-2009, in the open Court as last balance. Under such circumstances, the above company petition was not pressed. (b)The applicant was also ready and willing to deposit the amount due to the Official Liquidator, the second respondent therein, who has made excessive claims. If the dues to the Official Liquidator were paid, nothing survives in C. P. No. 78 of 2008, and the company petition was liable to be dismissed. (c)An order of winding up came to be passed on 3-12-2008. The Official Liquidator, who was initially appointed as Provisional Liquidator, was later on appointed as Official Liquidator of the company. The Official Liquidator must have got the sanction of the Court to sell the properties; but, he has not asked for the sale of the properties of the company in liquidation in auction. The Court directed him to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either to set aside the sale or to stay the same. Accordingly, both the applications were dismissed. Hence, O. S. A. Nos. 371 and 372 of 2009 have arisen. 4. As far as C. A. No. 2107 of 2008 was concerned, it was filed by the Official Liquidator under the following circumstances: (a)Subsequent to the publication made and pursuant to the orders made by the Company Court on various dates, auction was held on 15-9-2009, for three items of the properties namely Lot 'A' - land and building in 'A' Mill and 'B' Mill, Lot 'B' - plant and machineries and movables in 'A' Mill and Lot 'B' - plant and machineries and other movables in 'B' Mill. The auction was conducted firstly for Lot 'B' namely item 2 in respect of plant and machineries and other movables in 'A' Mill. There were two offers received. One Subramani has offered to purchase the properties for Rs. 2.5 crores and he submitted a demand draft for Rs. 83 lakhs towards EMD, on 15-9-2009, while the other bidder Ramasubbu offered Rs. 2 crores and submitted a draft for Rs. 83 lakhs. Between these two offers, the sale was confirmed in favour of M. Subramani which was higher. The EMD given by him was accepted and handed over to the Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, OSA No. 370 of 2009 has been brought forth by the appellant. 5. Advancing arguments on behalf of the appellant, the learned Senior Counsel Mr. T. R. Rajagopalan would submit that it is pertinent to note that the Official Liquidator has not yet adjudicated upon the claims called for; that without the crystallization of the amount, there was no reason to sell all the properties; that the Official Liquidator owed a duty to the contributories to release the best amounts by selling only such of the properties that is required to discharge all the liabilities crystallized and return to the company along with the surplus assets to give back to the contributories; that it is to be noted that the valuation given by ITCOT is very low; that the Official Liquidator cannot bring the entire properties to sale only for realizing a sum of mere Rs. 25 lakhs; that the appellant or any other contributory is entitled to appeal at any stage if it affects the contributories; that the upset quoted was lower than the market value; that it is pertinent to note that appeals were filed by the applicant before the DRAT and therefore the sale of the properties by the Company Court would render such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale as per the order dated 3-12-2008, since the company in liquidation did not make the payment of Rs. 25,08,395 as stated above. On the next date of auction namely 30-7-2009, there was only one offer, which was below the upset price. The publication was also made only in two newspapers, but not in three as ordered. The Official Liquidator was also directed to find out the purchasers. The auction was posted to 7-9-2009. But the auction was not held that day. The same was adjourned to 15-9-2009. On that day, for purchase of all the three items, the offerers were present in Court. They made their offers. The Court accepted the highest offer made by the offerers present in Court and subsequently confirmed the sale. The above sale proceedings and the confirmation of sale are challenged in these appeals. 8. The learned Counsel on either side argued in length attacking and affirming the order of winding up respectively. This Court is of the considered opinion that all these contentions as to the order of winding up need not be considered in these appeals for two reasons. Firstly, it is admitted by the parties that independent proceedings as to the winding up are pending in the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sity for making proper publication in order to fetch best and adequate price for the properties. It is not in controversy that for the auction sale in respect of the three items of properties mentioned above, a publication was made by the Official Liquidator stating that the sealed tenders should be submitted along with the EMD on or before 28-7-2009. They would be opened on 30-7-2009, before the Court. As could be seen from the order, on 30-7-2009, the date fixed for auction, there was only one bidder, who offered to purchase the properties for Rs. 40 crores, and hence the auction was postponed. At that time, it was found that the publication was effected only in two newspapers, while it was ordered to be made in three. Then the auction was adjourned to 7-9-2009. From the time of the order for making a publication till the date to which the auction was posted namely 7-9-2009, no material is available that the order of the Court for publication was complied with. Apart from the same, the auction was adjourned to 7-9-2009 also returning the demand draft to the only bidder. The properties were actually sold on 15-9-2009. It is not in controversy that for the sale held on 15-9-2009, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, there was no proper publication. Two bidders were present in Court who did not have the EMD amount. Then the sale was adjourned, and even on that day, two bidders were present. Both of them were not present in Court pursuant to the publication made. Hence, it would be quite clear that they should have been brought by others who were interested in the sale of the properties, but detrimental to the interest of all others. Under such circumstances, a meaningful intervention by the Court become necessary. The Apex Court had an occasion to consider the principles which would govern the confirmation of sale conducted in the winding up of a company in a case Navalkha & Sons v. Ramanuja Das [1970] 40 Comp. Cas. 936 and has held as follows : "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, 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 rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le which implies sale after giving notice to the public wherein every member of the public is at liberty to participate. No doubt, the device resorted to considerably raised the previous bid yet it was not an adequate price having regard to the market value of the property to which reference has already been made. The denial of opportunity to purchase the auction bid but for want of notice is a serious matter. In our opinion the learned Judge having decided on December 24, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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