TMI Blog2014 (12) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, the learned Company Court has taken everything upon itself and has accepted that the relevant factors like potential development of the land even as on 17.12.2013 were not considered by him which has resulted into accepting the inadequate price and irregularity and injury and therefore, this is a fit case to exercise the inherent powers conferred under Rule 9 of the Companies (Court) Rules. Therefore, as such the learned Company Court has tried to correct the error committed by it and has recalled its earlier order dated 17.12.2013 accepting the higher offer of the appellant of ₹ 148 Crores [market price of ₹ 148 Crores which is held to be grossly inadequate and substantially low] and has passed the order to reauction the land by fixing the upset price at ₹ 214 Crores. In the present case the learned Company Court has in exercise of inherent powers under Rule 9 accepting and/or taking upon itself that certain relevant factors like potential development and the change in the FSI which had a direct bearing on the determination of the market price was not considered by him on 17.12.2013 when the offer of the appellant of ₹ 148 Crores was considered. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Petition No.156/1989 and the company was thereafter ordered to be wound up by an order dated 06.03.1990 and the Official Liquidator attached to this Court came to be appointed as Liquidator of the said company. That the dispute is with respect to the completely freehold land of the company in liquidation admeasuring 13895 Sq. Meter situated in the very prime location of the city of Ahmedabad. That by order dated 26.03.2013 passed in Company Application No.475/2013, the learned Company Court directed the Official Liquidator to put the aforesaid freehold land for sale by inviting offers from intending purchasers in a sealed cover. That the learned Company Court also fixed the upset price at ₹ 55 Crores and the EMD was fixed at 10% thereof. Accordingly, the Official Liquidator invited the offers by giving advertisement in newspapers having wide circulation in the State of Gujarat as well as in the city of Mumbai. That in response to the said advertisement, 12 tender forms were sold, however only one tender was received from M/s. Jai Bholenath Project Pvt. Ltd. in a sealed cover. That thereafter Company Application No.151/2013 was filed, wherein it was prayed by the said of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter the appellant herein original opponent No.9 deposited 25% of the sale consideration as per the conditions of the tender i.e. ₹ 37 Crores on 16.01.2014. It appears that thereafter the appellant herein original opponent No.9 filed MCA No.53/2014 before the learned Company Court with a prayer to grant extension of four months to deposit the balance sale consideration of ₹ 106.50 Crores. That by order dated 31.03.2014, the learned Company Court disposed of the said application and granted four installments as under: 1. ₹ 34 Crores on or before 30.04.2014; 2. ₹ 24 Crores on or before 30.05.2014; 3. ₹ 24 Crores on or before 30.06.2014; 4. ₹ 24.5 Crores on or before 30.07.2014; The learned Company Court also directed the appellant herein to pay 10% interest per year starting from 16.04.2014 till the last installment of ₹ 24.5 Crores was paid. [2.2] That feeling aggrieved and dissatisfied with the aforesaid order dated 31.03.2014 passed by the learned Company Court in MCA No.53/2014, the respondent No.1 herein preferred appeal being OJ Appeal No.9/2014. It appears that at the time of hearing of the aforesaid appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Official Liquidator was further directed to set out the time schedule for different stages for the public auction. [2.3] It appears that thereafter one MCA No.90/2014 in OJ Appeal No.9/2014 came to be filed by the appellant herein original opponent No.9, which came to be disposed of by the said Division Bench vide order dated 22.04.2014 deleting the word consensus from second line of para 6 of the judgment dated 17.04.2014. At this stage it is required to be noted that order passed by the Division Bench of this Court in OJ Appeal No.9/2014 has attained finality. [2.4] That thereafter the opponent No.1 herein who was the second highest bidder submitted MCA No.89/2014 in OLR No.43/2013 before the learned Company Court mainly praying for recall of the order dated 17.12.2013 on two main grounds more particularly enumerated in paras 2.9, 2.10, 2.11 and 3 of the said application. That it was mainly contended on behalf of the opponent No.1 herein original applicant as under: (a). That while passing the order dated 17.12.2013, the successful bidder Vedica Procon Pvt. Ltd. opponent No.9 herein requested for permission of one nominee, but such a request was declined as obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and it is specifically contended by the applicant that the said order dated 31.3.2014 has now become infructuous. The applicant has also contended that this Court is the custodian of the interest of the Company and its Creditors. [2.5] That the aforesaid application was opposed by the appellant herein original opponent No.9 Vedica Procon Private Limited. It was submitted that the said application is not maintainable in law and no grounds are made for recall of the order. It was also contended that the application suffers from gross delay and laches. It was further contended that it was declared as the highest bidder and it has also paid the full amount of sale consideration on 16.04.2014 and therefore, thereafter it is not open to pray to recall of the earlier order dated 17.12.2013 accepting the highest bid / offer of the appellant. It was further contended that even the EMD amount came to be returned to the original applicant opponent No.1 herein and therefore, it has lost its right to recall / review the order dated 17.12.2013 by way of waiver, estoppel, acquiescences. It was submitted that neither there was any violation of the principles of natural justice while p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant herein original opponent No.9 at ₹ 148 Crores and has issued the following directions. 1. The Official Liquidator shall give a fresh advertisement for auction in newspapers as provided by this Court in the order dated 26.3.2014 passed in Company Application No.475 of 2011 in the same newspapers in English and Gujarati as provided in the earlier orders inviting for offer of the purchase of the land in question admeasuring 13895 Sq. Meter on the same terms and conditions by fixing the upset price at ₹ 214 crores and EMD at ₹ 21.4 crores being 10% of the upset price as fixed. The Official Liquidator shall give such advertisements within a period of two weeks from the date of receipt of this order. The Official Liquidator shall set out the time schedule for different stages of public auction. The amount of ₹ 214 crores deposited by the applicant herein shall be invested by the Official Liquidator in a Fixed Deposit till fresh auction process is over. 2. The Official Liquidator shall return back the amount of ₹ 148 crores to opponent No.9 forthwith. The applicant is directed to pay ₹ 25 lacs to opponent No.9, as provided by the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mently submitted that the learned Company Court has materially erred in passing the impugned order allowing the MCA No.89/2014 filed by the respondent No.1 herein original applicant and recalling its earlier order dated 17.12.2013. [4.2] Shri Mihir Joshi, learned Counsel appearing on behalf of the appellant herein original opponent No.9 has further submitted that the learned Company Court has materially erred in entertaining the application submitted by the respondent No.1 herein original applicant and in recalling its earlier order dated 17.12.2013 in the application filed by the respondent No.1 herein. [4.3] It is further submitted by Shri Mihir Joshi, learned Counsel appearing on behalf of the appellant herein original opponent No.9 that as such the application at the instance of the respondent No.1 herein was not at all maintainable. It is submitted that the respondent No.1 Balleshwar Greens Pvt. Ltd. having participated in the auction without objection and having failed to match the highest bid, was estopped and precluded from seeking to reopen the auction and from seeking second innings on an afterthought. [4.4] It is further submitted that the price offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013, passed by the Court, suffer from inherent lack of jurisdiction or that a necessary party had not been served at all or was not represented. It is submitted that under the circumstances, the application filed by the respondent No.1 herein original applicant Balleshwar Greens Pvt. Ltd. for recall of the order dated 17.12.2013, was not maintainable in law. In support of his above submissions he has relied upon the decision of the Hon ble Supreme Court in the case of Budhia Swain Ors. v. Gopinath Deb Ors. reported in (1994) 4 SCC 396 [Paras 6 to 9]. [4.8] It is further submitted by Shri Mihir Joshi, learned Counsel appearing on behalf of the appellant herein original opponent No.9 that as such the respondent No.1 herein original applicant was very much aware that the review application under Order 47 Rule 1 of the Code of Civil Procedure, 1908 (hereinafter referred to as Code ) read with Rule 6 of the Company Court Rules against the order dated 17.12.2013 passed by the learned Company Court, would not be maintainable as it was not the case of the Balleshwar Greens Pvt. Ltd. that there was any error apparent on the face of the record. The original applicant Balle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the increased value of the property due to the subsequent event of increased FSI and therefore cannot establish material irregularity in the confirmation of the sale earlier. It is further submitted that the attempt to reopen the concluded transaction on the basis of subsequent facts is impermissible. It is submitted that a bidder having participated in the auction and after consciously deciding not to bid higher than the highest bid, cannot be heard to complain that its business/commercial decision turned out to be incorrect on second thought and that it should be permitted to improve its offer and that this is against the basic concept of auction where the fall of the hammer crystallizes the rights of the parties. It is further submitted that any subsequent facts affecting the valuation of the property thereafter are wholly irrelevant to determine the adequacy of the price when the hammer fell and it would be to the risk and/or consequence of the purchaser. It is submitted that if an event adversely affecting the valuation of the property, viz. reservation, etc. had happened post the auction, the purchaser could not have sought a review to back out from the transaction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has set aside the confirmation on the ground that in view of the subsequent development of increase in the FSI, the price had been rendered inadequate, which is an error of principle. [4.16] It is further submitted by Shri Joshi, learned Counsel appearing on behalf of the appellant that even some of the observations made by the learned Company Court that since the change in FSI had not been sanctioned at the time of passing the order dated 17.12.2013, the Court had no occasion to consider the said factum and that on the date on which the auction came to be held by this Court and while accepting the highest bid of the opponent No.9, the change in FSI was not sanctioned but was only in offing and therefore, this Court had no occasion to consider the said factum and the aforesaid were overlooked, all these observations are required to be read in the context they are and the judgment and order is required to be read as a whole. It is submitted that entire judgment proceeds on the basis that the subsequent higher price renders auction price inadequate and therefore, in any case aforesaid observations be read in that context, since it is well settled principle that the judgment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Navalkha Sons v. Ramanuja Das Ors. (1970)40 CC 936 (Pages 941942) 2. Kayjay Industries (P) Limited v. Asnew Drums (P) Limited (1974)2 SCC 213 (Paras 7 and 9) 3. Sharawan Kumar Agarwal v. Shrinenp Investment Limited Ors. (1990 68 CC 52 (Cal) (DB) (Pages 63 to 71) 4. Valji Khimji Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Limited Ors. (2008) 145 CC 36 (SC) (Pages 42 and 43) 5. Sarvariya Exports Limited v. Official Liquidator of Urmi Oil Limited Ors. (2009) 147 CC 336 (Guj.) (DB) (Pages 344 to 352) 6. Chaudhary Brothers v. Official Liquidator of Bhagwati Glass Container Limited Ors. (2014)2 GLH 271 [4.18] It is further submitted that even the submissions on behalf of the Balleshwar that by order dated 17.12.2013, the learned Company Court had not confirmed the sale in favour of the appellant Vedica is baseless and without any merits. It is further submitted that by order dated 17.12.2013, the learned Company Court accepted the bid of appellant as being the highest bidder. It is further submitted that the bid of appellant is accepted as per the tender conditions and that by the said order the sale is confirmed in favour of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re being any averments to the effect that the price offered during the auction was inadequate would not lead the learned Company Court to exercise its inherent powers and thereby set aside a confirmed sale and concluded transaction. It is submitted that if higher price is the only trigger event for the learned Company Court to exercise its inherent powers then in such a case a confirmed sale can never attain finality and such interference and cancellation of a concluded contract would result into erosion of faith in the system and sanctity of the contract. It is submitted that learned Company Court in the facts of the present case, has grossly erred in exercising its inherent powers by recalling the order dated 17.12.2013 and by such recall the learned Company Court has failed to secure the ends of justice. Making above submissions and relying upon above decisions, it is requested to allow the present appeal and quash and set aside the impugned judgment and order passed by the learned Company Court. [5.0] Present appeal is opposed by Shri Kamal Trivedi, learned Senior Advocate appearing with Ms. Sangita Vishen, learned advocate appearing on behalf of the respondent No.1 herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In support of his above submissions, Shri Trivedi, learned Counsel has heavily relied upon the following decisions of the Hon ble Supreme Court as well as this Court and Kerala High Court. 1. Vishnu Agarwal v. State of U.P. AIR 2011 SC 1232 (Para 9) 2. G.T. Swamy Anr. v. Goodluck Agencies Anr. 1990 (69) Comp. Cases 819 (Para 827) 3. Giovanda Binny (in Liquidation) Fertilizers and Chemicals Travancore Ltd. v. Official Liquidator, High Court of Kerala (1996) 4 Comp LJ 380 (Ker) 380 (Paras 11, 12, 13) 4. Shraddha Aromatics P. Ltd. v. Official Liquidator of Global Arya Industries Ltd. Ors. (2009) 147 Comp. Cases 322 (Guj) 5. Girish Bhatwatprasad HUF through Karta and Manager Aastik and Anr. v. Industrial Development Bank of India Manu/GJ/0069/2014 (Paras 43 to 45) 6. Maharana Mills Rashtriya Kamdar Sangh 2011(3) GLH 399 (Para 49) [5.3] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent No.1 herein original applicant that one may find identical language like Rule 9 of the Company Court Rules having been used in section 151 of the Code, section 482 of the Code of Criminal Procedure, 1973 and Rule 6 of the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the present case as such the learned Company Judge has taken upon himself and has recalled its order dated 17.12.2013 by specifically observing that the relevant considerations like potentiality of the land etc. were not considered by him at the time of accepting the offer made by the appellant of ₹ 148 Crores and therefore, the price offered by the appellant i.e. ₹ 148 Crores, which came to be accepted was an inadequate price. [5.7] It is, therefore, submitted by Shri Trivedi, learned Counsel that when the Court felt that there was an error committed by it and therefore, when in exercise of inherent powers the Court has recalled its earlier order, the doctrine and/or principle of estoppel, acquiescence etc. can never come in the way of the Court to exercise inherent powers and to recall its earlier order. [5.8] It is further submitted by Shri Trivedi, learned Counsel that as such by order dated 17.12.2013, it cannot be said that the learned Company Court confirmed the sale in favour of the appellant herein. It is submitted that there is a difference between acceptance of the higher offer and confirmation of the sale in favour of the bidder making the hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having regard to the market value of the property, the price offered is reasonable. Unless the Court is satisfied about the adequacy of the price, the act of confirmation of sale would not be a proper exercise of judicial discretion. [Navalakha and Sons ( 1970)40 CC 936 (Para 941). 2. Businessman make uncanny calculation before striking a bargain and that circumstance must enter the judicial verdict before deciding whether the better price could be had by a postponement of the sale. [Kayjay Industries (1974) 2 SCC 213 (Para 7)] 3. Therefore, if a Court acting on the basis of a valuer s report has proceeded to confirm the sale after considering the fair value of the property, the general economic trends, large sum required to be produced by the bidder, the formation of a syndicate, the futility of postponements and the possibility of litigation, and several other factors dependent on the facts of each case, there should not be any act by the Court which signals that any confirmed sale can be lightly set aside. Once the order confirming the sale shows application of mind and indicates that all relevant facts have been considered before confirmation of sale, unless and until ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid case, the subsequent higher offer of the bidder i.e. LICA (P) Ltd. (No.1) was directed by the Apex Court to be treated as the upset price with a direction to the learned Company Judge to conduct the auction afresh. It is submitted that therefore there is nothing wrong on the part of the learned Company Judge to have directed a fresh auction with upset price of ₹ 214 Crores. [5.15] It is further submitted by Shri Trivedi, learned Counsel that it cannot be disputed that in the public auction conducted before the learned Company Court, the fundamental principle to be taken care of is to see that maximum higher market price of the property in question i.e. an inadequate price is fetched and that the said market price is to be decided with reference to its best price on a given day that could be expected to be offered and not with reference to the total dues of the workers and creditors. It is submitted that therefore even a confirmed sale / deconfirmed/cancelled, if subsequently, a significantly higher offer comes on record by making an exception to the position of the fact that ordinarily, the Courts are loathe to accept the subsequent higher offer of one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Divya Manufacturing Company (P) Ltd. (2000)6 SCC 69 (Para 16) 2. Valji Khimji Co. (2008) 9 SCC 299 (Para 28) 3. FCS Software Solutions Ltd. (2008)10 SCC 440 4. Shraddha Aromatics Pvt. Ltd. (2011)6 SCC 207 5. M/s. Suchit Pavitra Industrial Co.op. Society Order dated 31.02.2013 in SLP No.10881/2012 6. Manu Tilling Co. P. Ltd. v. Patel Poschem (P) Ltd. Order dated 13.08.2014 passed in SLP No.28790/2012 7. Manoj I. Naik Associates v. Official Liquidator Order dated 19.08.2014 in SLP No.3478234783/ 2012 8. Abhishek Shops and Warehouses Co.op. Societies Ltd. v. Monali Textiles [Judgment dated 24.12.2013 in OLR No.49/2013] 9. Nileshbhai R. Patel v. Official Liquidator Judgment dated 25.07.2013 in CA No.299/2013 [5.18] It is further submitted that in the case of Shraddha Aromatics Pvt. Ltd. (Supra), the Apex Court quashed and set aside the order of Division Bench of this Court reported in (2009) 147 Comp. Cases 353 which has set aside the order of learned Company Court, reported in (2009) 147 Comp. Cases 322. It is submitted that it was the order of the learned Company Judge deconfirming the already confirmed sale for fetching most reasonable market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property in question, which eventuality took place on 4.3.2014, when the FSI came to be increased to 1.8. It is therefore submitted that for the present purpose, what was decisive was not the said subsequent event of 4.3.2014, but the factor of strong probability referred to above existing as on 17.12.2013, which was within the knowledge of all the bidders but it escaped the attention of the learned Company Court. It is submitted that thus, it was owing to the aforesaid reason that the correct market price of the property in question could not come to the notice of this Hon ble Court on 17.12.2013, which aspect ought to have been taken into account on 17.12.2013 and for that purpose, even public auction held on 17.12.2013 could have been postponed. It is under these circumstances that the learned company Judge took note of the Respondent s contention in the following fashion at Pg.Z43 of the order under challenge: .... It was contended that on 17.12.2013 all the bidders were aware that there is possibility to increase in FSI which would result into increase in value of the property in question and because of the said reason, the correct market price of the property in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the custodian of the property of the Company under liquidation and therefore, such factors need to be considered even at this stage. .... (Emphasis supplied) It is further submitted that merely because the aforesaid strong probability of likely increase in FSl as on 17.12.2013 came to be turned into a reality on 04.03.2014, which was followed by the higher offer of the respondent, it cannot be contended that the learned Company Judge has taken into consideration a subsequent event of 04.03.2014 which was in fact, a matter of coincidence. It is alternatively submitted that even if it is accepted that the learned Company Judge has taken into consideration the subsequent event of increase in FSl happened on 04.03.2014, there is nothing wrong in law to consider a subsequent significantly higher offer of the respondent herein for cancelling the earlier auction held on 17.12.2013. It is submitted that in view of the aforesaid, it can be said that there was an occurrence of a forced material irregularity as mentioned above on 17.12.2013, even if one were to treat the order passed on 17.12.2013 as an order of confirmation of sale in favour of appellant. It is further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . on 15.09.1992 by following the above referred judgment in case of Sharawan Kumar Agrawal (Supra) came to be set aside by the Hon ble Supreme Court on 04.01.1993 in the case of LICA (P) Ltd. (No.1) reported in 1996 Vol. 85 Company Cases 788. It is further submitted that similarly, the judgment rendered by this Court in the case of Sarvariya Exports Ltd., reported in (2009) 147 Comp. Case 336, cannot have any efficacy in the present matter, since another judgment in case of B.D. Lathia v. Shraddha Aromatics Pvt. Ltd. reported in (2009) 147 Comp. Cases 353, rendered by the Division Bench of this Hon ble Court by following the said judgment of Sarvariya Exports Ltd. (Supra) has been set aside by the Apex Court in the case of Shraddha Aromatics Pvt. Ltd., reported in (2011)6 SCC 207. It is further submitted that the judgment of the Apex Court in the case of Genoa Retreat Towers Ltd.. reported in (2003) 12 SCC 91, also cannot have any applicability to the facts of the present case. In the said case before the Apex Court, auction was held on 21.12.1994 with a liberty to construct with FAR (Floor Area Ratio) of 2, followed by execution of a sale deed on 07.01.1997 with FAR 2. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions of offer. Clause 11 as extracted in the said judgment reads as under: 11. The High Court may set aside the sale in favour of the purchaser/purchasers even after the sale is confirmed and the purchase consideration is paid on such terms and conditions as the court may deem fit and proper for the interest and benefit of creditors, contributories and all concerned and/or for public interest. It is further submitted that no such clause similar to the aforesaid clause 11 is found in the facts of the present case. It is further submitted that in LICA2, the Hon ble Supreme Court specifically observed that the order passed by the Supreme Court in LICAl yielded the result that the property which would have been finalized at ₹ 45 lacs, fetched ₹ 1.10 Crores and in the Hon ble Supreme Court a further offer of ₹ 1.25 Crores is made and therefore, the principle laid down in LICA2 (Supra) would not be applicable to the facts of the present case. [7.0.3] It is further submitted that in the case of Divya Manufacturing (Supra), the Hon ble Supreme Court has held that when correct market value of the assets was not properly known to the Court and the sale was con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that on perusal of the facts it is evident that in the case of Divya Manufacturing (Supra), the correct market value of the property was not properly known to the Court and the sale was confirmed at grossly inadequate price. It is submitted that in thep present case, there is no allegation by Balleshwar that the correct market value of the property was not known to the Court while confirming the sale by order dated l7.l2.2013. It is further submitted that it is not the case of Balleshwar that at the time when the sale was confirmed by this Court in favour of Vedica, the price realized was inadequate. It is further submitted that it is not even the case of Balleshwar, in the present application, that it seeks to offer substantive higher price based on the facts and circumstances prevalent at the time when this Court passed the order dated 17.12.2013 and in fact, Balleshwar is offering the higher price only because subsequently the FSI has increased and the land in question, based on subsequent facts, may now fetch more price. [7.0.7] It is further submitted that in the case of FCS Software (Supra), the Hon ble Supreme Court of India observed that certain facts which were necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further submitted that the judgment of Shradhha Aromatics (Supra) is also referred to by this Hon ble Court in the case of Chaudhary Brothers (Supra). It is submitted that this Hon'ble Court in the case of Chaudhary Brothers (Supra) has culled out the true ratio of the judgment delivered in Shradhha Aromatics (Supra). It is submitted that on perusal of para 11(m) of the judgment of Chaudhary Brothers (Supra), it becomes evident that the judgment delivered in Shradhha Aromatics (Supra) would have no bearing to the facts of the present case. [7.0.11] It is further submitted by Shri Joshi, learned Counsel that in the case of M/s Suchit (Supra), M/s. Suchit badly defaulted in making the payment of the rest of the bid amount and that the balance amount which was to be deposited by April 2007 was deposited only on 08.08.2008. It is submitted that even the application for extension of time for the deposit was rejected by the Court. It is submitted that during the said period other bidders made the offer and M/s. Suchit thereafter carried the matter before the Division Bench and eventually before the Hon ble Supreme Court of India. It is submitted that M/s. Suchit before the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Liquidator have now earned interest @ 8% per annum and thereby accumulated to a sum of ₹ 3.78 Crores. It is submitted that the Hon ble Supreme Court also noted that Manu is revising its bid from ₹ 2.70 Crores to ₹ 4.00 Crores inclusive of the interest that has been earned on the deposit already made. It is submitted that at the time of hearing held on 13.08.2014, Patel Phoschem alternatively submitted that if the Hon ble Supreme Court is to consider the higher bid of ₹ 4 Crores offered by Manu, there should be fresh auction. It is in these circumstances that the Hon ble Supreme Court directed the Official Liquidator to initiate a fresh process of auction. It is submitted that further, it is important to highlight that the bidder who had offered higher price had not participated at the time of auction and in the instant case, Balleshwar was very much a party to the auction and had failed to offer higher price than that offered by Vedica and confirmed by the Hon ble Company Court. It is submitted that from the aforesaid facts it is evident that the said facts have no bearing to the facts of the present case. It is submitted that in the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offer from ₹ 1.03 Crores to ₹ 6.25 Crores. It is submitted that by such increase there was never any confirmation or acceptance of the bid by the Hon ble Supreme Court of India and that there were other offers also which were much more than the offer made by Manoj. It is in these circumstances that the Hon ble Supreme Court directed fresh auction. It is submitted that on perusal of the orders, it becomes evident that even the Company Court would have directed fresh auction based on the order dated 18.12.2004 passed by the Company Court or order dated 30.08.2011 passed by the Division Bench. It is submitted that it is not known as to how the said orders passed by the Company Court, Division Bench and the Hon ble Supreme Court helps the case of Balleshwar in any manner whatsoever. [7.0.14] It is further submitted by Shri Joshi, learned Counsel appearing on behalf of the appellant that in the case of Abhishek Shops (Supra), the sale was confirmed by the learned Company Court on 11.09.2003 in favour of Abhishek Shops. It is submitted that the said order was recalled by order dated 16.10.2003 and against the recall order Abhishek Shops preferred appeal before the Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. It is submitted that on the contrary, the learned Company Court by its aforesaid order dated 17.12.2013 directed Official Liquidator to take appropriate actions as envisaged under the conditions of the tender notice, more particularly condition Nos. 29, 32 and 33. It is submitted that considering various conditions of the tender notice when the higher bid of the applicant of ₹ 148 Crores was accepted by the learned Company Court vide order dated 17.12.2013, it can be said that by the order dated 17.12.2013, the learned Company Court confirmed the sale in favour of Vedica and thereafter nothing further was required to be done except executing the sale deed by the Official Liquidator. In support of his submission that by order dated 17.12.2013, the learned Company Court confirmed the sale in favour of Vedica, Shri Joshi, learned Counsel appearing on behalf of the appellant has heavily relied upon clauses 5, 8, 9, 13, 17, 20, 23, 29 and 33 of the Terms and Conditions. [8.3] Now, so far as the impugned judgment and order passed by the learned Company Court recalling its earlier order dated 17.12.2013 in exercise of inherent powers under Rule 9 of the Company Court Rules is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IDBI. As the aforesaid shareholders were not heard, the Company Court recalled its earlier order. It is submitted that the learned Company Court recalled the order as the proper and necessary party was not heard. In the present case it is nobody s complaint that necessary or proper party was not heard at the time when the Company Court passed the order dated 17.12.2013 confirming the sale in favour of Vedica. [8.4.3] It is further submitted that in the case of Vishnu Agarwal (supra), the matter was listed for hearing before the High Court on 02.09.2003. It is submitted that no one appeared on behalf of Revisionist and the Counsel for respondents appeared and in these circumstances, the judgment was passed. It is submitted that subsequently, an application was moved for recall of the order dated 02.09.2003 stating that the case was shown in the computer list and not in the main list of the High Court and hence, the Counsel for Revisionist had not noted the case and hence he did not appear. It is submitted that the High Court recalled the order dated 02.09.2003 and the same was challenged by Vishnu Agarwal. It is submitted that the Hon ble Supreme Court rejected the appeal and whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficial Liquidator should sell the land to Fertilizers Chemicals on paying the said price as quoted by State Bank of India. It is further submitted that Fertilizers Chemicals also stated that it was willing to offer ₹ 66.09 lacs. It is submitted that the Court on considering the aforesaid facts directed the Official Liquidator to reauction the property. It is further submitted that in the aforesaid case there was no confirmation of sale in favour of State Bank of India. It is submitted that at the time when the Court was considering confirmation of sale in favour of State Bank of India that Fertilizers Chemicals approached the Court with an offer of ₹ 66.09 lacs. It is submitted that in the present case the Court accepted the bid of Vedica and confirmed the sale in its favour. It is further submitted that Balleshwar approached the Court with recall application after 4 months. It is submitted that it is not known as to how the said judgment is applicable in the facts of the present case. It is further submitted that in the case of Maharana Mills (Supra), the question was as to whether any adhoc disbursement can be made to the creditors or workers of a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 9 of the Company (Court) Rules by taking upon itself the burden and accepting that certain relevant aspects which have a direct bearing on the market value / price of the land in question as on that day, such as potentiality of the land etc. were not considered by him and that the offer made by the appellant herein of ₹ 148 Crores was inadequate. [9.1] While considering the submissions made by the learned Counsel appearing on behalf of the rival parties, some of the observations and findings recorded by the learned Company Court made while passing the impugned order are required to be considered which are as under: 35. ...It is an admitted position that the lands put to auction are situated in the prime locality of Ahmedabad City, having potentiality of commercial development and it is situated in the main market area. 36. It may be noted that the auction is governed by the terms and conditions which are at AnnexureA to this application. Considering the terms and conditions of the sale and more particularly, condition No.5 provides that the offers received by the Official Liquidator shall be opened before this Court. Condition No.7, interalia, provides that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was granted 4 installments as provided in Para 5 of the order dated 31.3.2014 and opponent No.9 was also directed to pay interest at the rate of 10% starting from 16.4.2014 till the last installment of ₹ 24.5 crores is received, to be calculated proportionately on the outstanding/unpaid amount. The applicant challenged the said order dated 31.3.2014 by way of filing an appeal being O.J. Appeal No.9 of 2014 on 16.4.2014. Incidentally, on the same day opponent No.9 paid the remaining amount of consideration i.e. ₹ 106.5 crores. Though it is disputed by the present applicant, the records reveal that on 17.4.2014 when O.J. Appeal No.9 of 2014 came to be heard and disposed of by the Division Bench of this Court, the Official Liquidator handed over the possession of the lands in question to opponent No.9. However, it is an admitted position that the sale deed is not executed. In opinion of this Court, opponent No.9 and the Official Liquidator have still to adhere to condition No.33 of the terms and conditions in order to see that the sale deed is executed. The draft of such a sale deed is to be placed before the concerned Company Court for its approval and admittedly, before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice is fetched and considering the gap between the price determined in the auction and the price now offered, the price fetched in the auction is grossly inadequate. As noted hereinabove, it is an admitted position that the sale deed is not executed and thus, as per the terms and conditions of auction, the sale procedure is not yet complete. 40. Even if it is construed that the offer of ₹ 148 crores made by opponent No.9 amounts to confirmation of sale, the fresh offer now given by the applicant who himself was also a bidder (second highest bidder) at the auction held on 17.12.2013 before this Court is very high and the same therefore demonstrates that the offer which was accepted by this Court by the order dated 17.12.2013, was accepted at a grossly inadequate price. ...However, in the instant case, the offer made by the applicant is significantly higher than the price which is received in the auction and therefore, the present case falls in the exception of deconfirming the sale. Considering the ratio laid down by the Apex Court in the case of LICA (P) Ltd. (No.1) (supra), LICA (P) Ltd. (No.2) (supra), Divya Manufacturing Co. Pvt. Ltd. (supra) and Shraddha Aromatics P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crease in FSI is an event which has occurred after acceptance of highest bid still however, the vital factor of potentiality of development could not be considered, which has resulted into irregularity as well as injury and as held by Division Bench of Calcutta High Court in the case of Sharawan Kumar Agarwal (supra), the same constitute something more than merely a higher price. 41. ...However, such a vital factor of potentiality of development which could not be considered by this Court in the circumstances narrated hereinabove, has resulted into inadequacy of price fetched which is amply clear from the substantial gap between the price fetched at the auction held on 17.12.2013 and the price now offered as an upset price. The increase from the price offered by the highest bidder opponent No.9 at ₹ 148 crores and now offered by the applicant at ₹ 214 crores is a substantial wide gap which has resulted into insufficiency of price fetched which even according to Apex Court amounts to irregularity. 43. The Company Court has to see that the best price of the property is fetched, the price is not to be determined in relation to the dues of the stakeholders, but maximu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the error committed by it and has recalled its earlier order dated 17.12.2013 accepting the higher offer of the appellant of ₹ 148 Crores [market price of ₹ 148 Crores which is held to be grossly inadequate and substantially low] and has passed the order to reauction the land by fixing the upset price at ₹ 214 Crores. Under the circumstances, when the learned Company Court / Judge accepted that at the time of accepting the offer made by the appellant of ₹ 148 Crores on 17.12.2013, the factor like FSI which has direct impact and effect on the potential development could not be considered by him, which has resulted into irregularity in accepting the grossly inadequate price offered by the appellant of ₹ 148 Crores and when in exercise of the inherent powers the learned Company Court has recalled its earlier order dated 17.12.2013, it cannot be said that the learned Company Court has committed any error and/or exceeded its jurisdiction in exercising the inherent powers conferred under Rule 9 of the Companies (Court) Rules. At this stage it is required to be noted that as such the order dated 17.12.2013 accepting the offer of the appellant of ₹ 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a mistake, and its rectification, would certainly not put us to shame. In our considered view, embarrassment would arise when the order assailed is actuated by personal and/or extraneous considerations, and the pleadings record such an accusation. No such allegation was made in the present writ petition. And therefore, we were fully satisfied that the feeling entertained by the petitioner, that we would not pass an appropriate order, if the order impugned dated 4.3.2014 was found to be partly or fully unjustified, was totally misplaced. [9.4] In the case of G.T. Swamy (Supra), while considering the power of a Company Court to recall order of winding up passed by it and while considering the inherent power of the Court it is observed and held that a combined reading of Rules 6 and 9 of the Companies (Court) Rules indicates that inherent power of the Company Court can be exercised in the manner provided under Section 151 of the Code, except in cases where the Companies Act and the Rules provided otherwise. It is further held that it is open to the Company Court, in exercise of its inherent power in order to do justice between the parties, and to recall the order of winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions have been made by the learned Counsel appearing for respective parties on the issue whether the confirmed sale can be deconfirmed or not on the basis of the subsequent higher offer. It is also contended on behalf of the appellant that the learned Company Court has relied upon the subsequent development of increase in FSI which has resulted into increase in the market price and therefore, the subsequent development could not have been considered by the learned Company Court. However, it is required to be noted that the learned Company Court has specifically observed and held that certain relevant factors such as potential development of the land in question as on the day on which the bid of the appellant was accepted and it had a direct bearing on the determination of the market price was not considered by him. Therefore, as such the learned Company Court has considered the position as on 17.12.2013 and has observed that by not considering the aforesaid factors it has resulted into irregularity and injury. The observation made by the learned Company Court with respect to subsequent increase in FSI resulting into a large further area available for the purpose of construction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing (Supra) and Valji Khimji and Company (Supra). The learned Company Court has also considered the decisions which were relied upon by and which are relied upon by the learned Counsel appearing on behalf of the appellant. Considering the aforesaid decisions and even the decisions which are relied upon by the learned Counsel on behalf of the appellant referred to herein above on the point whether a confirmed contract/sale can be deconfirmed subsequently or not, we are in complete agreement with the view taken by the learned Company Court that in the facts and circumstances of the case, there is a case made out to recall the earlier order of confirming the bid/offer of the appellant of ₹ 148 Crores. As observed hereinabove, there is a substantial difference between the price offered by the appellant which was confirmed by the learned Company Court vide order dated 17.12.2013 and even the price offered by the respondent No.1 now i.e. approximately more than ₹ 66 Crores. It is required to be noted that as such the aforesaid difference of ₹ 66 Crores would be considering ₹ 214 Crores as upset price now fixed by the learned Company Court and if there is a rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to see that the properties are sold at a reasonable price. It is also observed and held by the Hon ble Supreme Court in catena of decisions that the Company Court has to see that the best price of the property is fetched. Under the circumstances and in the facts and circumstances of the case, narrated hereinabove, more particularly when the learned Company Court has recalled its earlier order of accepting the offer of the appellant of ₹ 148 Crores, in exercise of inherent powers and has passed an order of reauction by fixing the upset price at ₹ 214 Crores, we see no reason to interfere with the same. We are of the opinion that the learned Company Judge has exercised the discretion judiciously and in the larger interest and has corrected the mistake committed by it of not considering the relevant factors while passing the order dated 17.12.2013. If despite the above, the impugned order passed by the learned Company Court of correcting its mistake / error and recalling its earlier order dated 17.12.2013 accepting the offer of the appellant of ₹ 148 Crores is interfered with, in that case the benefit of the same would straightway go to the appellant. Because of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant herein can be said to be a necessary and/or proper party or not. The said application preferred by the applicant i.e. OJ Civil Application No.283/2014 has been dismissed by the learned Company Court solely on the ground that the application submitted by the applicant earlier for joining party in Company Application No.475/2011 in OL Report No.36/2011 by which the applicant prayed to join it as a party in the said proceedings was rejected. However, on considering the order passed by the learned Company Court dated 26.03.2013 in Company Application No.475/2011 more particularly para 18 of the said order, it appears that the said application was not rejected by the learned Company Court on merits by observing that the applicant cannot be said to be a necessary and/or proper party. The said application being Company Application No.475/2011 was rejected by the learned Company Court by observing in para 18 as under: [18] Company Application No.475 of 2011 and Company Application No.75 of 2012 are filed by the applicant seeking to join as party in O.L.R. No.36 of 2011. Now since the Court is not inclined to review or reconsider the proposed scheme of the applicant of Company Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid extent. [11.0] In view of the above and for the reasons stated above, OJ Appeal No.36/2014 filed by Vedica Procon Private Limited is hereby dismissed and the impugned judgment and order dated 11.08.2014 passed by the learned Company Court passed in Miscellaneous Civil Application No.89/2014 in OLR No.43/2013 by which the learned Company Court has recalled its earlier order dated 17.10.2013 passed in OLR No.43/2013 and issued the directions for fresh auction of the land in question of the Company in liquidation fixing the upset price at ₹ 214 Crores is hereby confirmed. [11.1] For the reasons stated above, OJ Appeal No.66/2014 preferred by the Narmada Fintrade Pvt. Ltd. is hereby allowed and the matter is remanded to the learned Company Court to decide the OJ Civil Application No.283/2014 afresh in accordance with law and on merits as observed herein above. [11.2] In view of disposal of main Appeals, OJ Civil Application No.525/2014 in OJ Appeal No.36/2014 stands dismissed. In the facts and circumstances of the case, there shall be no order as to costs. [12.0] At this stage a request is made on behalf of the appellant to continue the stay / interim order g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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