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TMI Blog2013 (10) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... l bidder) may be recalled and cancelled and instead his (i.e. the applicant's) offer, which is for higher amount (i.e. about Rs. 9.90 lacs more than the highest bid which came to be accepted vide order dated 21.6.2013 during auction / inter-se bidding) may be accepted. 1.1 Considering the request made in the application, order dated 30.7.2013 was passed and office was directed to issue process to the opponent No.2 i.e. the said successful bidder and to the secured creditors as well as official liquidator (OL for short). 1.2 Having regard to the request in the application and the issue raised by the applicant, Rule. Mr. Rao, learned advocate for the opponent No.2, Mr. Dave, learned advocate for opponent No.4 and Ms. Yajnik, learned advocate official liquidator have waived service of Rule. In view of the request by learned advocates, application is heard finally. Service of process is waived by learned advocates for opponent No.2, opponent No.4 and opponent No.1. 2. Before proceeding further, it is relevant to mention at this stage that the date on which this application was taken up for hearing i.e. on 30.7.2013 the sale deed was not executed and the OL had not handed over th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided to put up the assets for sale in three different lots namely (a) Lot No.1 being freehold non-agricultural land, (b) Lot No.2 being plant, machineries, furniture, fixtures, raw materials, finished goods, etc. and (c) lot No.3 composite offer for lot No. 1 and 2. In light of the said valuation report the sale committee accepted valuer's opinion about market value and recorded its views to fix the reserved price at Rs.422.00 Lacs for lot No.1 and EMD was fixed at Rs.42.20 lacs while upset price for plant and machinery i.e. lot No.2 was Rs.16.50 lacs and EMD was Rs.1.65 lacs and for lot No.3 the upset price was fixed at Rs.438.50 lacs. It was on the basis of the views and opinion of the sole committee the OL filed OLR No. 21 of 2013 and submitted that the market value of the property / lot No. II is Rs.16.50 lacs. 3.5 In the said OLR No.21 of 2013 the OL prayed, inter alia, that:-- 9 (a) That, this Hon'ble Court may be pleased to take on records the action taken by the official liquidator for sale of assets of the company; (b) That this Hon'ble Court may be further pleased to direct the official liquidator to issue advertisement inventing offers from the intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (6) Chechani Trading Company. After the last date for receiving the offers OL filed report being Official Liquidator's Report No.54 of 2013 wherein the OL prayed inter alia that:-- 16 (a) That this Hon'ble Court may be pleased to consider the views of the secured creditors of the company in respect of the highest bid that may be received in the inter-se bidding and may also be pleased to confirm, if found fit and proper, the sale of Lot No.II in favour of the highest bidder on the terms and conditions of sale as per tender document and / or such other and further terms and conditions as may be considered appropriate by this Hon'ble Court; (b) If this Hon'ble Court finds that the highest offer received in the inter-se bidding is not the appropriate offer looking to the fair market price and the valuation of assets of the company as per valuation report of 4.12.2012, this Hon'ble Court may be pleased to direct the official liquidator to re-advertisement the sale on such terms and conditions and with such further orders and directions as in the facts and circumstances of this case, may be considered appropriate and expedient by this Hon'ble Court; 3.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next hearing, i.e. on 20.6.2013, the proceedings were adjourned for the reasons mentioned in the order dated 20.6.2013. On the next date, ie on 21.6.2013, the inter-se bid amongst the said six bidders was conducted and during the said inter-se bidding (auction) present opponent No.2 emerged as highest bidder with revised offer at Rs. 20,10,000/- as against the reserved / upset price of Rs.16,50,000/-. On conclusion of the said inter-se bidding / auction, the Court passed the order dated 21.6.2013 confirming sale in favour of M/s. Omar Steel who was one of the said six bidders (i.e. opponent No.2 in present proceedings). The relevant part of said order dated 21.6.2013 reads thus:-- 1........... 2. At the outset, it is necessary to mention that the 6 bids / offers in question which are under consideration are restricted to lot No. II ( i.e. only for movable such as plant, machineries, furniture, fixtures, raw materials and finished goods except records). 3. As mentioned in the order dated 13.6.2013 in response to the advertisement issued by OL pursuant to order dated 30.4.2013, OL received in all 6 bids / offers from (1) Omar Steel (2) G.K. Traders (3) Adinath Enterprise (4) Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y future dispute or controversy, it is clarified that the term plant used in the advertisement and in this order means only manufacturing facility (i.e. machines / equipments for manufacturing process) and not the building and / or permanent or temporary super structure or any material being part of or used in the building and / or permanent or temporary superstructure. 12. In view of the above following order is passed:-- (A) The said highest bidder i.e. Omar Steel shall, as per the condition in the advertisement / tender document pay 25% of purchase consideration to the OL within 30 days from today and balance amount of purchase sale consideration shall be paid within 3 months thereafter. (B)......... (C) ........ (D) The stamp duty, registration charges, AUDA / Society charges and all other incidental charges thereto shall be borne by the purchaser. (E) ......... (F)........." 3.13 In pursuance of the said order dated 21.6.2013, the said successful bidder was obliged to make payment of sale consideration within and in accordance with the time schedule prescribed in the said order. 3.14 It was after completion of the entire aforesaid procedure and after the sale c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant, it is not one of the six bidders who had submitted the bids before the last date for submission of the bids as per the advertisement inviting bids and it had not participated in the auction / inter-se bidding on 21.6.2013 however the opponent has disputed said submission and alleged that actually the applicant is proxy of one of the bidders (viz. M/s. V.L. Intex) who, though present, did not increase its bid during the auction. Re:- Belated offer / application 7. Even if, only for the sake of consideration, the applicant's assertion is assumed to be true then also the fact remains that: (a) the applicant has woken-up at highly belated stage i.e. the applicant did not submit its offer in response to the invitation to bid within prescribed time limit; (b) and the applicant did not appear even at the stage of inter-se bidding and did not seek permission to participate in the auction as per usual practice (i.e. by paying late-entry-fee); (c) and after the stage of confirmation of sale in favour of the bidder of highest offer; (d) and did not come forward even until the stage when the successful bidder paid the entire sale consideration. 7.1 Moreover the fact al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the order passed by this Hon'ble Court and therefore the present application is not maintainable. 3. I say and submit that on 21.6.2013, this Hon'ble Court has in OLR NO. 54 of 2013 confirmed the sale in favour of the answering opponent after finalizing interest bidding between the parties present at the time of auction in the open Court. I say and submit that after the auction has been concluded by the Hon'ble Court for Rs.20,10,000/- and order was passed and thereafter the deponent has deposited the amount and the contract is concluded. Therefore now the present application is not maintainable for recalling of the order merely on the ground that the present applicant has offered the higher amount. 4......the opponent NO.2 has discharged his obligation and now only material has to be lifted by the opponent No.2. But before that the applicant has filed this application before this Hon'ble Court. It is submitted that the applicant has submitted the tender pursuant to the public advertisement given by the official liquidator and not remained present before the Hon'ble High Court. 6......contract is concluded and therefore now it is not open for the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who wants to unnecessarily cause difficulties and hurdles for opponent No.2. It is also claimed that the opponent No.2 is acting at the behest of one of the bidders who had submitted its bid during earlier process and who at the time of inter-se bidding did not increase its offer and the process of inter-se bidding was closed / concluded by order dated 21.6.2013 and now by way of this application the said bidder, through the applicant, is trying to play second innings and that therefore such attempt should not be permitted and such malafide intention may not be entertained by the Court. Mr. Rao, learned Counsel for opponent No.2 also submitted that the sale in its favour (i.e. in favour of opponent No.2) may not be set aside and confirmation of sale in its favour may be maintained, though with higher offer (i.e. at the same rate which the applicant has offered). 8.2 Ms. Yajnik, learned advocate for OL has submitted that in the facts of the case the Court may pass any appropriate order. So far as the factual aspects pursuant to the order dated 21.6.2013 is concerned, Ms. Yajnik, learned advocate for OL relied on the details mentioned in OL's reply/ report dated 7.8.2013. Mr. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on report would be of help in considering this aspect and would lead to the answer to the question related to the price suggested by the valuer. 2. ......... 3. Though the applicant has offered Rs.3 lakh and also submitted that he is willing to offer more, the applicant has, however, kept the cards close to his chest and not revealed his highest / final offer if any. 4. The applicant's obvious attempt is to give an impression that higher price can be fetched. However, it is also a matter of record that even at auction limited number of bidders participated, even amongst those who were present some of them did not proceed to quote more and after confirmation of sale until now any other (i.e. other than the applicant) higher offer is not received by Official Liquidator or by the Court. In this background, Mr. Rao, learned advocate has relied on the decision in case of Valji Khimji and submitted that merely because higher offer is received subsequently, confirmed sale should be cancelled. 5. Under the circumstances, at this stage, the Court is of the view that in the interest of justice and in view of facts of the case, if below mentioned order and direction is passed, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n M/s Navalkha and higher offeror Gopaldas Darak. M/s Navalkha thereafter offered higher bid at Rs.8,82,000 and its bid was accepted and the learned Judge concluded the sale in its favour with a direction to pay the balance amount. Thereafter an application was filed offering Rs.10 lakhs. A contention was raised that due publicity of the sale of the property was not made, but that application was rejected by the Court. Hence, an appeal was filed by the applicant who made an offer of Rs.10 lakhs and another by one contributory against the order of confirmation. Both appeals were allowed by the Division Bench and the order passed by the learned Judge was set aside with a direction to take fresh steps for sale of the property either by calling sealed tenders or by auction in accordance with law. That order was challenged before this Court by M/s Navalkha. It was contended that there was no justification for the Division Bench to interfere with the order of the learned Single Judge." In the said factual background, Hon'ble Apex Court, after referring to Rule 273 of Company Court Rules 1959, observed that: "6. The principles which should govern confirmation of sales are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, almost in all cases, consistently considered and followed by the Apex Court, it emerges that in view of the fact that the Court is the custodian of interest of the company and creditors it is not only proper but necessary for the Court to ensure that the price fetched at the auction is best and higher price though there is no suggestion of irregularity or fraud. Thus, the said observation by the Apex Court emphasizes that the paramount duty of the Court is to protect best interest of the company, creditors (i.e. shareholders and contributories) and the workers and to ensure that the Court should also ensure that highest price is received at the auction. Ordinarily, this would translate into the situation which would justify the decision to set side the confirmed sale in the event higher price is offered even after confirmation of sale. However, it may be noticed that in the very same decision the Apex Court, in the immediately next paragraph, observed that it is equally well settled that once the Court comes to the conclusion that the price offered is adequate, subsequent higher offer cannot be a valid ground to refuse confirmation of sale. Thus, the guiding and determining fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er price could have been had. What is expected of the Judge is not to be a prophet but a pragmatist and merely to make a realistic appraisal of the factors, and, if satisfied that, in the given circumstances, the bid is acceptable, conclude the sale. The Court may consider the fair value of the property, the general economic trends, the 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. Once that is done, the matter ends there. No speaking order is called for and no meticulous post mortem is proper. If the Court has fairly, even if silently, applied its mind to the relevant considerations before it while accepting the final bid, no probe in retrospect is permissible. Otherwise, a new threat to certainty of Court sales will be introduced. 10. So viewed we are satisfied that the district Court had exercised a conscientious and lively discretion in concluding the sale at Rs. 11.5 lakhs. If the market value was over 17 lakhs, it is unfortunate that a lesser price was fetched. Mere inadequacy of price cannot demolish every Court sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price offered and accepted is adequate. The Court being the custodian of the interests of the company and its creditors, the power to confirm a sale or to withdraw the confirmation has to be exercised with judicial discretion regard being had to the fact that the price fetched is the best that can be expected to be offered even though there may be no suggestion of irregularity of fraud. It is also true that in the present case, there is a specific provision incorporated in the terms and conditions of sale that the sale in favour of a purchaser was liable to be set aside, even after the sale is confirmed and the purchase consideration is paid, in the interest and benefit of creditors, contributors and all concerned and/or for public interest. However, the investment of such power does not mean that the Court should review and set aside an order confirming a sale which has already taken place merely because at a later stage on second thoughts someone, more particularly, an offeror who was outbidden, says that he is willing to pay more. Once the Court has come to the conclusion that the price offered is adequate and has confirmed the sale, the subsequent higher offer made under such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay more. The Court emphasized the requirement of something more than merely higher offer which means infection in the decision of sale confirmation by way of illegality or fraud. (d) In the decision between Lica (P.) Ltd. (No.1) v. Official Liquidator [1996] 85 Comp. Cas 788, Hon'ble Apex Court observed thus:-- "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. One of the terms of the offer in this case is that even confirmation of the sale is liable to be set aside by the High Court as per Clause 11 of the conditions of offer. The sale conducted was subject to confirmation. Therefore, mere acceptance of the offer of Mr. Shantilal Malik does not constitute any finality of the auction nor would it he automatically confirmed. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assets and properties could be sold at Rs. 2 crores. For showing their bona fides, they were directed to deposit Rs. 40 lakhs each and also to pay Rs. 70 thousand each as damages to the appellant. Further, the application for setting aside the sale was filed within a few days of the order accepting the bid of the appellant. In these set of circumstances, when correct market value of the assets was not properly known to the Court and the sale was confirmed at grossly inadequate price, it was open to the Court to set it at naught in the interest of the company, its secured and unsecured creditors and the employees. Appellant is also duly compensated by payment of Rs. 70 thousand each by respondent Nos. 7 and 8. 13. From the aforesaid observation, it is abundantly clear that the Court is the custodian of the interests of the Company and its creditors. Hence, it is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud....." The Apex Court has, thus, observed that it is the duty of the Court to satisfy itself that before putting up notice / advertisement inviting bids, proper an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Official Liquidator [2000] 25 SCL 431 (SC), the Hon'ble Apex Court observed, inter alia, that:-- '6. Against that order appellant preferred an appeal before the Division Bench. Before the Division Bench a contention was raised with regard to the inadequacy of the price and the Court observed that the Court would be rather loath to interfere and intervene in a Court Sale where a question of inadequacy of the price is to be considered by observing that: "Court sale has taken place for the benefit of the employees concerned and more than 100 employees were starving to death and the Official Liquidator was trying to sell the assets as a going concern so that the employment opportunities can be maintained in these hard days." 10. At the outset we would state that in proceedings for winding up of the Company under liquidation, the Court acts as a custodian for the interest of the company and the creditors. Therefore, before sanctioning the sale of its assets, the Court is required to exercise judicial discretion to see that properties are sold at a reasonable price. For deciding what would be reasonable price, valuation report of an expert is must. Not only that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in case of Valji Khimji & Co. v. OL of Hindustan Nitro Product (Gujarat) Ltd. [2008] 86 SCL 81 (SC) Hon'ble Apex Court, considered the case of the bidder who did not participate in auction proceedings but after the sale was confirmed by the Court in favour of one of the bidders (who participated in auction proceedings and whose offer was highest during auction) he belatedly came forward with higher offer coupled with request to cancel the sale. In the said decision Hon'ble Apex Court observed that:-- "30. In our opinion the decision of this Court in Divya Manufacturing Company (P) Ltd. (supra) cannot be treated as laying down any absolute rule that a confirmed sale can be set aside in all circumstances. As observed by one of us (Hon. Katju, J.) in his judgment in Civil Appeal No. 4908/2008 (Dr. Rajbir Singh Dalai vs. Chaudhary Devi Lal University, Sirsa and Anr. pronounced on 6.8.2008), a decision of a Court cannot be treated as Euclid's formula and read and understood mechanically. A decision must be considered on the facts of that particular case. 31. If it is held that every confirmed sale can be set aside the result would be that no auction sale will eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Besides the exception on aground of fraud and illegality other exception, which the Apex Court in the decision, found acceptable is grossly inadequate price with emphasis on the expression gross. This would mean that if slightly higher price is offered by any interested purchaser then the Court should not readily agree to set aside the confirmed sale. (j) In the decision by the Hon'ble Division Bench of this Court dated 25.7.2013 rendered in OJ CA No.299 of 2013 in OLR No.34 of 2013 wherein the Hon'ble Division Bench observed that:-- "7.1 Taking into consideration the aforesaid ruling of the Honourable the Apex Court and the facts of the case, this Court deems it proper to recall its order dated 17.04.2013. Taking into consideration the facts of the case, it is deemed proper to direct the Official Liquidator to re-advertise the auction of this property on the same terms and conditions but with increased upset price of 1.60 crores in three daily newspapers, of which one is having circulation at national level. So far as the above referred order by Division Bench is concerned it is relevant to note that in the said decision not only the facts materially differ from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Company Court has to be in the direction of obtaining the maximum price of the property in the auction for the benefit of workers, secured, unsecured creditors and the company, and the entire class of creditors would stand to benefit by the higher price received by the property under the sale." The above mentioned observations in the said order are made in factual background which is recorded in the order. The relevant part of the order reads thus:-- "in the auction whereas Respondent No.1 gave offer of Rs.75,00,000/- and raised it to Rs.3,76,00,000/. The property was valued by the approved valuer in January 1998 at Rs.3,88,00,000/-; that in the Court auction the appellant gave highest bid of Rs.4,05,00,000/-. Respondent No.1 did not participate in Court auction. Whereas Mahavir Developers (respondent no.8) gave bid of Rs.3,86,00,000/-. By the order dated 11.9.2003 Company Judge accepted the offer made by Arvindbhai Kantibhai Patel promoter / organizer of proposed society for Rs.4.05,00,000/- and confirmed the sale accordingly After confirmation of sale in favour of the proposed society, present respondent no.1 on 19-9-2003 moved an application being O.J.M.C.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the said approach." It was in the backdrop of the said fact that order passed by learned Company Judge for fresh auction in the said decision was found to be justified. In present case the facts are materially different. Hence the said decision does not help the applicant. (m) Learned Counsel for the applicant has relied on the decision in case of Shraddha Aromatics (P.) Ltd. v. Official Liquidator for Global Arya Industries Ltd. [2011] 6 SCC 207. In the said decision the Court has observed, inter alia, that:-- "15. We have considered the respective submissions and carefully perused the record. Ordinarily, the Court is loathe to accept the offer made by any bidder or a third party after acceptance of the highest bid / offer given pursuant to an advertisement issued or an auction held by a public authority. However, in the peculiar facts of this case, we are inclined to make a departure from this rule." Thus, in the said decision it is clarified that Hon'ble Apex Court made departure from normal rule (i.e. that the Court would be loathe to accept the offer made by any bidder after acceptance of highest offer given in response to the advertisement or at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the Court may interfere with and may cancel the confirmed sale and concluded contract is that the Court, upon consideration of relevant facts, finds unto its satisfaction, that the price offered and received / accepted in the sale process is grossly inadequate. (h) If Court were to interfere with the confirmed sale upon subsequently receiving higher offer, then a moderate or slight variation or increase over accepted price, without anything more, cannot lead the Court to the conclusion that accepted price is grossly inadequate. 12.1 It is pertinent that the sale (of assets and properties of company in liquidation) by the Court is a measure of safeguard against the assets of the company being sold at inadequate price or at price less than the realizable market value. Therefore, the Court has to maintain strict vigil, from the very inception, over the sale process. So as to ensure that complete fairness and transparency in sale process is maintained, all measures and steps which can be reasonably perceived and contemplated to eliminate formation of cartel or syndicates and / or undervaluation of the assets (in given case even by valuer) should be taken so as to ensure that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied about adequacy of the price then mere higher offer will not be good and valid ground to cancel confirmed sale / concluded contract. 12.3 Court has to keep in focus that despite inherent presence of competition in process of auction it often does not yield best price and therefore Court has to allow some leeway a margin to take care of and hedge against this possibility eventuality. Confirmation of sale should not be interfered with easily or quickly and at a fall of hat or frequently and it should not be disturbed / deconfirmed without good reason and strong justification otherwise it may prove self defeating as the bidder / prospective bidder will tend to lose faith in sale / auction by Court, for its uncertainty. 12.4 While the Court should endeavour to ensure that the price fetched is the highest and best price, in temptation to receive and secure still higher and better price confirmed sale and concluded contract should, ordinarily, not be quickly interfered with and cancelled and it should be kept in focus that while it is Court's duty to best serve the interest of company, creditors and workers by securing best price, it is also Court's obligation to main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prospective purchaser (belatedly) offers higher price and it has come forward with modest increase of Rs.9.90 Lacs. 14.1 Another relevant aspect is that in present case there is no allegation or suggestion, from any side-including the applicant about any irregularity and / or fraud and / or illegality in auction process. 14.2 The above quoted observations and the principles unanimously say that mere higher offer, without any thing more, is not good and valid ground to deconfirm and cancel the confirmed sale. That something more means irregularity or fraud in sale process or grossly inadequate price. 14.3 As mentioned earlier in present case there is no allegation about fraud or irregularity in sale process, which leaves behind the criterion of grossly inadequate price. Actually there is no material on record of the application which would demonstrate that the sale confirmation is hit by the said vice (i.e. by grossly inadequate price). 14.4 Nonetheless, having regard to the fact that it is Court's duty to secure highest and best price and to examine, for that purpose, that the price offered is adequate, the Court considered it appropriate to examine as to whether the yardst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip;. 422.00 Lacs 42.20 Lacs II Plant, Machineries and all other movables including furniture , fixtures, Raw material and finished goods except records. 16.50 Lacs 1.65 Lacs III Composite Offer of Lot No. I & II. 438.50 Lacs 43.85 Lacs" 15. On perusal of valuer's report it appears that the valuer seems to have considered the physical condition, age, working performance, production capacity etc. of the machines. According to the valuation report, the relevant details regarding plant and machinery, furniture and fixtures are mentioned in Annexure-3, which read thus: ANNEXURE-3 VALUATION OF PLANT AND MACHINERY Name of the Unit: M/s Bhagwati Glass Containers Ltd. (In Liquidation Sr. No. Name of Machinery & Specifications Qty. Name of Supplier/Make Year of purchase Condition Estimated value (Rs.in lacs) Remarks 1 Furnace fabricated from MS Structure, silica and other refractory's, consisting of gas burners, dampers, chequered jali platform and stairs, semi auto bottle making machines, blowers, electrical panels and connected to self supporting MS chimney 2.5' dia. And 80' height, 1- unit Dhanlaxmi & Jay Trading, Manjushri Steel Traders, Dip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hine having 24 inch stroke 1 Climax Engineers - Poor 0.10lacs Without motor and top section 19 MS tables with Vices 1 - - Poor 0.04 Lacs 20 Fire-fighting equipments of various capacities-13 Nos. approximate Lot Local 1993 Poor 0.08 Lacs 21 DG Set of 100 KVA capacity-1No. Only base plate, cylinder head and stator, and other DG without stator 2 Kirloskar Cummins 1993 Poor 0.70 Lacs All panels in skeleton condition 22 Gas Measuring station with distribution units as GAIL standard supply system. Lot Gas Authority of India Ltd. 1993 Poor N.A. Property of GAIL hence not valued Total 13.57 lacs 15.1 It is noticed from the said details that most of the plant and machinery which was put up for sale under Lot No.2 were purchased by the company in 1993. 15.2 In his report, the valuer has mentioned (in column No.6 which is titled as 'condition' of plant and machinery) that the condition of most of the plant and machinery was found to be poor as on date of inspection and valuation. Likewise, as regards furniture and fixtures also, the valuer has mentioned that condition was found to be from fair to poor. Other relevant aspect which emerge from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court to hold at this stage that the market price and realizable value of plant and machinery and fixtures and their valuation by the valuer was grossly inadequate, more particularly when the hard reality of the case is kept in focus viz. machinery was purchased in 1993 and the operation of the company remained closed before the order appointing OL as liquidator came to be passed and that therefore the plant and machinery also remained in unused and non-operational condition (which would obviously deteriorate their condition). In such circumstances, it is not possible to hold that the valuation and / or determination of reserved price was inadequate. 15.6 Moreover, in present case it is also relevant that though about 16 persons had visited and inspected the property in question and after inspection of the properties less than half of them i.e. only 6 persons submitted their bids and thereafter, during auction one of the said 6 bidders did not even come forward to participate in auction. At the time of auction any other bidder, including the applicant, did not come forward to participate in the auction process. 16. When all these aspects are collectively and cumulatively take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at the auction is grossly inadequate. 18.3 Once the Court reaches the conclusion that the two most relevant and important factors viz. (a) illegality or irregularity or fraud in sale process; and (b) grossly inadequate price, are absent then the request such as the applicant's request will have to be examined in light of the principle enunciated by the Apex Court which is consistently followed in all cases viz. mere higher offer, without anything more cannot be a good and valid ground to deconfirm and cancel the confirmed sale. 19. Relying on the observation it is abundantly clear that the Court is the custodian of the interests of the Company and its creditors. Hence, it is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud.... in the decisions Divya Mfg. (supra) and the observations in the decision in case of FCS Software Solutions Ltd. and Shraddha Aromatics(P.) Ltd. (supra) Mr. Desai, learned Counsel for the applicant would submit that it is not always necessary that the applicant should demonstrate fraud or irregularity or illegality in the sale process. 19.1 It is true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause at a later stage on second thoughts someone, more particularly, an offeror who was outbidden, says that he is willing to pay more. Once the Court has come to the conclusion that the price offered is adequate and has confirmed the sale, the subsequent higher offer made under such circumstances, without anything more, cannot constitute a valid ground for interfering with the rights arising out of sale which has already been confirmed...." 19.4 Therefore, the paramount criterion for considering such request is as to whether the sale was confirmed at grossly inadequate price. 19.5 In all cases, except the cases where sale is demonstrably hit by fraud or similar illegality or irregularity, the Court has to pause, while considering the tempting offer for more amount and ask the question, whether the price offered and received at the auction / during sale process was grossly adequate. If the answer is negative then there would be hardly any room for interfering with confirmed sale. 19.6 At this stage, the Court would hasten to add that there could be an exception to the aforesaid position. In a given case fresh offer may be very high (i.e. the gap between the price accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant has not made such allegation. On the other hand it has emerged that it is not possible to hold that the reserved price determined on the basis of report by government approved / registered valuer is grossly inadequate. Even the applicant has not claimed and established that reserved price and / or sale price are grossly inadequate. In such circumstances it would not be proper and just for the Court to cancel confirmed sale more particularly when the offer for higher price is made i.e. almost 40 days after the order confirming sale came to be passed and thereafter the successful bidder has deposited / paid the entire sale price. 19.9 It is true that physical possession of the property in question is not handed over to the successful bidder by OL however, in view of the observations by Apex Court in case of Valji Khimji (supra), the sale / contract in present case can be said to be concluded. In this context it is appropriate to refer to the observations by the Apex Court in case of Valji Khimji (supra) which read thus:-- "29. In the present case we are satisfied that there is no fraud in the auction sale. It may be mentioned that auctions are of two types - (1) where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsecured and the workmen will be served. 20. In this background, when the above mentioned observations by Hon'ble Apex Court that mere offer of higher price, without anything more, cannot be the criterion and basis to de-confirm a confirmed sale, are applied to the facts of present case (wherein the only basis on which the applicant has preferred this application is that he offers higher price) is applied in present case then it leads to the inevitable conclusion that this is not a case wherein the confirmed sale should be and can be deconfirmed and the sale confirmation order can be recalled and cancelled. 21. At this stage, it is relevant to mention that vide order dated 25.9.2013 the Court observed that the applicant has kept his last offer close to his chest and until the said order was passed and even until 6.10.2013, the applicant did not come forward with any offer higher than the amount mentioned in the application and it was only on 7.10.2013 i.e. after the Court made above observation in the order dated 25.9.2013 that Mr.Desai, learned advocate for the applicant made his last offer which is higher by Rs.2 lakh i.e. the applicant has offered Rs.32 lakh. Mr. Rao, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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