Important Point
Sale notice not disclosing valuation of movable and immovable properties, fixation of reserve price, non-inventory of plant and machinery, etc. vitiates the process.

Headnote:(a)Government Auction – Sale notice not disclosing valuation of movable and immovable properties, fixation of reserve price, non-inventory of plant and machinery, etc – Company Judge, being prima facie satisfied, rightly ordered fresh auction. (Para 21)
       (b)Government Auction – Where acceptance of the offer by the authority is subject to confirmation of the Court, mere acceptance of offer by the authority would not confer vested right to the property in favour of the bidder. (Para 25)
       (1969)3 SCC 337 – Relied upon.
       (c)Government Auction – It is the duty of the Court to accept the highest bid and the Court is not bound to go on adjourning the sale on the basis of valuation report – It is the duty of the Company Court to satisfy itself as to reasonableness of price by disclosing valuation report to secured creditors of the Company and other interested persons-The Court should ensure that sale of property should fetch adequate price – Even confirmed sale can be set aside. (Paras 26 to 28)
       (1974)2 SCC 213; (2000)5 SCC 274; (2000)6 SCC 69; (2004)7 SCC 151 - Relied upon.
       (d)Government Auction – During the resale, while accepting the highest bid of Rs.3.5 crores opportunity was afforded to the appellant which was not availed – Appellant is not entitled to the relief sought. (Para 35)
       (e)Government Auction – Appellant’s money remaining with the Official Liquidator since 2004-2005 – Solatium of 30 lacs granted to appellant to be paid by the present successful bidder. (Para 36)
       (1899) ILR 26 Cal 449 (FB) – Approved impliedly.
       Facts of the case :
       1.La Medical Devices Ltd.-respondent NO. 1 went into liquidation. Official Liquidator was appointed by the Court who is joined as Respondent No. 1 in the present proceedings. In view of the liquidation of the Company and dues to be paid by it, proceedings were initiated for sale of property of the Company.
       2.The bid of the appellant for Rs.1.47 crores for immovable as well as movable property was the highest. One of the creditors, namely, Pradeshiya Industrial and Investment Corporation of U.P. Ltd. (PICUP) granted ‘no objection’ to the sale-price.
       3.The Company Judge directed the Official Liquidator to hand over possession of the Unit by executing sale deed in favour of the appellant after receiving full and final payment within one month.
       4.The appellant made full payment and a date was fixed by the Official liquidator to hand over possession, but he failed to do so on the ground that he had received a higher bid.
       5.Company Judge directed re-sale of the property.
       6.In pursuance of the above direction, highest offer of Rs.3.5 crores by Nice Society-respondent No. 3 was received which was accepted.
       7.The appellant in the meanwhile challenged the order of the Company Judge which was dismissed by the Division Bench.
       Finding of the Court :
       No interference warranted.
       Result : Appeal dismissed, but solatium granted.

Judgment

C.K. Thakker, J. —

1.Leave granted.

2.The present appeal is filed by the appellant against an Order passed by the Division Bench of the High Court of Punjab & Haryana on October 15, 2007 in Company Appeal No. 10 of 2006. By the said Order, the Division Bench of the High Court dismissed the appeal filed by the appellant-herein and confirmed the Order passed by the Company Judge on February 16, 2006 in Company Application No. 178 of 2005 in Company Petition No. 42 of 1999.

3.Few facts of the case are that La Medical Devices Ltd.-respondent No. 1 went into liquidation. Official Liquidator was appointed by the Court who is joined as Respondent No. 1 in the present proceedings. In view of the liquidation of the Company and dues to be paid by it, proceedings were initiated for sale of property of the Company. Sale notice was issued by the Company Court on October 19, 2004 which was published in various newspapers inviting sealed tenders for the sale of property of the Company situated at NOIDA (U.P.). Twelve bids were received which were opened on November 16, 2004. The bid of the appellant for Rs.1.47 crores for immovable as well as movable property was the highest. One of the creditors, namely, Pradeshiya Industrial and Investment Corporation of U.P. Ltd. (PICUP) granted ‘no objection’ to the sale-price. Since the appellant was the highest bidder, it wrote a letter to the Official Liquidator on December 19, 2004 followed by a reminder dated January 20, 2005 requesting him to expedite the process and issue letter of acceptance of the offer of the appellant so that possession of the Unit can be given to the appellant and the property could be made ready for commencement of production. It is the case of the appellant that there was no reply by the Official Liquidator to the appellant. The appellant, therefore, wrote a letter to the Company Judge on January 27, 2005, complaining that though it was the duty of the Official Liquidator to accept the highest offer submitted by the appellant, no action had been taken by the Official Liquidator and there was delay in the process of finalization of acceptance of bid. The appellant also complained about the threat administered by the Official Liquidator. According to the appellant, thereafter on February 15, 2005, the Official Liquidator accepted the bid of the appellant for Rs. 1.47 crores for immovable property. The appellant on its own had forgone its claim of leased machinery. The Official Liquidator also instructed the appellant to deposit 25% of the bid amount for immovable property within fifteen days. The appellant, however, deposited the said amount on the same day, i.e. February 15, 2005. According to the appellant, the Company Judge having found the auction in accordance with law and for adequate price and there being no other objection, confirmed the auction sale in favour of the appellant-Company on March 24, 2005. The Company Judge also directed the Official Liquidator to hand over possession of the Unit by executing sale deed in favour of the appellant after receiving full and final payment within one month. The Official Liquidator conveyed the appellant vide his letter dated April 4, 2005 that an Order was passed by the Company Judge in favour of the appellant. The appellant was also asked to deposit the rest of the amount immediately. On receiving the letter dated April 4, 2005 from the Official Liquidator, the appellant deposited the remaining amount on April 12, 2005. The appellant thereby became entitled to receive possession and execution of sale deed in respect of immovable property of the Company. By a communication dated April 21, 2005, the Official Liquidator informed the appellant that possession of the property would be handed over to the appellant on May 6, 2005 at 11.30 a.m.

4.According to the appellant, thereafter the Official Liquidator did not act legally and in accordance with law. On May 6, 2005, though the officers of the appellant waited at the site for

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2008 Supreme(SC) 1014

Important PointSale notice not disclosing valuation of movable and immovable properties, fixation of reserve price, non-inventory of plant and machinery, etc. vitiates the process.

Cases Referred (7)

Important Point
Sale notice not disclosing valuation of movable and immovable properties, fixation of reserve price, non-inventory of plant and machinery, etc. vitiates the process.