IMPORTANT POINT
Properties of a company under liquidation cannot be sold for a song.

JUDGMENT

DIPAK MISRA, J.

The factual exposition that is capable of being encapsulated in a real small compass, has, with some passage of time and turn of events, grown into a colossal structure having the effect potentiality to amaze and perplex any prudent man. The chronology of events pyramids a gradual financial structure, making it limpid how on certain occasions properties are sold for a song in so called sales made in the proceedings under the provisions of the Companies Act, 1956 (for brevity ‘the Act’) and how with some intervention the said competitors metamorphose themselves into different incarnations, and the roses on the table turn into pearls and diamonds in the private closets. To put it succinctly, the price fixed at Rs.6.25 crores for 291 plots has fetched, by the intervention of this Court, Rs.70 crores for 113 plots. It is not change of heart, but the price reality that gets manifest. Not for nothing it has been said, “money can solve the problems concerned with money”. The large amount of money, we are inclined to think, would solve the problems of the company in question.

2. The short narration. A company, namely, M/s Vitta Mazda Ltd. went into liquidation and on 21.02.2002, the High Court of Gujarat directed the Official Liquidator to put up the properties of the company in liquidation (except those for which applications are pending before the said Court for regularisation of transactions) to auction for sale. Thereafter many an order was passed. On 18.12.2004, the learned Company Judge, by taking into consideration many aspects, declined to accept the report of the Official Liquidator for acceptance of the offer made before the sale Committee. An appeal was preferred being O.J. Appeal No. 81 of 2004, wherein the Division Bench of the High Court on 30.08.2011 passed the following order:

“1. The present appeal arises against the order dated 18.12.2004 passed by the learned Company Judge in OLR No. 100 of 2003, whereby the learned Company Judge has not accepted the report of the OL for acceptance of the offer made before the Sale Committee.

3. It is an admitted position that the appellant was one of the offerers, who submitted the highest offer before the Sale Committee and when the report was made by the OL for approving the offer accepted by the Sale Committee subject to approval of the company Court, the learned Company Judge found that it would not be a case for acceptance of the offer and, therefore, rejected the report submitted by the OL.

5. Apart from the above, even if the matter is to be considered for the test of exercise of the judicial discretion exercised by the learned Company Judge, it appears that the learned Company Judge, at paragraph 5, recorded that the valuation made by the Bank of Baroda of the property is much more than the offer submitted by the appellant. If the said aspect is further considered, it appears that the offer of the appellant was Rs. 1.03 crore, whereas it is a part of the record of the Sale Committee's proceedings that as per Bank of Baroda, the valuation of the property was Rs. 6.25 crore. It has been stated that there was also another report, which was shown to the Court.

6. Be that as it may, even if it is considered that the offer of the bank of Baroda was of Rs. 6.25 crore as per the valuation report available and the highest offer was of Rs. 1.03 crore coming on record and under these circumstances, if the learned Company Judge found it proper not to accept the offer by confirming the sale, such an exercise cannot be said to be erroneous. On the contrary, the exercise would be in the larger interest of the corpus of the company.

7. Additionally the learned Company Judge, in the impugned order, has also recorded the fact that the total chunk of property comprises of various plots of different characteristics namely; that on some plots, there were encroachments, for some plots, there were litigations and some plots were clear. Therefore, the learned Company Judge