( 1 ) THIS Company Application is filed in Company Petition No. 25 of 1985 which had been filed for winding up M/s. Nandi Hasbi Textile Mills Ltd. , which is now under liquidation. This Court by an order made on 26-10-1994 passed in O. S. A. No. 17/ 1993 directed the official Liquidator to advertise for sale of the mill of the said company comprising of 25 spindles, about 13 acres of free hold land and buildings with a layout of 10,10,000 Sq. ft. and plant and machinery on 'as is where is basis' : The sale of the said assets were offered subject to certain terms and conditions. The most important of them being conditions 3, 5, 6 and 7 which are extracted below :"xx xx3 That the offer should be accompanied with a bank draft of Rs. 5,00,000 drawn in favour of the Official Liquidator Karnataka Bangalore, payable at :bangalore, as earnest money deposit. The EMD will be adjusted towards the bid amount in case of successful bidder. 4 xx xx5 That the successful bidder shall have to deposit 25% of the bid money within 7 days from the date of acceptance of the bid by the official liquidator and the balance 75% within 30 days from the date of confirmation of sale by the Hon'ble High Court of Karnataka. 6 That the tender money (EMD of Rs. 5,00,000) shall not carry any interest and shall be liable for forfeiture in case of default by the successful bidder. The earnest money of unsuccessful bidder shall be refunded forthwith after conclusion of tender proceedings. 7 That the sale is subject to confirmation of the Hon'ble High Court of Karnataka Offers containing any subjective clause/incomplete offer shall be liable for rejection. "

( 2 ) THE said offer was advertised in the newspapers and the applicant offered his bid at Rs. 2,36,00,000/ -. The said bid was accepted. Before making the offer, the applicant had deposited a sum of Rs. 5,00,000/ - by way of Earnest Money with the Official Liquidator and on becoming successful bidder, he deposited a further sum of Rs. 59,00,000/- on 26-2-1995 in terms of condition No. 5 being 25% of the bid amount. However, this Court in O. S. A. No. 17 of 1993 by order dated 26-2-1996, cancelled the acceptance of the said bid made on 18-1-1995 under certain circumstances and this Court directed the Official Liquidator to issue fresh advertisement inviting tenders for sale of the properties under the directions of the Company Judge, with a floor price of Rs. 2,40,00,000/ (Rupees Two Crores Forty Lakhs ).

( 3 ) NOW, this application is filed by the highest bidder seeking for refund of the amount in a sum of Rs. 64,00,000/-deposited by the applicant with the Official Liquidator along with interest that had accrued thereto and to grant such other reliefs as are just in the interest of justice and equity.

( 4 ) THIS application is opposed by the Secured Creditors on the ground that the applicant is guilty of breach of contract and therefore is not entitled to the refund of the amount deposited by him and an enquiry should be held to fix the quantum of compensation payable by the applicant. to the General Body of creditors and until such time the amount in deposit should not be ordered to be refunded.

( 5 ) THE learned Company Judge on 12-4-1996 made an order to the following effect :-"keeping in view the objection raised by the Official Liquidator, let the secured creditors be added as party-respondents and notice be issued in relation to the prayer made. In the meantime, Official Liquidator to refund Rs. 50 lakhs out of sum of Rs. 5 lakhs and Rs. 59 lakhs which had been deposited as amount of security plus 25% bid amount. The rest of the amounts are not being refunded since those may be liable to forfeiture clause to meet the cost which has been met by the Official Liquidator in relation to the transaction in question. "

( 6 ) UNDER the terms of the sale offered by this Court a sum of Rs. 5,00,000/- had been deposited by the applicant alongwith his offer by way of Earnest Money. The characteristic