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Karnataka High Court
Judges : D.V.Shylendra Kumar
K.SATISH KUMAR - Appellant
Versus
OFFICIAL LIQUIDATOR - Respondent
Company Application 1043 Of 2002
Decided On : 01/30/2004
Official Liquidator - Sale of Company Assets - Companies Act, Section 25 - The court discussed the sale of assets of a company under liquidation, emphasizing that the assets were being sold in 'as is where is' condition, and the Official Liquidator's role was limited to receiving the price amount offered and handing over the assets. The court also highlighted that the character of the land being sold was not within the knowledge or control of the Official Liquidator, and the purchaser was responsible for ascertaining all relevant matters before making an offer. The court ultimately cancelled the sale in favor of the applicant due to non-compliance with the payment requirement.
Fact of the Case:
The applicant had offered to buy the assets of a company under liquidation, but had not made any payment despite offering a price. The applicant sought to clarify the status of the land being sold and requested an extension of the payment deadline.
Finding of the Court:
The court rejected the applicant's requests, emphasizing that the assets were being sold in 'as is where is' condition and the Official Liquidator's role was limited to receiving the price amount offered and handing over the assets. The court also noted the applicant's non-compliance with the payment requirement and cancelled the sale in favor of the applicant.
Issues: The issues involved the applicant's request to clarify the status of the land being sold and to extend the payment deadline, as well as the Official Liquidator's role in the sale of company assets.
Ratio Decidendi: The court held that the Official Liquidator's role was limited to receiving the price amount offered and handing over the assets, and that the purchaser was responsible for ascertaining all relevant matters before making an offer. The court also emphasized the applicant's non-compliance with the payment requirement as grounds for cancelling the sale.
Final Decision: The court rejected the applicant's requests, cancelled the sale in favor of the applicant, and directed the Official Liquidator to advertise the property for fresh sale.
( 1 ) C. A. 1043/02 filed in Company Petition No. 68/97 is by a person who had offered to buy the assets of the company under litigation and which had been advertised for sale as per a paper publication carried in Times of India, News Daily of Bangalore Edition on 28-3-2002. The applicant who had responded to this and who had offered the highest bid amount of Rs. 365 lakhs had, subsequent to certain negotiations etc. , increased this offer to Rs. 375 lakhs. The sale itself was being conducted pursuant to the permission granted by this Court on 11-3-2002 permitting the Official Liquidator to sell the properties of the Company namely M/s. Swede (India) Teltronics Limited, which had been ordered to be wound up by this Court by an order passed on 27-1-2000.
( 2 ) THE paper publication reads as under :-
"office of the Official Liquidator.--Attached to High Court of Karnataka, Bangalore. Notice of Public Auction.--The movable and immovable assets belongs to M/s. Swede (India) teltronics Ltd. (In liquidation) which include Lot. I, Land and Factory building: Land: 4. 5 acres of land situated in Plot No. 131/1, 132/2, 132/3, 132/4 located at Hoody Village, Whitefield Road, mahadevpura (PO) K. R. Puram Hobli, Bangalore - 560 048. Building: Factory building R and D block and Testing House Generator Room. Lot II - Plant and Machinery.--Schlatter make welding machine with feeding unit, Air condition unit, injunction moulding machines. 125 KVA DG set and Furnitures and Fixtures etc. Lot III - Current Assets: Stock/inventories, etc.- Will be sold through Public Auction at 2. 30 p. m. on 13-4-2002 if necessary on 15-4-2002 at Plot No. 131/1, 132/2, 132/3, 132/4 located at hoody village, Mahadevpura (PO) Whitefield Road, Bangalore as per the orders of the honourable High Court of Karnataka. Sale is subject to the confirmation of the Honourable High court. Each of the participating bidder/buyer will have to deposit towards EMD: Rs. 6,86,600 for entire assets or Rs. 5,75,500 for land and building, Rs. 80,000 for plant and machinery and rs. 31,600 for current assets by way of Demand Draft in favour of the Official Liquidator, High court of Karnataka, before they participate in the auction for the purpose of bidding the assets of the company in liquidation. Official Liquidator, High Court of Karnataka reserves the right to cancel or reject the highest offer or cancel the auction without assigning any reasons. For inspection of the assets and terms and conditions of auction contact the Official Liquidator's representative at the factory premises of the Company in liquidation between 11. 30 a. m. to 4. 00 p. m. on 6-4-20002. Sd/- B. N. Harish, official Liquidator, [iv Floor, D and F Wing, Kendriya Sadan, Koramangala, Bangalore - 560 034. "
( 3 ) THE applicant, who has only made Earnest Money Deposit ('emd' for short) of a sum of Rs. 6,86,600 has not made any payment at all though has offered a price of Rs. 375 lakhs in respect of the property and as per the terms and conditions of sale, the highest bidder was required to deposit 25 per cent of the amount within seven days and the balance within the next sixty days. Though the terms and condition of the sale which are as under :-
"terms and conditions for sale of assets of M/s. Swede (India) Teltronics Ltd. (In liqn.) situated at Plot Bearing No. 131/1, 132/2, 132/3, 132/4 Located at Hoody Village Whitefield Road, mahadevpura (PO), Bangalore:
1. Sale is through public auction. 2. Public auction is for the sale of factory of above cited company all assets on "as is where is and whatever there is basis" as per the direction of the Honourable High Court of Karnataka. The public auction will be conducted lotwise as under : lot I - Land and Factory Building : land : 4. 5 acres of land situated at Plot No. 131/1, 132/2, 132/3, 132/4 located at Hoody Village, whitefield Road, Mahadevpura (PO), Bangalore. Lot II - Plant and Machinery: schlatter make welding machine with feeingment,
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