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HIGH COURT OF CALCUTTA
Probodh Dinkarrao Desai & Shyamal Kumar Sen, J.
Sharawan Kumar Agarwal
Vs
Shrinenp Investment Ltd. & Ors.
Original Side Appeal No. 45 of 1990; C. P. No. 116 of 1986
Decided on : March 6, 1990
COMPANY - SALE OF ASSETS - CONFIRMATION OF SALE - DISCRETION OF COURT - EXERCISE OF - PRINCIPLES - CASE LAW - NAVALKHA & SONS' CASE (AIR 1970 SC 2037) - ROSHAN & CO.'S CASE (AIR 1940 MAD 42) - SALE HELD BY PUBLIC AUCTION - PUBLICITY - ADEQUACY OF PRICE - SUBSEQUENT HIGHER OFFER - EFFECT.
Fact of the Case:
The assets of the company (in liquidation) were sold by public auction and the sale was confirmed in favour of the first respondent. The appellant, who was the highest bidder at the auction, challenged the confirmation of sale and sought a direction for fresh sale on the ground that he was willing to pay a higher price. The appellant contended that the sale was not properly advertised and that the price fetched was inadequate.
Finding of the Court:
The Court held that the sale was properly advertised and that the price fetched was adequate. The Court further held that the appellant's subsequent higher offer was not a valid ground for de-confirming the sale. The Court dismissed the appeal.
Issues: 1. Whether the sale was properly advertised? 2. Whether the price fetched was adequate? 3. Whether the appellant's subsequent higher offer was a valid ground for de-confirming the sale?
Ratio Decidendi: 1. The Court held that the sale was properly advertised because it was advertised in four daily English newspapers and one Hindi newspaper published at different Metropolitan Cities and that as many as 21 parties had collected copies of the terms and conditions of sale from the Official Liquidator. 2. The Court held that the price fetched was adequate because it was far in excess of the reserve price and that none of the secured creditors or other creditors had complained about the inadequacy of price. 3. The Court held that the appellant's subsequent higher offer was not a valid ground for de-confirming the sale because the sale had already been confirmed and the first respondent had already taken possession of the assets.
Final Decision: The Court dismissed the appeal.
Per Chief Justice (C. A. V.) : By an order passed on August 3, 1988, the Hanuman Cotton Mills Ltd. was wound up and the Official Liquidator was directed to take possession of the assets of the Company. On September 2-5, 1988, the Official Liquidator took possession of the assets which comprised, inter alia, the plant, machinery, land and building of the manufacturing unit situate at Fuleshwar, Howrah.
2. On October 6, 1988, the Official Liquidator sought direction from the learned Company Judge (hereinafter referred to as "the Court) for the appointment of a valuer to value the assets. By an order passed on December 22, 1988 a valuer was appointed. The valuer submitted his report on April 12, 19159, in which the assets were valued at a little above Rupees One Crore.
3. On April 21, 1989, the Court issued directions for the sale of the assets of the Company (in liquidation), including the factory premises, as per inventory, by public auction and by inviting sealed tenders upon advertisement, once each in an English Newspaper (the Statesman) and in a Bengali and a Hindi Newspapers (Jugantar and Viswamitra) as per usual terms and conditions of sale. The advertisement was directed to be published at least two weeks prior to June 2, 1989, which was fixed as the date of sale. The reserve price was fixed at Rupees One Crore. The Official Liquidator was directed to give notice to the secured creditors directing them to be present in the Court on the date of sale at 2 P.M.
4. Advertisement inviting offers for purchase of the entire moveable and immoveable assets of the Company (in liquidation) lying at the factory was published as directed in the Bengali and Hindi newspapers on May 10, 1989, and in the English newspaper on May 11, 1989. The reserve price fixed by the Court was mentioned in the advertisement and the intending purchasers were directed to submit their offers along with a bank draft or pay order for a sum equivalent to 10% of their offer as earnest money. It was mentioned further that the intending purchasers would be allowed inspection of the assets on the dates and at the time specified in the advertisement and that the list of assets and terms and conditions of sale would be available from the office of the Official Liquidator. It was also stated that the offers would be opened on June 2, 1989, at 2 P.M. in the Court.
5. One June 2, 1989, sealed cover containing the offers were opened in the Court. Out of the three offers received, two were found to be far below the reserve price and one offer, which was for a sum of Rs. 1,10,00,000/- (Rupees one crore ten lacs), was found to have been made by a person not genuinely interested since none appeared on his behalf on that day. Under the circumstances, an order was passed fixing July 8, 1989, as the date of fresh sale and the directions for advertisement were decided to be given later.
6. On June 16, 1989, an order was passed raising the reserve price to Rs.1,15,00,000/- (Rupees one crore fifteen lacs) at the instance of Indian Bank, one of the secured creditors. The Official Liquidator was directed to publish advertisement once each in Statesman (Calcutta Edition), Times of India (Bombay Edition), Hindustan Times (Delhi Edition), Hindu (Madras Edition) and Viswamitra (Calcutta Edition), inviting sealed tenders for the purchase of the assets of the Company (in liquidation) lying at the factory premises, on the usual terms and conditions, at least three weeks prior to September 15, 1989, which was fixed as the date of sale to take place at 2 P.M. in Court.
7. Between August 3 and 17, 1989, the advertisement was published which was in terms similar to the one published earlier, save and except the difference in the dates and time regarding the submission of offers, inspection, sale, etc. In response to the advertisement, 21 parties collected copies of the terms and conditions of sale from the office of the Official Liquidator.
8. At this stage reference may be made to the mat
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