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2008 Supreme(Del) 1170

IN THE HIGH COURT OF DELHI
VIPIN SANGHI
In the matter of: M/s SARAF PAPER MILLS LTD (IN LIQUIDATION) THROUGH OFFICIAL LIQUIDATOR - Appellant
Versus
. - Respondent
CA Nos.1185/06, 554/07, 698/07, 1449/06 IN C.P. No.201 of 1990
Decided On : 25-11-2008

Advocates Appeared:
Mr. Abhishek Kumar for IFCI, IDBI
Ms. Indrani Mukherjee and Ms. Chandrani Mukherjee for SCB.
Mr. K.K. Rai, Senior Advocate with Mr. Ajay Kumar Agarwal counsel for applicant
in C. A. No. 1185/2006
Mr. S.K. Luthra for the O.L.
Mr.A.K.Chaturvedi, Official Liquidator.
Mr. Ravi Gupta, Ms. Reema Kalra, Mr. Ankit Jain for applicant in C. A. No.
554/2007

Headnote:Companies Act, 1956 Section 446 - Confirmation of sale -Interest of the creditors of the company, particularly the unsecured creditors, ought to outweigh equities, if any, arising in favour of the auction purchaser on confirmation of sale and handing over of possession - Holding of auction in Court without giving opportunity to members of the general public to participate in the auction was not sound exercise of discretion -Scope of the courts enquiry into the case of an auction sale of a property of the judgment Debtor in execution proceedings stand on a different footing, when compared to the sale of the assets of a company that has gone into liquidation - Held that sale is liable to be set aside and cancelled.

       

VIPIN SANGHI, J.

1. By this order I propose to dispose of CA No.1185/2006 (preferred by M/s Indocap Pvt. Ltd. for enhancement of the bid price to Rs.4.10 crores for the land and building), CA No. 1449/2006 (preferred by IDBI for disbursement of the amount lying with the Official Liquidator), CA No.554/2007 (preferred by M/s Surya Finvest P. Ltd. for enhancement of the bid price to Rs.4.50 crores for the land and building) and C.A. No.698/2007 (preferred by Industrial Finance Corporation of India Ltd. [IFCI Ltd.]) to set aside the auction dated 04.11.2004 in favour of Gagan Educational Society in respect of the land and building of the company in liquidation admeasuring 35 acres and having built up area of about 79,658.75 sq.ft situated at M.I.A Extension, Delhi-Alwar Road, Alwar (Rajasthan). Brief facts leading to the filing of these applications are as follows:

.2. M/s Saraf Paper Mills Ltd. was ordered to be wound up by this Court on 20.05.1994 in C.P. No.201/1990 and the official liquidator attached to this Court was appointed as its liquidator. The effort to sell the property of the company in liquidation

.consisting of the plant and machinery, and factory premises i.e. the land and building of the company in liquidation situated at MIA Extension, Delhi-Alwar Road, Alwar, Rajasthan started in June, 1997. As per the initial valuation report, the aforesaid properties were valued at about Rs.2.97 Crores by the valuer Lt. Col. R.K. Kohli vide report dated 01.02.1997. The effort to sell the property through a sale proclamation did not fructify. On 04.09.1998 the Court directed the sale of plant and machinery separately from the land and building. The plant and machinery was disposed of for Rs.33.50 Lacs and the sale confirmed on 04.11.1999. On 13.12.2001 the Court fixed the reserve price of the land and building at Rs.2.70 Crores on the basis of valuation of Rs.1.84 Crores for the land, and Rs.88 Lacs for the building. Sale proclamation was issued. However, it appears no offers were received. On 26.07.2002 the Court directed issuance of a fresh sale proclamation fixing the value of the land and building at Rs.2.71 Crores and the reserve price of the land and building at Rs.1.60 Crores. From the sale proclamation stated to have been issued on 7.10.2002, filed on record by the Official Liquidator, it appears that the said proclamation stated the extent of land as 1,41,610 sq mts. situated at Delhi, Alwar, Rajasthan. The extent of the built up factory was however, not disclosed in this proclamation. On 07.08.2003 the secured creditors, namely, IDBI, IFCI and ICICI asked that a fresh sale proclamation be issued. The Court directed the said secured creditors to take necessary steps to get the publication effected in various newspapers. Pursuant to the sale proclamation only two tenders were received which were way below the reserve price. The tender was, accordingly, cancelled on 27.11.2003 and the Court directed initiation of fresh sale process by issuance of a fresh sale proclamation. On 22.04.2004 the Court directed that a fresh valuation to be made since the valuation was quite old. Accordingly, a fresh valuation report dated 14.08.2004 was received. This was prepared by the same valuer Lt. Col. R.K. Kohli. Surprisingly, despite the passage of considerable length of time and contrary to the general trend, where one sees appreciation in real estate prices, the valuer valued the land at only Rs.87.50 lacs and the building at Rs.32,12,820/-at the highest. The following Note was appended by the valuer Note : 1. If the buildings cannot be utilized by the purchaser economically and for the purpose as desired, he has to demolish these buildings and in that event the values of the structure will be only 40% of the above i.e. Rs.32,12,812/-x40/100 = Rs.12.84.960/- say Rs.12,85,000/-. On 26.08.2004, the Court directed issuance of a fresh sale proclamation in The Statesman (English) and Rajasthan Patrika (Hindi) by fixing the reserve price





































































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