Point of Law: A highest bidder in public auction cannot have a right to get the property or any privilege, unless the authority confirms the auction sale, being fully satisfied that the property has fetched the appropriate price and there has been no collusion between the bidders

ORDER :

Heard learned advocate Mr.Tirthraj Pandya for learned advocate Mr.Parthiv Shah for the applicant, learned advocate Mr.Jay Kansara for respondent No.1 - SICOM Limited and learned advocate Mr.Saurabh Patel for respondent NO.4 – Official Liquidator.

2. By bringing out the Judges Summons, following prayers are made by the applicant in the present Company Application.

(i) To quash and set aside impugned order dated 14.05.2021 passed by Respondent No. 1 rejecting the bid of the applicant.

(ii) To stay the process of issuance of fresh public notice for auction of the scheduled properties to be held by Respondent No. 1 as intimated in impugned order dated 14.05.2021,

(iii) To direct Respondent No. to file an appropriate report before this Hon'ble Court for the confirmation of sale of the scheduled properties in favour of the applicant herein.

3. The facts in the background stated in brief are inter alia that respondent No.2 herein – Kemrock Agritech Pvt. Ltd. was under liquidation. In respect of certain properties of the company in liquidation, respondent No.1 – SICOM Limited claimed its exclusive charge. It was the case that the properties were mortgaged with the said respondent No.1 company. Respondent No.1 therefore approached this Court seeking permission to sell them off.

3.1 In the Company Application No.314 of 2015 in Company Petition No.338 of 2013 being SICOM Limited Vs. Kemrock Agritech Pvt. Ltd., following was the prayer.

“to grant leave to the Applicant under Section 446 r/w. Section 537 of the Companies Act, 1956 to auction and sell the immovable property described at Annexure “B” hereto and appropriate the proceeds towards discharge of the Respondent Company’s liability owned to the Applicant under the Deed of Further Mortgage dated 13th December, 2012 and Indenture of Mortgage dated 10th June, 2010.”

3.2 The respondent No.2 company was wound up on 01st July, 2014. As the properties of the company in liquidation was mortgaged with respondent No.1 – SICOM Limited, it sought to exercise powers under Section 29 of the State Financial Corporations Act, 1951. In the aforesaid Company Application No.314 of 2015, the Court considered the submissions of the parties, mentioned the decision of the Supreme Court in Rajasthan State Finance Corporation v. Official Liquidator [(2005) 8 SCC 190] in which the legal position regarding the powers of the State Financial Corporation under the Act vis-a-vis powers of the Company Court were considered. Another decision of the Apex Court in A.P. State Financial Corporation v. Official Liquidator [(2000) 7 SCC 291] was also referred to, whereafter this Court stated thus,

“11. Thus, as held by the Hon’ble Supreme Court, the control of the Company Judge and the Official Liquidator, if authorized, can be only to ensure that the purpose of Section 529A is effectively achieved i.e. only to a limited extent and for the limited purpose of securing the right of the workers for distribution of their wages as pari passu charge. Learned advocate for the applicant has fairly stated before the Court that the Official Liquidator could be associated with the applicant in sale of the properties and that the applicant has no objection or reluctance in depositing the sale proceeds on completion of the sale of the mortgaged properties with the official liquidator reserving its right to claim that except the pari passu charge of the works for recovery of their dues from the sale proceeds, the applicant shall have the exclusive right to the sale proceeds. The Court, therefore, finds that the applicant being Financial Corporation and entitled to exercise the power under Section 29 of the Act could be granted permission to auction and sale the properties mentioned in schedule at Annexure A, however, with certain directions to safeguard the interest of the workers of the company, if any.”

3.3 Finally, the following operative portion was passed in the aforesaid order dated 14th June, 2018 while disposing of the Company