An auction conducted by a liquidator is valid unless substantive financial prejudice is demonstrated; post-auction higher bids do not justify reopening concluded proceedings.

ORDER :

N.S. SANJAY GOWDA, J.

[1] The prayers in this appeal are as follow :-

“11. (i) The Hon’ble court may admit and allow this appeal.

(ii) The Honorable Court may set aside the judgment dated 25/03/2022 passed in OLR No.103 of 2021.

(iii) The Honorable Court may confirm the auction conducted by the Official Liquidator, wherein the appellant was declared as the successful bidder.

(iv) The Honorable Court may award appropriate compensation to the appellant.

(v) The Honorable Court may stay the operations of the judgment dated 25/03/2022 in OLR No.103 of 2021.

(vi) The Honorable Court may grant such other and further relief(s) as deemed just and proper by this Hon’ble Court in the interest of justice.”

[2] The facts which are essential for deciding this appeal are as follows:-

[2.1] On 09.08.2002, an order of winding-up was passed in respect of M/s. Kanoria Dyechem Limited.

[2.2] On 25.02.2021, this Court directed the Official Liquidator to sell the assets of the company, including the land situated at Plot Nos.6101/1, 6101/A and 6101/2 at Ankleshwar GIDC (which is the subject matter of the dispute herein). On 02.03.2021, the said notice was published in the newspapers. The said sale notice indicated that the properties of the company under liquidation were to be sold by way of e-auction on 05.04.2021 at 3.30 p.m. and upset price of Rs.6,02,00,000/- was fixed under the said notice. An Earnest Money Deposit of Rs.60,20,000/- was required to be submitted by the intending bidders. Inspection of the property was permitted to be done on 18.03.2021. The said notice ultimately stated that the last date of availability of the tender form would be 30.03.2021 upto 1:00 p.m. and the last date for submission of the online offers along with EMD would be 30.03.2021 at 4:00 p.m.

[2.3] M/s. Survival Technologies Private Limited, however, deposited the EMD amount of Rs.60,20,000/- at 7:00 p.m., i.e., after the deadline on 30.03.2021. The Official Liquidator consequently refused to accept the EMD and as a consequence, M/s. Survival Technologies Private Limited made an application for a direction to the Official Liquidator to permit it to participate in the e-auction. This Court accepted the said application and permitted M/s. Survival Technologies Private Limited to participate in the e-auction and ordered a revised schedule / programme for sale of assets. This Court directed the conduct of e-auction on 08.04.2021. The e- auction was to be carried out by M/s. Railtel Corporation of India Limited. On 08.04.2021, the e-auction was conducted, in which M/s. Khandwala Finestock Limited, i.e., the appellant herein, offered the highest bid of Rs.6,95,00,000/-.

[2.4] At 8.32 p.m. on the same day, i.e., on 08.04.2021, M/s. Survival Technologies Private Limited addressed an e-mail to the Official Liquidator alleging that a technical snag prevented them from placing a higher bid. It was stated that the online bidding site had been interrupted 10 minutes before the close of the bid and as a result, they could not punch the bid in time. He therefore requested another opportunity to participate in the auction. The Official Liquidator forwarded the e-mail to M/s. Railtel Corporation of India Limited and sought for the response. The M/s. Railtel Corporation of India Limited responded to the said e-mail stating that no technical issues had occurred and there was nothing wrong in the conduct of the e-auction. It is also stated that they had not received any complaint from other bidders in this regard.

[2.5] On 05.07.2021, the Official Liquidator placed on record the details of the e-auction proceedings conducted on 08.04.2021 and also placed on record the request of M/s. Survival Technologies Private Limited to raise or revise the offer, in whic