The main legal point established in the judgment is that in the event of winding up, the court is duty-bound to ensure that the price fetched at auction is adequate and has the power to set aside any sale if it concludes that the price offered by the auction purchaser is inadequate.

JUDGMENT :

B.N. Mahapatra, J. - This Appeal is preferred against an Order Dated 02.02.2007 passed by the Company Judge in Company Act Case No. 36 of 2001 directing to hold fresh auction in open Court and consider the respective offers of the parties.

2. The case of the Appellant is that in the winding up proceeding Learned Company Judge directed Industrial Development Corporation of Orissa (for short 'IDCOL'), the holding Company of M/s Konark Jute Limited (for short 'KJL'), to publish advertisement by fixing appropriate up set price. It was further directed that the said offer so received in sealed cover should be placed before the Asset Disposal Committee (for short 'ADC') of IDCOL who shall open and consider the same and submit a report to the Company Judge with regard to acceptability of any of the offer so made. The final decision with regard to acceptance of such offer shall be taken up by the Court. In compliance of the said direction of the Company Judge, offers were invited with up set price of Rs. 5,60,28,000 and in response to said advertisement, the following bidders participated:

(i) M/s Collin Traders Pvt. Ltd.

(ii) M/s S.B. Overseas Ltd.

(iii) M/s Piyush Suppliers Pvt. Ltd.

The Appellant's bid was for Rs. 6.02 crores which was increased from time to time up to Rs. 9.40 crores with upfront payment of Rs. 92.0 lakhs and the balance amount in sixty equal monthly instalments along with interest and secured by letter of credit. On 15.12.2005 IDCOL filed an affidavit recommending the acceptance of Appellant's offer of Rs. 9.40 crores in Company Act Case No. 36 of 2002. According to the Appellant, the Company Judge vide Order Dated 13.01.2006, on consideration of the affidavit filed by IDCOL ultimately directed that the recommendation of ADC for taking over of KJL by M/s S.B. Overseas Ltd. (for short 'SBOL') on the terms and conditions mentioned in the affidavit filed by IDCOL dated 15.12.2005 should be accepted. The IDCOL was also directed to take necessary steps in this regard and after completion of the transaction should file report before the Company Judge for passing further orders. Further case of the Appellant is that the objection of one of the bidders, namely, M/s Collin Traders Pvt. Ltd. to the averments made by IDCOL in its affidavit dated 15.1.2005 was turned down. Similarly, offers of M/s Piyush Suppliers Pvt. Ltd., M/s Santan Cammercial Pvt. Ltd. and others were not accepted as viable as per the averments made by IDCOL in its affidavit dated 15.12.2005. Pursuant to Order Dated 13.01.2006 of Company Judge further progress of negotiation continued and ultimately IDCOL filed two affidavits dated 04.04.2006 and 16.04.2006 before the Company Judge. On 04.04.2006, IDCOL filed affidavit including correspondences with a prayer to the Company Judge to approve the recommendation in favour of SBOL. On 16.04.2006, IDCOL filed another affidavit stating that the Court may direct SBOL to provide letter of credit with terms and conditions to cover Rs. 11.52 crores in sixty-one instalments besides Rs. 1.20 crores towards gratuity and leave encashment of 252 employees under Voluntary Retirement Scheme. On 05.05.2006, the Company Judge directed the Appellant to comply with the terms of the sale negotiated with IDCOL. On 09.05.2006, SBOL filed an affidavit before the Company Judge giving reply to the aforesaid terms of IDCOL. On 22.06.2006, the Appellant improved upfront payment of Rs. 92.0 lakhs to Rs. 1.10 crores. On 12.07.2006, the Appellant submitted bank guarantee as suggested by JDCOL and subsequently approved by ADC. At this stage, new Chief Managing Director of IDCOL suggested for entire payment of upfront which was opposed by the Appellant as the same was inconsistent with the terms agreed between the Appellant and IDCOL and was accepted by the Company Judge. On 20.07.2006, SBOL requested IDCOL to allow for furnishing bank guarantee. On 28.07.2006, IDCOL wrote a letter to the Appellant for upfront payment. The Appellant