The highest offer received in the public auction should be accepted as a fair value unless there are allegations of fraud, collusion, etc.

JUDGMENT :

1. This intra court appeal is directed against an order passed by the Company Judge, dated 7.11.2023 in Company Petition No. 27 of 2007. The learned Company Judge has noticed that pursuant to auction proceedings initiated by the official liquidator the proposed sale was widely published in Amar Ujala (Hindi) (All UP Edition) and Hindustan Times (All India Edition) (English). Three bids have been submitted before the official liquidator all of which were above the reserve price fixed by the Company Judge. Learned Company Judge by the order under challenge has directed the official liquidator to re-advertise the auction by enhancing the reserve price to the amount quoted by the highest bidder i.e. the appellant. Aggrieved by the decision of Company Judge the highest bidder has filed the present appeal.

2. It transpires that in the liquidation proceedings an order came to be passed by the Company Judge on 24.5.2023 directing the official liquidator to publish e-auction notice for sale of the property in question. Auction notices were thus published on 24.7.2023 in Hindustan (Hindi) in all editions and Indian Express (English) all India editions. Pursuant to such publication of auction notice three offers were received by the official liquidator, which are as under:-

S.No. Name of bidders Highest bid amount

1. Flavuro Foods Pvt. Ltd. Rs. 11,68,41,205/-

2. Mukti Enterprises Rs. 11,58,75,205/-

3. Harshika Infrastructure Pvt. Ltd. Rs. 09,75,21,205/-

3. The reserve price for the property to be auctioned was fixed by the Company Judge at Rs. 9,65,55,205/-. It is, therefore, apparent that all three offers received by the official liquidator were above the minimum price of the property fixed by the Company Judge. The official liquidator submitted proceedings alongwith application on 11.9.2023 for acceptance of appellant’s highest bid by the Company Judge.

4. Learned Company Judge upon being informed of the proceedings conducted in the matter called upon the three bidders to participate in the negotiations. This was done vide order dated 17.10.2023 passed by the learned Company Judge. The apparent object of the order dated 17.10.2023 was to make further endeavours to fetch still higher prices than what was offered by the three bidders. Pursuant to such order passed all the bidders appeared before the Company Judge. The two lowest bidders, however, refused to increase the bid amount and the highest bidder (appellant herein) stuck to his bid. It is at this stage that the Company Judge has passed the order under challenge directing fresh auction proceedings to be conducted on the premise that only one bidder remained at the stage of negotiation. The Company Judge has accordingly enhanced the reserved price to the amount submitted as bid by the appellant.

5. Sri Amit Saxena, learned Senior Counsel assisted by Sri Kunal Shah, learned counsel for the appellant submits that the Company Judge fell in error in directing conduct of fresh auction despite the fact that the bid submitted by the appellant was much above the minimum bid amount fixed by the Company Judge. It is urged that no justifiable reason has been disclosed by the Company Judge for not accepting the appellant’s highest bid and directing conduct of fresh bids. Sri Saxena places reliance upon various paragraphs of a recent judgment of the Supreme Court in Eva Agro Feeds Private Limited Vs. Punjab National Bank and Another, 2023 SCC OnLine 1138 to submit that the direction of the learned Company Judge is not in consonance with the law laid down by the Supreme Court. Para 67 to 69 of the judgment in Eva Agro Feeds Pvt. Ltd. (supra) notices relevant facts of the case, which are reproduced hereinafter:-

“67. Coming back to Schedule I, we find that as per Para 1(4-A), where an auction fails at the reserve price, the Liquidator may reduce the price by up to 25% of such value to conduct subsequent auction.

68. Paras 1(11), (11-A), (12) and (13) of Schedule I are relevant since much