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IN THE HIGH COURT OF ALLAHABAD
Arun Bhansali, CJ, Vikas Budhwar, J.
Mrs Jayshree Kailash Wani - Appellant
Versus
Official Liquidator – Respondent
Special Appeal No. - 963 of 2024
Decided On : 25-10-2024
(A) Companies Act, 1956 - Section 483 - Intra-court appeal against rejection of time extension for bid deposit in e-auction - Appellant participated as highest bidder but failed to deposit within stipulated time - Court emphasized the principle of 'AS IS WHERE IS' in auction terms, holding that the appellant had the opportunity to inspect the property before bidding. (Paras 1, 5, 20, 28)
(B) Auction - E-auction notice must disclose all material facts - Non-disclosure of certain property conditions does not invalidate the auction if the terms were clear and inspection was allowed. (Paras 10, 20, 24)
(C) Legal obligations of bidders - Bidders must conduct due diligence before participating in an auction, and failure to do so does not entitle them to relief post-bid acceptance. (Paras 23, 26)
Facts of the case:
The appellant bid Rs.51 crores for property in liquidation but failed to deposit the bid amount within the required timeframe, leading to the rejection of his extension request.
Findings of Court:
The court found no legal infirmity in the Company Judge's order rejecting the extension application, affirming the auction's terms.
Issues: The main issues were whether the auction notice adequately disclosed property conditions and the appellant's obligations as a bidder.
Ratio Decidendi: The court ruled that the auction terms were clear, and the appellant's failure to inspect the property did not warrant relief.
Result: Appeal dismissed.
JUDGMENT :
Vikas Budhwar, J.
1. This intra-court appeal under Chapter VIII, Rule 5 of the Allahabad High Court Rules read with Section 483 of the Companies Act, 1956 is against the order of the Company Judge dated 12.9.2024 whereby the Civil Misc. Application No.46 of 2024 preferred by the appellant seeking extension of time to deposit the bid amount in pursuance of the orders dated 26.7.2023 and 1.12.2023 of the Company Court was rejected.
Facts
2. Broadly, the facts of the case are that M/s Ganga Asbestos Cement Pvt. Ltd. ( In short ‘Company’) was directed to be wound up by the Company Judge by order dated 25.4.1995. Thereafter, the Company Judge on 29.11.2022 directed for e-auction of the assets of the company in liquidation situate in Village Dariyapur, District Raebareilly.
3. An e-auction notice came to be published in the year 2022 for auctioning of the land measuring 9.211 hectares or 92110 sq. meters containing a reserved price of Rs.15 crores. As per the e-auction notice the earnest money being 10% of the reserved price was Rs.1.5 crores and the date and the time of the inspection of the demised property which was put to auction was scheduled on 2.1.2023 and 3.1.2023 from 11.00 a.m. to 5.00 p.m. The date of submitting the earnest money deposit was 9.1.2023 upto 5.00 p.m. and the bidding was scheduled on 10.1.2023 upto 6.00 p.m.
4. The appellant herein, participated in the e-auction and bidded for Rs. 51 crores which was stated to be highest. On 26.7.2023 the bid of the appellant came to be accepted by the Company Court and an order is stated to have been passed in Misc. Company Application No. 3 of 1995 on 26.7.2023 which is as under:-
“In Re: Civil Misc. Recall Application No. 40 of 2023
Heard Sri Udayan Nandan, learned counsel for the applicant.
The recall application is misconceived and is hereby dismissed.
In Re: Civil Misc. Application Nos. 36 and 37 of 2023
Sri Shashi Nandan, learned Senior Advocate assisted by Sri Udayan Nandan, learned counsel appearing for M/s. Garnet Shelters Pvt. Ltd., Sri Amit Krishna, learned counsel for Mrs. Jayshree Kailash Wani and Sri Arnab Bannerji, learned counsel for Official Liquidator are present. Sri O.P. Mishra, Advocate has also appeared for Kotak Mahindra Bank.
The representatives of two companies, M/s. Garnet Shelters Pvt. Ltd. and Mrs. Jayshree Kailash Wani are present in the chamber. The bidding was made which was carried to several rounds and finally bid was settled in favour of Mrs. Jayshree Kailash Wani at Rs.51 crores.
The highest bidder is directed to deposit the entire amount of the bid within a period of 60 days from today failing which the earnest money deposited shall be forfeited.
The earnest money which is deposited with Rail Tel Corporation of India Ltd. by M/s. Garnet Shelters Pvt. Ltd. shall stand refunded to the company, M/s. Garnet Shelters Pvt. Ltd., within 15 days from today along with interest.
The application nos. 36 and 37 of 2023 stand disposed of.”
5. As per terms and conditions of the e-auction as well as the order of the Company Court dated 26.7.2023 in Misc. Company Application No. 3 of 1995 the appellant was requuired to deposit the entire amount of the bid within a period of 60 days from the passing of the order dated 26.7.2023, failing which the earnest money deposited was to be forfeited.
6. The appellant, thereafter, preferred a Civil Misc. Time Extension Application No.42 of 2023 before the Company Court in Misc. Company Application No.3 of 1995 in which on 1.12.2023 the following order was passed:-
“Order on Civil Misc. Time Extension Application No.42 of 2023 Heard Sri Amit Krishna, learned counsel for the applicant and Sri Arnab Banerjee, learned counsel for the Official Liquidator.
This is an application seeking extension of time by the applicant who was the highest bidder in the auction conducted on 26th July, 2023. The applicant, being the highest bidder, was required to deposit the bid amount, within 60 days. The said amount was not deposited by the a
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