The court emphasized the duty of the court to satisfy itself about the adequacy of the price offered and the need to protect the interests of the creditors. The court also highlighted the importance of recording reasons for the decision and the finality of auctions to prevent loss to the exchequer.

ORDER

Shantanu Kemkar, J.

1. Both these Appeals filed under Section 483 of the Companies Act, 1956 arise out of the order dated 09.12.2010 passed by the learned Company Judge of this Court in Company Petition No. 8/2005. These appeals involve common questions of facts and law and as such are being decided by this common order. For the sake of convenience, the facts are taken from Company Appeal No. 06/2010.

2. The first Respondent company Maikaal Fibres Limited was ordered to be wound up by the Company Judge vide order dated 06.01.2010. Prior to it an order was passed by the learned Company Judge on 7.05.2007 declining permission to Appellant Assets Reconstruction Company (India) Limited (for short the ARCIL) to sale assets of the company in liquidation under Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act). On appeal being filed against the said order dated 7.05.2007 the Division Bench of this Court vide order dated 6.08.2007 passed in Company Appeal No. 4 of 2007 permitted the Appellant to sell the secured assets of the first Respondent company in liquidation in accordance with the provisions of the Sarfaesi Act. The Division Bench issued following directions:

1. The Appellant shall endeavour to obtain / realize maximum price from the assets which can be alienated under the provisions of Sub-section (4) of Section 13 like a prudent man in respect of his own property.

2. The Appellant shall on realizing the amount, apply to the Company Court to inform the Appellant as to the dues of the workmen of the industry concerned.

3. The Appellant shall also place before the learned Company Judge a list of the other secured creditors and the amount due to them.

4. The Appellant company shall file an undertaking before the Company Court to the effect that the Appellant shall abide by the provisions of Section 529-A of the Companies Act as incorporated in Section 13(a) of the Sarfaesi Act, 2002.

3. In furtherance to the steps for sale of the properties in question, the ARCIL submitted I.A. No. 712/2010 before the learned Company Judge in the said Company Petition No. 8/2005 inter-aila praying for constitution of a Sale Committee comprising of representative of ARCIL and the Official Liquidator attached to the Company Court. The learned Company Judge vide order dated 14.07.2010 allowed the said I.A. and ordered for formation of a Sale Committee comprising of the representative of ARCIL and the Official Liquidator with a direction that the Sale Committee so constituted shall not finalize the sale without the leave of the Company Court.

4. On the basis of the Valuation Report dated 09.06.2010 which was already obtained from a registered Valuer, the fair market value of the properties was fixed by the Sale Committee at Rs. 21,10,50,000/- and the Distress Market Value was fixed at Rs. 15,31,62,000/-.

5. On 22.09.2010 the sale notice was published by the Sale Committee in five newspapers having wide circulation in the country. In pursuance to the publication of the advertisement for sale in all five bids were received. Out of the five bidders in the process of interse bidding two bidders namely the third Respondent Wearit Global Limited (Appellant of Company Appeal No. 7/2010) and the fourth Respondent Manjeet Cotton Pvt. Limited emerged as top two bidders offering for Rs. 29.25 crores and Rs. 28.50 crores, respectively as against the fair market value of Rs. 21,10,50,000/-assessed by the valuer and fixed by the Sale Committee.

6. On completion of the process of interse bidding the Sale Committee submitted its report dated 15.11.2010 before the learned Company Judge and thereby recommended for the confirmation of sale in favour of the highest bidder Wearit Global Limited. The learned Company Judge after considering the said report dated 15.11.2010 vide impugned order dated 09.12.2010 refused to confirm the sale conducted by the Sale Committee. The learned C