LexDIVYA MANUFACTURING CO. (P) LTD. TIRUPATI WOOLLEN MILLS SHRAMIK SHANGHARSH SAMITY AND ANR. versus UNION BANK OF LNDIA AND ORS. OFFICIAL LIQUIDATOR AND ORS.
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A B c DIVY A MANUFACTURING CO. (P) LTD. TIRUPATI WOOLLEN MILLS SHRAMIK SHANGHA7lSH SAMITY AND ANR. v. UNION BANK OF lNDIA AND ORS. OFFICIAL LIQUIDATOR AND ORS. JULY 11, 2000 [M.B. SHAH AND R.P. SETHI, JJ.] Companies (Court) Rules, 1959: Rule 273. Winding up of company-Confirmed sale-Setting aside of- Permissibi/ity--High Court accepted highest offer and confirmed sale- Subsequent/y, some parties offered much higher prices-High Court directed D the parties to deposit 20% of their offer and to pay a certain amount of compensation to the original bidder and set aside the confirmation of sale- A clause in the terms and conditions of sale empowered the High Court to set aside the confirmation of sale in the interest of creditors and/or public interest-Correctness of-Held: High Court rightly set aside the sale in the exercise of its discretion although there is no suggestion of fraud or E irregularity-More so when the High Court exercised its jurisdiction within the shortest time-However, fresh sale ordered with a reserved price fixed at the new higher price-Companies Act 1956. The appellant company (f) was ordered to be wound up by the High Court F and an official liquidator was directed to take charge of the said company. The properties of T were valued at Rs. 37 lakhs on the basis of the valuation report. The appellant-company (D) was agreeable to purchase the company T at that price as a going concern. Subsequently, the company judge directed the official liquidator to publish an advertisement inviting fresh offers for the purchase of the company T.D. enhanced its offer to Rs. 85 lakhs from G Rs. 37 lakhs and it was declared as the highest bidder. However, the High Court did not confirm the sale in favour of 0 as the respondent-Bank, a secured creditor, requested for further opportunity to bring a higher offer. However, since no one turned up to make any higher offer, the Company Judge conditionally accepted D's offer with liberty to the secured creditors to find higher offer within 30 days. However, the Division Bench of the High Court I-I 474 DIVYA MFG CO. (P) LTD TIRUPATI WOOLLEN MILLS SHRAMIK SHANGHARSH SAMITY' U.O I 475 stayed the aforesaid order. A The Division Bench directed the official liquidator to conduct a fresh sale with a reserved price of Rs. 85 lakhs. D's offer of Rs. 1.30 crores was accepted and the sale was confirmed in its favour. Subsequently, respondents (T and S) filed an application for setting aside the sale in favour of Das they were prepared to offer Rs. 1.40 crores and Rs. 2 crores respectively. To show B their bona fides they were prepared to deposit 20% of these amounts. D opposed this application. The Division Bench referred to a clause of the terms and conditions of sale which empowered the High Court to set aside the sale even though it is confirmed for the interests of creditors contributors and all concerned and/ C or public interest. The Division Bench noted that the amounts offered had increased from Rs. 37 lakhs to Rs. 2 crores. The Division Bench, therefore set aside the sale in favour of D and directed T and S to compensate D by paying Rs. 70,000 each for the loss suffered by D and directed re-sale of the assets ofT. Hence this appeal. D Dismissing the appeal, this Court HELD: I. The Division Bench of the High Court has considered all the relevant facts including the fact that at the initial stage, appellant D offered only Rs. 37 lakhs to purchase the properties. That means, the appellant wanted E to purchase at a throwaway price. Thereafter, at the intervention of the Court, the price was increased to Rs. l.3 crores by the appellant. This indicates that the appellant was keen to purchase the property, however, by paying only the bare minimum amount and to take advantage of sale by the liquidator in the hope that if there are no other purchasers, it would purchase the company at a price which is abnormally below the market price. It is also true that the F offer made by the appellant was accepted and it was ordered that sale in its favour be confirmed but at the same time, before possession of the property could be handed over, or before the sale deed could be executed in its favour, respondents S and J pointed out that the assets and properties could be sold at Rs.2 crores. For showing their bonafides they were directed to deposit G Rs. 40 lakhs each and also to pay Rs. 70,000 each as damages to the appellant
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