LexINDUSTRIAL FINANCE CORPORATION AND ORS. versus OFFICIAL LIQUIDATOR, HIGH COURT, CALCUTTA AND ANR. ETC. ETC.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
- - - y -.I 'y y INDUSTRIAL FINANCE CORPORATION AND ORS. A v. OFFICIAL LIQUIDATOR, HIGH COURT, CALCUTTA AND ANR. ETC. ETC. FEBRUARY 16, 1993 B (K JAYACHANDRA REDDY AND B.P. JEEVAN REDDY, JJ.). Compa11ies Ac~ 1956: Section 457( l)(e)-Sale of assets of a Company in liquidation by Company Cou~Terms of Sale Notice-What is the proce- dure to be adopted. c Neptune Paper Mills (N.P.M.) was directed to be woun_d·up by the Company Court on August 4, 1987. The Official Liquidator took posses· sion of the assets of the company under the orders .or the Court. N.P.M. had borrowed huge amounts from several financial institutions including b Industrial Finance Corporation of India, I.C.J.C.I., W.!1.1.D.C. and I.D.B.I. on security of its assets. In view of the default committed by it in· repayment, the financial institutions (F.ls.) recalled their loans in April, 1988 with the result all the loans in their loans in April, 1988 with the result all the loans in their entirety became due at once. On August 8, 1988 the F.Is. were granted leave to file a suit under Section 446 of the Com· E panies Act. A suit was filed by them in September 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too. _ In January 1990, the company court directed the sale of the assets of the company in liquidation. Before making the said order the court had F obtained a valuation of the said assets. The valuation was at Rs. 4 crores. Sale notices were published from time to time in response to which certain offers were received, the highest of them being Rs. 6.90 crores. For one or the other reason, no offer was accepted and sale notice was published again. The sale notice would state that (I) the said company in liquidation \\'ill be sold as a going concern on "as is \\'here is and whatever there is G .>- basis", (2) the hids \\'ill start fr~}m 6.90 cri>res, (3) the succe~sful bidder must deposit-10% of his bid at the time of the sale, (4) the balance amount of th~ snle pril·e 1na.v be paid by instalments as would be fixed IJy the H 10(>3 1064 SUPREME COURT REPORTS [1993] 1 S.C.R. A Hon'ble Court, Calcutta i.e., deferred payment o( instalments will be considered and (5) and purchaser shall have to enter into an agreement and understanding with the employees union on the same lines as has I.een entered into previously by one of the bidders. In pursuance of the said sale notice, certain offers were received including the one by Buxa. Its B offer was in a sum of Rs. 6 crores sub_ject to certain terms and conditions stipulated therein. In short, it proposed to pay the said amount in instal· ments @ Rs. 45 lakhs per annum with a moratorium of one year immedi· ately following the confirmation of sale. On th• date of sale before the learned company Judge only two C parties remained in the field. They were asked to raise their bids. Buxa raised its offer to Rs. 8 crores, the higher of the two. The learned Judge accepted its offer subject to the condition that the balance consideration (after deducting 10% earnest money which was to be deposited immedi· ately) shall be paid in instalments prescribed by him. It was directed that D f0r the first two years following the sale, Rs. 60 lakhs shall be paid each year. Tiiereafler, half-yearly instalments of Rs. 30 lakhs shall be paid until the entire earnest money is paid off. No interest was stipulated. It was privided that on default of payment in any one instalment • yearly or half-yearly • the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited. E Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and pre-judicial to the interest of the F.Is., an app1'3l was preferred by them before the Division Bench. The Division Bench finding that It would be inappropriate to set aside the sal•, p effected modifications in the terms of sale thereby providing some more safeguards to protect the interest of the F.ls. Aggrieved by the order of the Division Bench, F.Is. approached this court by way of a Special Leave Petition (S.L.P. 14929/90). This Court, taking the view that the allegations made on behalf of F.Is. can be dealt with by the High Court if it is moved again declined to interfere with the order of the High Court. But with a G view to secure the interest of the Financial instit
Excerpt shown. Read the full judgment & AI analysis in Lexace.