LexM/S. TECH INVEST INDIA (PVT.) LTD. THR. MAJOR SHAREHOLDER RAJIV GOSAIN versus M/S. ASSAM POWER & ELECTRICALS LTD. AND OTHERS
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[2015] 9 S.C.R. 970 A M/S. TECH INVEST INDIA (PVT.) LTD. B c THR. MAJOR SHAREHOLDER RAJIV GOSAIN v. M/S. ASSAM POWER & ELECTRICALS LTD. AND OTHERS (Civil Appeal Nos. 6055-6056 of 2015) AUGUST 11, 2015 [M. Y. EQBAL AND ARUN MISHRA, JJ.] Company law: Sale of assets of company - Public auction - Stay application by company on the ground that its assets were worth Rs. 7 crores and public auction was being held without fixing the minimum reserve price after issuing D auction sale notice only once - Company judge refused to interfere with the auction and directed the company to raise the objections at the time of confirmation of safe - In auction, respondent no.3 purchased assets for Rs. 45. 55 fakhs- High Court held that counsel representing shareholders of the, E company had no objections and confirmed the sale - Company's appeal dismissed on the ground that Counsel had not made any objections at the time of confirmation of safe - On appeal, held: Sale at a price of Rs. 45.45 lakhs without proper publicity through advertisement or fixing any F reserve price for the assets cannot be sustained in law, particularly, when the predecessor Official Liquidator reported that the property put in auction is of much higher valuation - Having considered the illegality and irregularity committed G in the auction sale of the property, the entire process was vitiated. Allowing the appeals, the Court HELD: 1. Prima facie, the objections raised by the H appellant were not properly considered inasmuch as the 970 TECH INVEST INDIA (P.) LTD. v. ASSAM POWER & 971 ELECTRICALS LTD. objections were not heard on merit and the auction sale A was confirmed. The Advocate, had made the said statement before the Company Court, however, he had never been engaged either by the shareholders. Therefore, making statement by the Advocate that he has no instruction or waiving the disposal of objection on B merit, was without any basis which ought to have been considered by the High Court. The conduct of the Official Liquidator in selling the property at a price of Rs. 45.45 lakhs without proper publicity through advertisement or fixing any reserve price for the assets cannot be C sustained in law, particularly, when the predecessor Official Liquidator reported that the property put in auction is of much higher valuation. Having considered the illegality and irregularity committed in the auction sale D of the property, the entire process was vitiated. Further, the Company Judge also failed to exercise its judicial discretion to see that the properties are sold at a reasonable price. Apart from that, when the valuation report was submitted before the Company Judge, it E ought to have disclosed the secured creditors and other interested persons in order to ascertain the market value of the property before property was auction sold. Since the same was not done, the auction sale and the order confirming the sale were liable to be set aside. F Consequently the Official Liquidator is directed to forthwith recover the possession of the properties and proceed with a fresh auction after obtaining the fresh valuation report and fixing the reserve bid. [Paras 14 to 18] [975-F-G, H; 976-A-E, F] G CIVILAPPELLATE JURISDICTION: Civil Appeal Nos. 6055-6056 of2015. From the Judgment and Order dated 25.09.2012 of the H High Court of Uttarakhand at Nainital in Review/Recall 972 .SUPREME COURT REPOR:rS [2015) 9 S.C.R. A Application No. 660 of 2012 in Company Appeal No. 01·of 2005. Priya Puri, Ranjay Kr. Dubey for the Appellant. 8 M. C. Dhingra, Piyush Kant Roy, M. T. George, M. G. Yogamaya, Pulak Raj Mullick, Tanuj Bagga Sharma, Sahil Mullick (for Rajinder Mathur), Ravindra Kumar, M. Shakeel, Subhash Chandra Jain for the Respondents. c The Judgment of the Court was delivered by M. Y. EQBAL, J. 1. Leave granted. 2. These appeals by special leave are directed against the judgments dated 25.09.2012 and 16.07.2012 of the High D Court of Uttarakhand at Nainital, which dismissed the appeal and review application filed by the appellant company challenging the order confirming the sale and handing over the assets of the appellant-company to the respondent. E 3. The facts of the case lie in a narrow compass. The respondent no. 1 had sent a statutory notice under Section 434 of the Companies Act, 1956 and filed a winding up petition against the appellant-company alleging that the appellant- co
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