LexNAVALKHA & SONS versus SRI RAMANYA DAS & ORS.
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• > c D F G H I NAVALKHA & SONS v. SRI RAMANYAJ>AS & ORS. October 27, 1969 [V. RAMASWAMI AND I. D. DuA, JJ.] Companies (Court) Rules, 1959, r, 273-Sale of properties of com· pany in liquidation-Principles to be followed by Judfe exercising discretion. Jn the winding up proceedings of a company in liquidation, the official liquidator and a share-holder sought permission of the High Court for the sale of immovable and movable p·roperties and actionable claims of the company. The company Judge appointed commissioners for the sale in accordance with the terms and conditions mentioned in bis order. One of the conditions was that the proclamation of sale was to be adver- tised twice in each of 5 leading daily newspapers. The commissioners had the proclamation published in only 4 dailies and it was only .in two of them that there were two insertions. No offer having been received, the time fixed was extended when the appellant made his offer as the sole offeror. The commissioners applied to the Judge for confirmation of sale, but before the sale in favour Of the appellant was confirmed another person made an offer of a larger amount complaining that he could not make the 'offer earlier as there was no adequate publicity. The Judge there- upon arranged an open bid in the Court itself on that very day, as between the appellant and the ""w offeror. .The appellant became the highest bidder and the appellant was directed to pay the balance of amount by a part~cular. date, but again, before the sale in his favour could be con- firmed;. a third person made an application offering a still large amount, complaining of the want of adequate pubJicity and advertisement of the sale. The Judge rejected the application and confirmed the sale in favour of the appellant. Jn appeal, the Letters Patent Bench set aside the order af the single Judge and directed that he should take fresh steps for sale of the property either by calling for sealed tenders or by auction in accordance with law. In appeal to this Court, HELD : When the acceptance of an offer by the commissioner is subject to confirmation by the court, the offeror does not by me're accep- tance get any vested right in the property and he cannot demand aul!'· -!!latic confirmation of his offer. It is the duty of the court to satisfy it- self that having regard to the market value of the property the price offered is reasonable, even though there is no suggestion of irregularity or fraud. Otherwise, the act of confirmation of the sale would not be a proper exercise of judicial discretion. But once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid !?round for refusing confilrmation of the sale or offer already received. [5 D-F; 6 A-BJ In the present case, the publicity was not as wide as originally pro· posed. Therefore. the single Judge was right in refusing tO confirm t~e first offer of the appellant. and holding an auction .. But he erred m confinin~ the auC:tion to two persons only. ·The auction was ne dou.bt conducted in a public place but it was not open to the general pubhc, 2. SUPREME COURT REPORTS [1970] 3 s.c.R. nor was it held after due publicily. Therefore, the sale was not a public sale, wh~ch impli~s .. a sale after giving notice to the public with liberty to t~e pubhc to par11c1pate. Rule 273 of the Companies (Court) Rules, pro- vides that all sales shall be made by public auction, or by inviting sealed tenders, or in .such manner as tlte Judge mc;y direct. Since the're was want of publicity and there was lack of opportunity to the public to take part in the auction, and there was inherent prejudice in the method adopted by the Judge, the acceptance of the appellant's bid by the Judge \Vas not a sound exercise of discretion and the Division Bench was right in directing a fresh sale. [6 B.C; 7 A-B, C-D. F] Gordhan D,as Chuni Lal v. T. Sriman Kanth_hnathinatha Pillai, A.I.R. 1921 Mad. 286, Rathnaswami Pillai v. Sadapathi Pillai. A.I.R. 1925 Mad. 318, S. Soundarajan v. M/s. Roshan & Co. A.l.R. 1940 Mad. 42, and A. Subbraya Muda/iar v. Sundararajan, A.I.R. 1951 Mad. 986, referred. to. Crv1L APPELLATE JURISDICTION : Civil Appeals Nos. 1085 and 1086 of 1967. Appeals from the judgment and decree dated September 24, 1965 of the Andhra Pradesh High Court in 0.S.A. Nos. 3 and 4 of 1965. V. S. Desai and P. C. Bhartari, fo
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