LexUNION BANK OF INDIA versus OFFICIAL LIQUIDATOR H.C. OF CALCUTTA AND ORS .
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UNION BANK OF INDIA A v. OFFICIAL LIQUIDATOR H.C. OF CALCUTTA AND ORS . . ..... APRIL 26, 2000 [M.B. SHAH AND R.P. SETHI, JJ.] B COMPANIES ACT, 1956: Winding up proceedings-Company under liquidation-Role of the Court-Held, tlze Court acts as a custodian for the interest of the company and C tlze creditors : Section 529 : Sale of assets of company under liquidation-Sanction of-Role of Court- Before sanctioning the sale of its assets, the Court is required to exercise judicial discretion to see that properties are sold at a reasonable price-It is the duty of the Court to apply its mind to the valuation repo1tforverifying whether tlze n;port indicates reasonable market value of the property to be auctioned even if objections are not raised-Unless the court is satisfied about the adequacy of the price the act of confirmation of sale would not be a proper exercise of judicial discretion. Sale of assets/factory of Company as a going concern-Company closed 17 years ago-Attempt made by BIFR and A/FR, which are expert bodies under D E the Sick Industrial Companies Act to revive the sick unit failed-Order by Company court to sell tlze property as a going concern, relying on oral F submission of workmen and without verification of the facts-Held, not justi- fied-Sick Industrial Companies Act. Auction sale of assets of company under liquidation-And confilmation of the sale-Without disclosing the valuation report to the creditors and without fixing its reserve price-Justification of-Held, not justified-Since it is against normal procedure-After winding up order; the properties of the Company are in the custody of the Cou1t for the benefit of the secured creditors and thereafter . (f any thing remains, for other creditors and its share holders. Indian Evidence Act, 1872-Section 45-Expert opinion-Valuation 691 G H 692 SUPREME COURT REPORTS [2000) 3 S.C.R. A Rep01t-Of land-Based on enqui1y from local people-Held, cannot be said -4. - be an opinion of an expert valuer. \ In the Company Petition filed by the appellant-Bank, Company Judge issued direction for winding up of the Company and appointed B official liquidator to take over the assets. A valuer was also appointed and directed to submit the valuation report. Thereafter order fixing the date of sale of the assets of the Company was passed and advertisement to that effect was also directed. ... An application was filed with the plea that 1200 workmen would be c affected if the sale or the factory of the company does not take place as a going concern and workmen are not re-employed. Government submitted that the corporation was ready to purchase the entire company and re- employ the workmen. Court made fresh order ready to of sale of the ~ company as a going concern by auction. Court while narrating the submis- D sion of the employees noted that more than 100 employees were starving to death and more than 100 employees had already died. Subsequently, Government withdrew its offer. In the valuation re- port the assets of the company were valued at around Rs. 67 lakhs. Re- E spondent No. 2 offered Rs. 67 lakhs and agreed to take the company as a ~ going concern and further agreed to employ the eligible workmen. Court accepted the offer of respondent No. 1. The appellant-Bank prayed for t stay of the order but the same was rejected. 'S' then made an offer of Rs. 70 lakhs on the same terms. Court ,___ F directed 'S' to deposit 20% of the amount with the official liquidator within a specific date, and ordered that on failure to do so, bid of respond- .,. ent No • 2 would be accepted. 'S' failed to deposit the amount as directed by the Court. Therefore bid of respondent No. 2 was accepted with a direction to deposit the balance amount within a specific period. G Appellant-Bank filed a writ petition before Division Bench praying for the stay of the operation of the order of the Company Judge, contend- ing that the price was inadequate. The writ petition was dismissed with the observation that in the meantime the whole amount was paid by respond- ent No. 1 and that price was not inadequate as it was matching with the H valuation. - UNION BANK OF INDIA v. OFFICIAL LIQUIDATOR H.C. OF CALCUITA 693 In appeal to this Court, appellant contended that in sale of Compa- ny's property, it is the duty of the Court to see that the properties are sold at a reasonable price; that without there being anything on recor
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