1992 (3) TMI 275 - HC - Companies Law

Summary

Issues:
1. Acceptance of offer for sale of assets below reserve price.
2. Exercise of discretion by the company court in directing sale of assets.
3. Compliance with Companies (Court) Rules, 1959 in sale proceedings.

Issue 1: Acceptance of offer for sale of assets below reserve price
The judgment deals with an appeal filed by a bank against an order directing the sale of a company's assets to the State of West Bengal for Rs. 1 crore, below the reserve price of Rs. 2.50 crores. The bank argued that the court should not have accepted the lower offer. The court detailed the series of events where multiple sale notices were published, inviting sealed tenders, but no higher offer was received despite several attempts. The court emphasized the lack of better offers and the necessity to accept the highest offer available.

Issue 2: Exercise of discretion by the company court in directing sale of assets
The court discussed the discretionary power vested in the company court under Rules 272 and 273 of the Companies (Court) Rules, 1959, to order the sale of company assets. It highlighted the court's duty to ensure the price is reasonable and in the best interest of creditors. Citing legal precedents, the court stressed the importance of confirming sales at adequate prices to safeguard the interests of the company and its creditors. The judgment analyzed the exercise of discretion by the company judge in accepting the offer from the State of West Bengal as the highest available despite being below the reserve price.

Issue 3: Compliance with Companies (Court) Rules, 1959 in sale proceedings
The judgment examined the compliance of the sale proceedings with the Companies (Court) Rules, 1959. It noted that no irregularities or illegalities were raised regarding the orders passed by the company judge or the steps taken by the official liquidator. The court emphasized that no objections were raised regarding the legality of the sale process or the adequacy of advertisement and publicity. The judgment concluded that, in the absence of any irregularities, the company judge had no option but to accept the highest offer presented.

In conclusion, the appeal was dismissed, emphasizing the duty of the court to act in the best interest of creditors and the company. The judgment highlighted the importance of ensuring adequate prices for assets and the discretion vested in the court to confirm sales. It also noted the lack of objections raised regarding the legality of the sale process, leading to the acceptance of the offer from the State of West Bengal despite being below the reserve price.