1996 (4) TMI 374 - HC - Companies Law

Summary

Issues:
1. Whether the court should confirm the sale of assets of a company in liquidation to the highest bidder or consider subsequent higher offers.
2. Whether the court can exercise discretion to reauction the property if there is a possibility of obtaining a higher price.

Detailed Analysis:

Issue 1:
The High Court was faced with the decision of whether to confirm the sale of assets of a company in liquidation to the highest bidder or consider subsequent higher offers. The official liquidator received 18 tenders for the purchase of the assets, with the highest offer being made by the State Bank of India for Rs. 52 lakhs. Another offer was made by the FACT for Rs. 26,76,000. The FACT later sought a direction to negotiate for the purchase of specific land, offering a higher amount of Rs. 66.09 lakhs. The State Bank of India opposed this, arguing that the auction was conducted fairly, and the court should not entertain subsequent higher offers. The court considered past judgments emphasizing the importance of confirming sales at reasonable prices and safeguarding against inadequate prices due to irregularities or fraud. Ultimately, the court decided to exercise discretion and ordered a reauction of the property with wide publicity, considering the significant difference in the offers and the duty to safeguard the interests of the company and creditors.

Issue 2:
The court also had to determine whether it could exercise discretion to reauction the property if there was a possibility of obtaining a higher price. Referring to a recent Supreme Court decision, the court highlighted the duty to secure the most remunerative price and the discretion to reopen auctions to achieve this goal. The court emphasized the importance of considering the interests of creditors, workmen, and the company in liquidation when deciding on the sale. In this case, despite no allegations of fraud or irregularity, the court found it appropriate to order a reauction due to the substantial difference in offers and the potential for securing a higher price. The court directed the official liquidator to conduct the reauction within three months with an upset price of Rs. 66.09 lakhs, requiring the FACT to deposit funds for preliminary expenses.

In conclusion, the High Court's judgment addressed the issues of confirming sales at reasonable prices, safeguarding against inadequate prices, and exercising discretion to reauction properties to secure the most remunerative price, ultimately ordering a reauction in this case to protect the interests of the company and creditors.