1995 (8) TMI 260 - HC - Companies Law

Summary

Issues:
1. Whether the court could reopen the sale confirmation on the basis of misstatement of facts.
2. Validity of the valuation report by the income-tax authorities.
3. Power of the court to recall an order based on misrepresentation.
4. Interest rate on refund of deposited money by the appellant.

Analysis:
1. The judgment involves a company appeal against the reopening of the sale confirmation of a property in Bombay. The appellant contested that the court lacked the power to reopen the matter based on misstatement of facts. The court considered whether the earlier sale confirmation for Rs. 11,10,000 should be recalled due to misrepresentation. The court held that if a sale confirmation was based on misstatement of facts, it could be recalled in the interest of justice and equity.

2. The valuation report by the income-tax authorities played a crucial role in the sale confirmation process. The court initially relied on a representation that the income-tax department valued the property at Rs. 11,07,000. However, it was later revealed that the valuation report dated back to 1986, not near 1993. Despite the appellant presenting additional material supporting the valuation, the court maintained that the sale confirmation was rightly set aside due to the misrepresentation.

3. The judgment discussed the court's inherent power to recall an order based on misrepresentation. Citing legal precedents, the court emphasized the importance of ensuring the best price for the company's assets during liquidation. The court referred to previous cases where orders were recalled to obtain higher bids in the auction process. The court concluded that it had the authority to recall the earlier order if it was passed on misrepresentation.

4. Lastly, the appellant raised a point regarding the interest rate on the refunded amount of Rs. 11,10,000. The appellant argued for an interest rate of 18%, citing a stipulation for default situations. However, the court upheld the grant of 12% interest, deeming it a proper exercise of discretion. The judgment dismissed the appeal and directed the matter to be reported to the Government for further action regarding the conduct of the Assistant Official Liquidator involved in the case.

This detailed analysis of the judgment highlights the key legal issues, the court's reasoning, and the ultimate decision reached by the High Court of Delhi.