1999 (2) TMI 477 - HC - Companies Law

Summary

Issues:
1. Sale of leasehold industrial land and factory building through tenders.
2. Allegations of flouting court orders by the auction purchaser.
3. Dispute over possession and removal of materials from the property.
4. Legal standing of applicants seeking to challenge the sale.
5. Consideration of higher offers after acceptance of the highest bid.

Issue 1: Sale of leasehold industrial land and factory building through tenders
The judgment pertains to the sale of leasehold industrial land and a factory building through a tender process jointly conducted by the Industrial Investment Bank of India (IIBI) and the official liquidator. After receiving six tenders, the highest bid of Rs. 1.20 crores by M/s. Umrao Steels was accepted. The purchaser deposited the required amount within the stipulated time frame, completing the sale transaction.

Issue 2: Allegations of flouting court orders by the auction purchaser
Allegations were raised against the auction purchaser, M/s. Umrao Steels, for flouting court orders by forcibly removing materials from the property before the sale confirmation. The official liquidator denied these allegations, stating that no complaint was received from the security guard, and a suspicious blank paper was sent in an envelope. The purchaser's counsel contended that the accusations were baseless and motivated by rivalry.

Issue 3: Dispute over possession and removal of materials from the property
A dispute arose regarding the possession and removal of materials from the property, with conflicting accounts from the security guard and the purchaser. The court found the allegations questionable, especially considering that the purchaser had almost completed the payment for the property, raising doubts about the necessity for such actions.

Issue 4: Legal standing of applicants seeking to challenge the sale
The court addressed the legal standing of the applicants, Manoj Kumar Mishra and Asif Ansari, who sought to challenge the sale. It was noted that Mishra had not submitted a tender or inspected the property within the specified timeline, while Ansari's offer for lot No. 2 was rejected, indicating a lack of standing to contest the sale.

Issue 5: Consideration of higher offers after acceptance of the highest bid
The court dismissed the applicants' requests to consider their higher offers after the acceptance of the highest bid, emphasizing that the accepted bid was deemed adequate. Citing precedent, the court held that once a bid is accepted, subsequent higher offers cannot disturb the concluded sale, especially when no irregularities or fraud were found in the process.

In conclusion, the court rejected the applications filed by Mishra and Ansari, deeming them to be motivated by ulterior motives and lacking legal merit. The judgment upheld the sale transaction conducted through the tender process, affirming the acceptance of the highest bid by M/s. Umrao Steels for the leasehold industrial land and factory building.