2000 (3) TMI 943 - HC - Companies Law

Summary

Issues:
1. Procedural irregularity in the advertisement for auction.
2. Discrepancy in the upset price fixed by the Sale Committee.
3. Failure to disclose crucial information about the property in the advertisement.

Procedural Irregularity in the Advertisement:
The applicant sought relief due to a procedural defect in the auction advertisement, specifically regarding the attachment of the property. The Official Liquidator acknowledged the oversight but argued that the defect had been rectified, and no actual loss or hardship was suffered by the applicant. The Court observed that while the irregularity existed, it was subsequently rectified, and the applicant did not incur any injury or loss. Thus, the Court found no valid reason to set aside the auction based on this procedural irregularity.

Discrepancy in Upset Price Fixed:
The Sale Committee had fixed the upset price at Rs. 7,28,00,000, which the applicant contested as arbitrary and contrary to the Court's order specifying Rs. 4,81,00,000 as the upset price. The Official Liquidator defended the higher upset price based on a valuation report indicating the property's value at around Rs. 7.40 crores. The Court noted that the Sale Committee acted reasonably and in the interest of all stakeholders by considering the valuation report and setting a higher upset price to secure better returns for the workers and creditors. Consequently, the Court upheld the Sale Committee's decision and vacated the interim order granted earlier.

Failure to Disclose Crucial Information:
The applicant highlighted that crucial details about the property, such as part of the land being vested in the Government and pending property tax dues, were not disclosed in the advertisement or tender documents. The Court directed the Sale Committee to quash the previous proceedings, invite fresh offers through a new advertisement, and consider including the information about the attached property and other relevant details in the future auction process. Additionally, the Official Liquidator was instructed to assess the impact of the disclosed facts on the property's value to avoid potential future disputes.

In conclusion, the Court addressed the issues of procedural irregularity, upset price discrepancy, and lack of disclosure of essential property information, providing detailed directions to rectify the shortcomings and ensure a fair auction process moving forward.