2002 (3) TMI 831 - HC - Companies Law

Summary

Issues Involved:
1. Validity of the sale confirmation in favor of the respondent.
2. Allegation of sale area discrepancy.
3. Locus standi of the applicant.
4. Validity of the "as is where is" sale condition.
5. Adequacy of the sale price.
6. Return of the deposit amount.

Detailed Analysis:

1. Validity of the sale confirmation in favor of the respondent:
The applicant, Kanchanjhanga Commotrade (P.) Ltd., the second highest bidder, filed an application to set aside the sale confirmed in favor of the respondent No. 1 by the Company Judge on 26-3-1999. The sale involved land and assets of Spawk Engg. (P.) Ltd. (in liquidation). The respondent No. 1 was the highest bidder at Rs. 13.5 lakhs, and the sale was confirmed after an open bid held in court.

2. Allegation of sale area discrepancy:
The applicant contended that the sale notice mentioned a land area of 4.68 acres, but a certificate from the managing director indicated that 2.3076 acres had been sold previously. The applicant argued that this discrepancy led to the respondent No. 1 acquiring a larger area than advertised. However, the court found no documents supporting the alleged sale of 2.3076 acres, and the balance sheet and records indicated that the entire 4.68 acres were still in the company's name.

3. Locus standi of the applicant:
The respondent No. 1's counsel questioned the applicant's locus standi, arguing that the applicant, being an unsuccessful bidder and neither a secured creditor nor a contributor, had no standing to challenge the sale. The court agreed, noting that the applicant's status as an unsuccessful bidder did not entitle it to seek the sale's invalidation.

4. Validity of the "as is where is" sale condition:
The court noted that the sale was conducted on an "as is where is" basis, as clearly stated in the sale notice. This term applied to the entire property, including the land, and all bidders, including the applicant, had the opportunity to inspect the property before bidding. The court found that the applicant had adequate notice and opportunity to ascertain the property's exact area.

5. Adequacy of the sale price:
The court observed that the sale price of Rs. 13.5 lakhs exceeded the valuation reports, which valued the property at Rs. 9.5 lakhs and Rs. 7.25 lakhs, respectively. There was no contention that the sale price was shockingly low or below the property's proper value. The court emphasized that the sale was valid and confirmed by the court, and there was no basis to set it aside on the grounds raised by the applicant.

6. Return of the deposit amount:
The applicant had deposited Rs. 5 lakhs with its advocate on record as directed by the court. Following the dismissal of the application to set aside the sale, the court directed that the request for the return of the deposit be considered by the appropriate Company Judge in accordance with the law.

Conclusion:
The court dismissed the application to set aside the sale, vacated all interim orders, and directed the official liquidator to proceed with the conveyance preparation. The application for return of the deposit amount was to be considered separately by the Company Judge. The application was dismissed without any order as to costs.