1999 (2) TMI 614 - HC - Companies Law

Summary

Issues Involved:
1. Confirmation of the sale of the assets of the company in liquidation.
2. Adequacy of the valuation of the assets.
3. Opportunity to object to the valuation.
4. Adequacy of the sale price.
5. Notice and participation in the tender process.
6. Delay in depositing the sale consideration instalments.

Issue-wise Detailed Analysis:

1. Confirmation of the Sale of the Assets of the Company in Liquidation:
The company was ordered to be wound up on December 16, 1993, and the official liquidator was appointed. The court had ordered the sale of the company's assets through tenders. The highest offer of Rs. 65 lakhs was accepted, and the full sale consideration was deposited in four instalments. The official liquidator reported that the sale should be confirmed as the entire sale consideration had been deposited within the stipulated time.

2. Adequacy of the Valuation of the Assets:
The main submission was that the valuation of the assets was not properly done and should be revalued by a technical expert. It was contended that the value of the assets was much higher than the offered price. However, the official liquidator stated that the valuation was done by a Government-approved valuer, and the machinery had only scrap value due to the removal of valuable parts. The court found the valuer's report credible and noted that the valuation in the 1992-93 balance sheet was not a correct reflection of the current market value.

3. Opportunity to Object to the Valuation:
It was contended that the applicant had no opportunity to raise objections to the valuation. However, the court noted that the applicant's counsel was aware of the orders and had been appearing on each date the case was listed. The court found that the applicant had knowledge of the sale order and had been informed about the date for opening tenders but chose not to be present.

4. Adequacy of the Sale Price:
The financial corporations contended that the sale price was inadequate and that a reserve price should have been fixed. The court noted that the machinery had lost its value and was merely scrap. The court had given reasons for accepting the highest offer, including the fact that the sale had been advertised thrice with no better offers received. The court found no merit in the submission that the price was inadequate.

5. Notice and Participation in the Tender Process:
The financial corporations argued that they did not receive notice regarding the opening of tenders and that the assets should have been sold jointly by the official liquidator and the corporations. The court noted that the official liquidator had informed the applicants about the dates and that they had full knowledge of the tender process. The court found that the applicants had adequate opportunity to oppose the highest offer and that the approval of the parties was not required when accepting the highest offer.

6. Delay in Depositing the Sale Consideration Instalments:
There was a delay in depositing the first, second, and third instalments of the sale consideration. The court noted that the entire amount was paid within four months, with delays of 28 days, 13 days, and 7 days for the respective instalments. The court directed that the purchaser should pay simple interest at the rate of 15% for the period of delay in depositing the instalments.

Conclusion:
The court rejected the objections filed by the ex-management and the financial corporations. The applications (A-59) and (A-63) were rejected. The court directed that on payment of interest for the delay in depositing the instalments, the sale in favor of the purchaser would be confirmed, and the official liquidator was instructed to take necessary steps for handing over possession to the purchaser.