2003 (7) TMI 580 - HC - Companies Law

Issues Involved:
1. Legality of the Company Court's order dated 13-6-2003.
2. Validity of the extension of time granted for payment by the highest bidder.
3. Consideration of the second highest bidder's offer.
4. Judicial discipline concerning orders passed by coordinate Benches.

Issue-wise Detailed Analysis:

1. Legality of the Company Court's Order Dated 13-6-2003:
The Company Court's order directed the appellant to deposit the entire amount of Rs. 52 lakhs within two weeks and allowed the Official Liquidator to negotiate for the highest possible amount. If the appellant offered the highest amount, the sale would be confirmed in its favor; otherwise, the first respondent would be given the opportunity to match the highest offer. The appellant challenged this order, arguing that it amounted to reviewing a previous order of extension granted by another judge, which is impermissible.

2. Validity of the Extension of Time Granted for Payment by the Highest Bidder:
The appellant contended that the extension of time granted by the Company Court was valid and that the subsequent order by another judge effectively reviewing this extension was improper. The appellant had initially failed to deposit the balance sale consideration on time, leading to an application for extension, which was granted. The appellant argued that this extension was granted after due consideration of all relevant facts, except the offer made by the first respondent.

3. Consideration of the Second Highest Bidder's Offer:
The first respondent, being the second highest bidder, had made an offer of Rs. 52 lakhs after the appellant failed to deposit the balance amount on time. The first respondent argued that this higher offer should have been considered, and the failure to bring this offer to the notice of the Company Court during the extension application was a significant omission. The Company Court, in its order dated 13-6-2003, took this higher offer into account and issued directions accordingly.

4. Judicial Discipline Concerning Orders Passed by Coordinate Benches:
The appellant argued that the subsequent order by another judge amounted to sitting in judgment over the order of a coordinate Bench, which is against judicial discipline. The appellant relied on the principle that once an order is passed by a judge, it should not be reviewed or modified by another judge of the same court. The first respondent countered that their higher offer created a new situation that justified the subsequent order.

Detailed Analysis:

Legality of the Company Court's Order:
The Company Court's order dated 13-6-2003 was challenged on the grounds that it effectively reviewed a previous extension of time granted to the appellant. The appellant argued that this was improper and against judicial discipline. However, the court found that the order was made after considering the higher offer by the first respondent and the overall circumstances, including the potential loss in value of the auctioned property due to delay.

Validity of the Extension of Time:
The appellant had initially failed to deposit the balance sale consideration, leading to an application for extension, which was granted. The Company Court, in its order dated 9-12-2002, condoned the delay, noting that the appellant had obtained the necessary demand drafts prior to the extended deadline. However, the first respondent's higher offer was not brought to the court's notice at that time.

Consideration of the Second Highest Bidder's Offer:
The first respondent's offer of Rs. 52 lakhs was made after the appellant failed to deposit the balance amount on time. The Company Court, in its order dated 13-6-2003, considered this higher offer and issued directions to secure the highest possible amount for the auctioned property. The court found that the failure to bring this offer to the notice of the Company Court during the extension application was a significant omission.

Judicial Discipline:
The appellant argued that the subsequent order by another judge amounted to sitting in judgment over the order of a coordinate Bench, which is against judicial discipline. The court acknowledged the principle that once an order is passed by a judge, it should not be reviewed or modified by another judge of the same court. However, the court found that the first respondent's higher offer created a new situation that justified the subsequent order.

Conclusion:
The court found that the Company Court's order dated 13-6-2003 was made after considering all relevant facts and circumstances, including the higher offer by the first respondent. The court also found that the failure to bring this offer to the notice of the Company Court during the extension application was a significant omission. The court upheld the Company Court's order and dismissed the appeal.

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