2004 (9) TMI 396 - HC - Companies Law

Summary

Issues Involved:
1. Review or recall of previous court orders.
2. Maintainability of the application for review.
3. Adequacy of the price offered for the property in question.
4. Impact of delay and subsequent developments on the application.
5. Legal principles regarding auction and contract.

Detailed Analysis:

1. Review or Recall of Previous Court Orders:
M/s. Akshar Corporation sought to review or recall the orders dated 26th December 2003 and 17th January 2004, which confirmed the sale of land of M/s. Vivekanand Mills Ltd. (in liquidation) for Rs. 2 crores to M/s. Khemaji Jodhaji & Brothers. The applicant offered Rs. 2.20 crores, Rs. 20 lakhs more than the confirmed bid.

2. Maintainability of the Application for Review:
The respondent argued that the application was not maintainable under Order 47, Rule 9 of the Code of Civil Procedure (CPC), which bars review of an order made on a review application. They contended that the applicant was not an "aggrieved party" and that the contract had already been executed, with third-party interests created. The applicant countered that the application was not a review under Order 47, Rule 1 of the CPC but rather under Rule 9 of the Companies (Court) Rules, 1959, which allows the court to exercise inherent powers. The court agreed with the applicant, stating that the application was maintainable under Rule 9 of the Companies (Court) Rules, which is analogous to Section 151 of the CPC.

3. Adequacy of the Price Offered for the Property in Question:
The court reviewed the history of attempts to sell the property, noting that several efforts had failed due to lack of satisfactory offers. The property was valued at Rs. 2.50 crores, and the respondent's offer of Rs. 2 crores, along with the liability for municipal taxes, was deemed fair and reasonable. The court emphasized that the primary duty was to ensure the property fetched the highest possible price, but mere higher offers after confirmation did not automatically warrant reopening the auction.

4. Impact of Delay and Subsequent Developments on the Application:
The court noted that the applicant filed the application in February 2004, after the respondent had already taken possession of the property and incurred significant expenses. The court found that the delay and subsequent developments, including payment of municipal taxes and creation of third-party rights, made it impractical to cancel the contract.

5. Legal Principles Regarding Auction and Contract:
The court highlighted the principles of contract law, emphasizing the sanctity of contracts and the need for judicial discretion in confirming sales. The court referred to several Supreme Court judgments, stating that the court must ensure the property is sold at a reasonable price but also respect the finality of confirmed sales unless there is evidence of fraud or procedural irregularity.

Conclusion:
The court concluded that the application was maintainable under Rule 9 of the Companies (Court) Rules but found no grounds to set aside the confirmed sale. The price offered by the respondent was deemed adequate, and the subsequent developments, including third-party rights, made it impractical to cancel the contract. The application was rejected, and the court granted a stay on the implementation of the order until October 14, 2004, to allow the applicant to approach a higher forum.