2006 (12) TMI 242 - HC - Companies Law

Issues Involved:

1. Maintainability of the appeal by M/s. Ruhatia Spinners Private Limited represented through Mr. Niranjan.
2. Validity of the order dated 8-9-2006 in light of the Apex Court's order dated 25-8-2006.
3. Eligibility and participation of respondent No. 1 in the bidding process.
4. Legality of the bidding process conducted by the learned Company Judge.

Detailed Analysis:

1. Maintainability of the Appeal:
The appeal was presented by M/s. Ruhatia Spinners Private Limited, represented by Mr. Niranjan. The respondents raised a preliminary objection regarding the maintainability of the appeal, arguing that Mr. Niranjan was not duly authorized to represent the company. The appellant later presented an affidavit from Sriprakash Kaluram Agrawal, Director of M/s. Ruhatia Spinners Private Limited, authorizing Niranjan Patra as the power-of-attorney holder. However, the court noted discrepancies in the representation and concluded that it could not be assumed that Niranjan in the cause title was the same as Niranjan Patra authorized by the company. Therefore, the appeal's maintainability was questioned.

2. Validity of the Order Dated 8-9-2006:
The appellant argued that the order dated 8-9-2006 violated the Apex Court's directive to maintain status quo as of 25-8-2006. However, the court found that the appellant had not informed the learned Company Judge of the Apex Court's order. The Apex Court had allowed the appellant to move the Division Bench within one week from 4-9-2006, which the appellant failed to do. Consequently, the court held that there was no illegality or infirmity in the order dated 8-9-2006, as the interim order was not brought to the learned Company Judge's notice.

3. Eligibility and Participation of Respondent No. 1:
The appellant contended that respondent No. 1, M/s. Rajashree Vanijya Private Limited, did not meet the pre-conditions for financial bids set by IDCOL, such as having an annual turnover of Rs. 10 crores and a net worth of Rs. 1 crore. Despite this, the learned Company Judge allowed respondent No. 1 to participate in the bidding process. The appellant's objections were dismissed as the court found that respondent No. 1 had complied with the directions to deposit the required amounts and was the highest bidder.

4. Legality of the Bidding Process:
The appellant participated in the bidding process conducted by the learned Company Judge on 8-9-2006 and offered Rs. 15.60 crores, while respondent No. 1 offered Rs. 15.65 crores. The appellant later challenged the legality of the bidding process, arguing that it was denied a fair opportunity. The court noted that the appellant had participated in the bid without raising any objections at that time and only challenged the process after becoming the second-highest bidder. The court also provided the appellant an opportunity during the appeal hearing to match or exceed respondent No. 1's bid, which the appellant declined. Consequently, the court found no merit in the appellant's challenge to the bidding process.

Conclusion:
The court dismissed the appeal, upholding the learned Company Judge's order directing respondent No. 3 to hand over possession of the units to respondent No. 1. The appellant's objections regarding the maintainability of the appeal, the validity of the order dated 8-9-2006, the eligibility of respondent No. 1, and the legality of the bidding process were all rejected. The bank draft deposited by the appellant was ordered to be returned upon proper application and identification.

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