2008 (8) TMI 561 - SC - Companies Law

Winding up Powers of Liquidators - Held that - Ends of justice would be served if we direct that sale in favour of first respondent be confirmed with condition that the first respondent will pay an additional amount of rupees three crores. It will be over and above the payment which has been made by him. Such payment will be made within a period of three months. If the payment is not made as per this order, the first respondent will not be entitled to claim any right on the basis of the bid made and accepted on January 31, 2001 and fresh auction will be conducted as per the order of the company judge. The appeal is disposed of accordingly.

Issues Involved:

1. Validity of the Division Bench's decision to set aside the company judge's order.
2. Adequacy of the highest bid and subsequent offers.
3. Delay in payment by the highest bidder due to interim stay.
4. Interest payable on delayed payment.
5. Confirmation of sale and fresh auction.

Issue-wise Detailed Analysis:

1. Validity of the Division Bench's Decision to Set Aside the Company Judge's Order:

The appeal challenges the Division Bench's order that set aside the company judge's decision to re-advertise and re-invite tenders for the sale of Champaran Sugar Co. Ltd.'s property. The Division Bench had allowed the appeal by Vishnu Kant Gupta, who was the highest bidder in 2001, and held that the company judge was not justified in setting aside Gupta's highest offer.

2. Adequacy of the Highest Bid and Subsequent Offers:

The company judge initially accepted Gupta's highest bid of Rs. 5 crores in January 2001. However, due to the delay caused by interim stays, other offers emerged in 2007, with the highest being Rs. 6.50 crores. The appellants argued that the company judge was correct in seeking fresh offers to ensure the property fetched a proper, adequate, and reasonable price. The Division Bench, however, ruled that the initial offer was reasonable and should not be set aside based on subsequent higher offers.

3. Delay in Payment by the Highest Bidder Due to Interim Stay:

The delay in payment by Gupta was attributed to the interim stay granted by the Division Bench in February and March 2001. The Division Bench noted that Gupta was ready to pay the amount once the stay was vacated in December 2006. Gupta paid Rs. 1.50 crores on February 9, 2007, and offered to pay the remaining amount shortly thereafter. The Division Bench found that the delay was not Gupta's fault but due to the court's stay order.

4. Interest Payable on Delayed Payment:

The Division Bench directed Gupta to pay interest at 10% from December 5, 2006, to February 9, 2007, amounting to Rs. 10 lakhs. However, the Supreme Court found this interest calculation inadequate, considering Gupta had only paid Rs. 10 lakhs out of the Rs. 5 crores bid amount. The Supreme Court noted that had the amount been deposited in a bank, it would have earned significant interest over the six years.

5. Confirmation of Sale and Fresh Auction:

The Supreme Court acknowledged that while higher offers in 2007 could not invalidate Gupta's highest bid from 2001, the negligible payment made by Gupta at the time was a critical factor. The court decided that justice would be served by confirming the sale in favor of Gupta with the condition that he pays an additional amount of Rs. 3 crores within three months. If Gupta fails to make this payment, a fresh auction will be conducted as per the company judge's order.

Conclusion:

The Supreme Court partly allowed the appeal, directing that the sale in favor of Gupta be confirmed with the condition of an additional payment of Rs. 3 crores. This decision balances the interests of all parties involved, ensuring that the property fetches a reasonable price while acknowledging the delays caused by the court's interim orders. The appeal was disposed of with no order as to costs.

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