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2007 (7) TMI 417 - HC - Companies LawWinding up Powers of Liquidators - sale to highest bidder - Held that - Allow this application and accept the bid given by respondent No. 4 and confirm the sale of the assets/properties of the company under liquidation in favour of respondent No. 4 in the sum of ₹ 4.21 crores and they are granted one month time to deposit the balance amount of the sale consideration with the official liquidator. On depositing the said balance amount, the possession of the assets/ properties of the company under liquidation shall be deemed to be handed over to the purchaser. The official liquidator shall also execute the sale deed in favour of the purchaser expeditiously.
Issues Involved:
1. Confirmation of the sale of movable and immovable properties of M/s. Scanomax India Ltd. 2. Objections by PSIDC regarding the valuation and re-auction of the properties. Issue-wise Detailed Analysis: 1. Confirmation of the sale of movable and immovable properties of M/s. Scanomax India Ltd.: The official liquidator filed an application for the confirmation of the sale of the properties of M/s. Scanomax India Ltd., a company under liquidation, to M/s. International Fresh Farm Products (India) Ltd., who emerged as the highest bidder in the auction conducted by a court-constituted sale committee. The company was ordered to be wound up by the court on February 21, 1997, and the official liquidator was appointed. The initial sale for Rs. 2.50 crores was not confirmed, prompting the formation of a sale committee to re-evaluate and re-auction the properties. The re-evaluation by M/s. NITCON assessed the distress value at Rs. 402.14 lakhs, which was accepted by all secured creditors. The auction received four bids, with M/s. International Fresh Farm Products (India) Ltd. eventually offering the highest bid of Rs. 4.21 crores after inter se bidding. All sale committee members, including secured creditors, expressed satisfaction with the proceedings and the bid amount, which exceeded the distress value. The secured creditors were given 15 days to secure approval from their competent authorities, which they did, leading to the official liquidator accepting 25% of the bid amount from the highest bidder. 2. Objections by PSIDC regarding the valuation and re-auction of the properties: When the application for sale confirmation came up on July 5, 2007, PSIDC objected, stating that the approval letter from their Deputy General Manager was not sanctioned by the board of directors. PSIDC's counsel suggested that re-auction might fetch a higher price and raised concerns about the valuation report, claiming it undervalued the assets by deducting 10% from the reasonable value. They referenced the Supreme Court decision in Union Bank of India v. Official Liquidator, High Court of Calcutta, emphasizing the court's duty to ensure assets are sold at a reasonable price and that valuation reports should be disclosed to secured creditors. However, the official liquidator and other secured creditors opposed the re-auction, arguing that the valuation was conducted by a government enterprise and unanimously accepted by all secured creditors, including PSIDC. They highlighted that PSIDC had not raised objections during the valuation or auction process and had approved the highest bid in writing. The court offered PSIDC a chance to bring a higher bidder, which they failed to do, and proposed conditions for re-auction, which PSIDC partially accepted but disagreed on bearing the loss if the re-auction fetched a lower price. The court found PSIDC's objections unsubstantiated and noted their initial approval of the highest bid. The court emphasized the extensive publicity given to the auction, the lack of irregularities in the sale process, and the unanimous satisfaction of all secured creditors with the valuation and auction proceedings. The court concluded that re-auctioning would incur unnecessary expenses and delay, burdening the secured creditors further. Final Judgment: The court allowed the application, accepted the highest bid of Rs. 4.21 crores by M/s. International Fresh Farm Products (India) Ltd., and confirmed the sale of the properties. The highest bidder was granted one month to deposit the balance amount, after which the possession of the assets would be handed over, and the official liquidator would execute the sale deed expeditiously.
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