2010 (12) TMI 1061 - HC - Companies Law

Order dated October 3, 2008 of the learned single judge directing amount of ₹ 47,20,000 along with simple interest of 24 per cent. per annum be deposited within 30 days time challenged? Held that - As rule 7 specifically gives power to the court to extend the time, rule 9 is an inherent power before the company judge to pass order in order to meet the ends of justice. We find that the extension of time granted by the learned company judge was ultimately in the interest of justice and there was no anomaly in the same. As such, we find no merit in Company Appeal No. 1 of 2008 and the same is liable to be dismissed. For the reasons already stated above, we see no relevance or justification for even entertaining any applications moved before this court by subsequent bidders. Firstly for the reasons that the interest of the secured creditor has been well taken care of by the order of the learned single judge, inasmuch as the amount has to be now given with an interest of 24 per cent. and secondly, since there was no challenge to the order of this court dated September 20, 2005, by any of the bidders. Appeal dismissed.

Summary

Issues:
Challenge to order confirming auction sale due to non-deposit of sale consideration within stipulated period; Validity of extending time for depositing remaining amount; Applicability of Rules 7 and 9 of Companies (Court) Rules, 1959; Maintainability of second company appeal by company under liquidation.

Analysis:
The judgment involves two company appeals challenging a common order passed by a learned single judge regarding an auction sale. The first appeal, filed by a corporation, contests the order directing the auction purchaser to deposit the remaining bid amount within a stipulated time. The main contention is that the auction sale should be cancelled due to the purchaser's failure to meet the condition. The appellant argues that a higher price could be obtained, but this argument weakens as another bidder offering a higher price withdrew. The court finds the extension of time granted by the judge reasonable, ensuring the secured creditor's interest is protected. The court refers to Rules 7 and 9 of the Companies (Court) Rules, 1959, highlighting the power of the court to extend time and pass orders in the interest of justice.

The judgment emphasizes that the extension of time was necessary to meet the ends of justice and dismisses the first company appeal, as the secured creditor's interests were adequately addressed. The court clarifies the distinction between Rule 7, providing power to extend time, and Rule 9, allowing inherent powers to pass orders for justice. The judgment concludes that the extension granted was justified, dismissing the challenge to the order confirming the auction sale.

Regarding the second company appeal filed by the company under liquidation, the court finds it not maintainable as the official liquidator represents the company's interests. Since the official liquidator is already involved, the appeal lacks merit and is dismissed. The judgment directs the return of the earnest money deposited by another bidder. Both company appeals are ultimately dismissed, with no order as to costs.

In summary, the judgment addresses challenges to an auction sale order, the validity of extending deposit time, the application of relevant court rules, and the maintainability of the second company appeal. The court upholds the extension of time as just, dismisses the appeals, and orders the return of earnest money, emphasizing the protection of the secured creditor's interests throughout the proceedings.