2010 (6) TMI 665 - HC - Companies Law

Winding up - Powers of liquidator - Official Liquidator had invited tenders for sale of properties of company-in-liquidation

Summary

Issues:
1. Appeal against Company Court order in a tender for disposal of assets of a company in liquidation.
2. Acceptance of belated offer after sealed tenders have been opened.
3. Discretion of Company Court to accept higher offers in tender proceedings.

Issue 1: Appeal against Company Court order in a tender for disposal of assets of a company in liquidation

In this case, the appellant participated in a tender for the disposal of assets of a company in liquidation. The Official Liquidator received 12 sealed tenders, with the highest being Rs. 1,62,88,000. The appellant, however, filed a company application stating that he could not properly inspect the properties, leading to his offer of Rs. 1,58,51,585. Despite this, he made a belated offer of Rs. 1,73,00,000. The Company Court observed that accepting such belated offers would prejudice other participants and disrupt the sanctity of the sealed tender process. The Court emphasized the importance of upholding the integrity of the tender proceedings conducted by the Official Liquidator.

Issue 2: Acceptance of belated offer after sealed tenders have been opened

The appellant relied on decisions of the Supreme Court to argue that the Company Court had discretion to accept higher offers even after the sealed tenders were opened. However, the Court distinguished this case from those precedents, noting that there were no justifiable grounds to deviate from the completed tender process. It was highlighted that allowing the appellant to make a higher offer after the formalities of the tender had been completed and tenders opened would undermine the fairness of the process. The Court also pointed out that the increase in the appellant's offer compared to the highest bid was marginal, further supporting the dismissal of the belated offer.

Issue 3: Discretion of Company Court to accept higher offers in tender proceedings

The Court concluded that the Company Judge's decision did not warrant interference. It was determined that the circumstances did not justify accepting the appellant's belated offer, as it would disrupt the established tender process and potentially lead to endless challenges from other participants. The Court upheld the sanctity of the sealed tender process and affirmed the importance of adhering to the rules and procedures set forth by the Official Liquidator. Consequently, the appeal was dismissed for lacking merit.

This comprehensive analysis of the judgment highlights the key issues addressed by the Court and provides a detailed overview of the reasoning behind the decision to dismiss the appeal.