2011 (7) TMI 1005 - HC - Companies Law

Winding up - auction purchaser had defaulted in making the payment of 25 per cent of the bid amount within one month of the date of auction as well as the balance 75 per cent within the period of 60 days. - The payment of 75 per cent was made after more than a year of the last date for the payment - substantial increase in land price - Court is not inclined to accept the payments made by it belatedly and without any permission from the Court. - amount deposited to be returned.

Issues Involved:
1. Acceptance of belated payments by the auction-purchaser.
2. Encroachments and possession issues on the auctioned land.
3. Legal claims and disputes over the auctioned land.
4. Request for fresh auction of the land.
5. Opposition to the acceptance of belated payments.

Issue-wise Detailed Analysis:

1. Acceptance of Belated Payments by the Auction-Purchaser:
The applicant, an industrial cooperative society, was the highest bidder for the purchase of some land of the company in liquidation. The court had directed the applicant to pay 25% of the bid amount within 30 days and the remaining 75% within 60 days. However, the applicant failed to make these payments within the stipulated time, depositing the amounts much later without court approval. The court was asked to accept these belated payments. The applicant cited various reasons for the delay, including encroachments on the land, legal disputes, and a stay order affecting the sale confirmation. Despite these reasons, the court emphasized its duty to ensure that the maximum price is fetched for the property. Given the substantial increase in the land's value during the delay period, the court declined to accept the late payments and dismissed the application.

2. Encroachments and Possession Issues on the Auctioned Land:
The applicant highlighted several encroachments and unauthorized occupations on the auctioned land, which included businesses operating on the premises and claims by various individuals. These encroachments needed removal to provide vacant and peaceful possession to the applicant. The applicant also pointed out that the land's possession was with the Collector, Ahmedabad, under attachment, and not with the Official Liquidator, complicating the transfer of possession.

3. Legal Claims and Disputes Over the Auctioned Land:
The applicant identified several legal disputes concerning the land, including claims of ownership by individuals based on a registered will and lease agreements. These disputes raised questions about the Official Liquidator's right to transfer clear title and possession of the land to the applicant. The applicant argued that these issues needed resolution before the transfer could occur.

4. Request for Fresh Auction of the Land:
In May 2009, the auction-purchaser filed an application for a fresh auction of the land, citing the delay and increased land value. They proposed a new reserve price of Rs. 61 crores, significantly higher than the original bid. However, this application was later withdrawn, leaving the court to decide on the acceptance of the belated payments.

5. Opposition to the Acceptance of Belated Payments:
The Official Liquidator and some contributories of the company in liquidation opposed the acceptance of the belated payments. They argued that the delay had led to a substantial increase in the land's market value, and a new party had already offered Rs. 62 crores for the land. The court agreed that confirming the sale at the old bid amount would be unjustified given the increased value and dismissed the application for accepting the late payments.

Conclusion:
The court dismissed the application for accepting the belated payments made by the auction-purchaser, emphasizing the duty to secure the maximum price for the property. The substantial increase in the land's value during the delay period justified this decision. The money deposited by the auction-purchaser was ordered to be returned by the Official Liquidator.

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