2011 (8) TMI 964 - HC - Companies Law

Winding up - re-sale notice auction - Company Judge refused to confirm the sale conducted by the Official Liquidator in the winding up proceedings Held that - Judge has referred to the objections of the ex-managing director of the company that the sale is conducted in haste and he opposed the request for confirmation on the ground that if more time had been given a better offer would have come. mere fact that it is a re-sale would not mean that the Official Liquidator would be absolved from his responsibility to act in conformity with law. If 15 days notice is warranted as per the provisions of CPC which becomes through Rule 6 of the Companies (Court) Rules then the Official Liquidator should have given 15 days notice. Company Judge was correct in refusing to confirm the sale having regard to the interest of the relevant parties. Appeal dismissed.

Summary

Issues:
1. Confirmation of sale conducted by Official Liquidator in winding up proceedings.

Analysis:
The High Court of Kerala heard an appeal against the Company Court Judge's order refusing to confirm a sale conducted by the Official Liquidator. The auction purchaser, the appellant, contested the decision, arguing that the sale secured the best price and that the ex-managing director's objections were unfounded. The ex-managing director, on the other hand, claimed to have shares and argued that the property's value was higher than the bid price. The legal provisions under consideration were Rules 272, 273, and 6 of the Companies (Court) Rules, 1959. The Official Liquidator defended the sale, stating that the notice given was sufficient for a re-sale. The Court noted that the Official Liquidator did not challenge the Company Court's decision, leaving the auction purchaser with the right to appeal.

In determining whether to confirm the sale, the Court considered three aspects: compliance with the law, the best interest of the company and shareholders, and the creditors' interests. While no specific criteria were provided in Rule 272, the Company Judge's decision must be informed by the legal framework and the factual context. The Court found that the notice period given for the sale was inadequate, especially considering the property's size and location. The Court rejected the appellant's reliance on a previous Apex Court decision, stating that the circumstances were different. Ultimately, the Court upheld the Company Judge's decision to refuse confirmation of the sale, emphasizing the importance of considering the parties' interests. The Official Liquidator was advised to explore selling the property in smaller plots to maximize the price.

In conclusion, the High Court of Kerala dismissed the appeal and upheld the Company Judge's decision to not confirm the sale conducted by the Official Liquidator. The judgment highlighted the necessity of considering various factors, such as legal compliance, the parties' interests, and the adequacy of the sale process, in such matters.