2013 (2) TMI 144 - HC - Companies Law

Entitlement for fresh auction or to give sanctity to the proceedings initiated by this Court? - Held that - As after the company petition is allowed, Official Liquidator was directed to take process and initiate auctions as per law. On filing necessary OLR, the OL was permitted to take public Notification inviting the public to participate in the public auction. On two occasions, notifications were issued and on considering the same there were four persons participated and again they were directed to quote highest bid and bid sheet was made and available before this Court to consider. When an order passed by this Court it is to be considered by the public at large and the same concluded at the instance of this Court. Then it is the duty of this Court to give respect to its order by giving sanctity more than, over and above the highest bid. The cases cannot be concluded if for One or the other reasons as stated in these applications, the orders are recalled there in no end and this Court cannot put an end to the legal proceedings. This Court feels, by considering all these applications it may reduce to real estate business. Money is not the criteria sanctity of the order is the criteria. In the application filed by the State Finance Corporation, the reasons assigned are examined. Since, from the day one i.e., in pursuance to first valuation report the learned counsel appearing on behalf of the KFSC was present before this Court. It is one year the proceedings have taken place. On hearing all the learned counsels, directuion for the second report and thereafter the auction was considered in the open Court itself. The sanctity of the order of this court matters rather than higher value or the bid offered at a later stage after the bid was accepted.

Summary

Issues:
1. Validity of auction process and bid acceptance.
2. Applications for recalling the auction order and permitting higher bids.
3. Consideration of sanctity of court orders over higher bids.

Issue 1: Validity of auction process and bid acceptance
The judgment discusses the auction process where company properties were auctioned in open court, with a fresh valuation report submitted to determine the property value. A bid of Rs. 86,00,000/- was made by a bidder, and the Official Liquidator was directed to hand over the property upon receiving the entire amount as per law. The auction process and bid acceptance were found to be valid based on the court's directions and the actions taken during the auction.

Issue 2: Applications for recalling the auction order and permitting higher bids
Several applications were filed by bidders requesting to recall the auction order and permit them to offer higher prices than the finalized bid. The reasons ranged from not being listed in the cause list to wanting to offer a higher amount for the property. The court considered these applications but emphasized the importance of respecting court orders and maintaining the sanctity of the auction process. The applications were ultimately dismissed to prevent endless legal proceedings and maintain the integrity of the auction process.

Issue 3: Consideration of sanctity of court orders over higher bids
The court highlighted the significance of upholding the sanctity of its orders over the pursuit of higher bids in auction processes. It emphasized that once an order is passed and an auction is concluded based on court directions, it is essential to give respect to the court's decision. The judgment stressed that the sanctity of court orders should be prioritized over the pursuit of higher monetary values, as maintaining the integrity of legal proceedings is crucial. The court dismissed the applications seeking to recall the auction order, emphasizing the importance of respecting court decisions and avoiding endless legal battles that could reduce legal proceedings to mere real estate business transactions.

In conclusion, the judgment addresses the validity of the auction process, the consideration of applications for recalling the auction order, and the significance of upholding the sanctity of court orders in auction proceedings. It emphasizes the importance of respecting court decisions and maintaining the integrity of legal processes to prevent endless legal disputes and prioritize the sanctity of court orders.