2018 (1) TMI 64 - HC - Companies Law

Public auction - Held that - Condition No.16 of the terms and conditions of tender document reads as under 16. The purchaser shall be liable to pay all statutory dues, if any, due and payable on the properties of the subject company for the period after the date of winding-up order. The payment of such dues for pre-Liquidation period shall be settled as per the provisions of the Companies Act, 1956. However dues, taxes, cess, if any, applicable on the sale of assets shall be paid by the purchaser. The Court finds that in view of the above condition incorporated in the terms and conditions for sale of the company s property as regards the liability to pay statutory dues and the other taxes on the property sold in public auction, no observation as requested by learned advocate Mr.Jain need to be made. The report stands disposed of accordingly.

Summary

Issues:
1. Consideration of bids for sale of company's property in liquidation.
2. Acceptance of highest bid and confirmation of sale.
3. Request for exemption from paying tax or statutory dues on the purchased property.

Analysis:
1. The case involved the consideration of bids for the sale of a company's property in liquidation. The Official Liquidator received two offers initially, and later, a third bidder was allowed to participate in the bidding process. The highest bid of INR 62,00,000 by one of the bidders was deemed inadequate by the Court, leading to a re-validation of bids. However, none of the bidders showed interest in raising their bids further. Eventually, one bidder offered INR 62,51,000, while the other bidder withdrew from the process. The Court sought the views of the secured creditor, Dena Bank, who had no objection to accepting the bid. Subsequently, the highest bidder raised the bid to INR 64,00,000, which was accepted by the Court.

2. The Court confirmed the sale of the company's property in liquidation to the highest bidder at INR 64,00,000. The confirmation was subject to the terms and conditions of the tender document. The Official Liquidator was directed to inform the bidder about the confirmation of the sale and ensure compliance with the tender document's terms and conditions. The Court emphasized that the bid increase from INR 62,00,000 to INR 64,00,000 was acceptable, especially since the secured creditor had no objections to the revised bid.

3. The highest bidder's advocate requested an exemption from paying tax or statutory dues on the purchased property retroactively. However, the Court referred to Condition No.16 of the tender document, which clearly stated the purchaser's liability to pay all statutory dues and taxes applicable post-winding-up order. The Court held that no exemption could be granted as per the terms and conditions of the sale, thereby dismissing the advocate's request.

This comprehensive analysis outlines the key issues addressed in the judgment, including bid consideration, acceptance, and exemption requests, providing a detailed understanding of the legal proceedings and outcomes in the case.