2009 (11) TMI 501 - HC - Companies Law

Winding up - auction sale of company s property challenged - Held that - At the outset we would reject the appeal of Sukhchainsingh because Sukhchainsingh had never offered any bid muchless higher bid than the successful bidder respondent No. 3 before confirmation of sale on 19-8-2009 and did not espouse his cause before the Learned Company Judge at an appropriate stage before confirmation of sale on 19-8-2009. In these circumstances, the appeal preferred by Sukhchainsingh, being Co. Appeal No. 7/2009, has no merit and substance and we dismiss it without any hesitation. In view of the undisputed facts floating on surface of record the original offer of ₹ 31 crores, which during the course of this appeal was revised to ₹ 35 crores, does not appeal to us so as to set aside the confirmed sale made by the Learned Company Judge in favour of the respondent No. 3. We feel disposed to take note of the fact that the EMD of ₹ 6 crores as deposited by the respondent No. 3 on 8-5-2008 was lying for more than a year with the Official Liquidator. Even by straight calculation this amount of ₹ 6 crores lying deposited with the Official Liquidator, if had not been deposited, would have been used by the respondent No. 3 and it could have at least fetched interest of ₹ 6 lakhs per month in the ordinary course of business. On the contrary the appellant did neither deposit any Earnest Money nor 18 per cent of his offer in violation to the court order which does not portray the picture of a bona fide and higher offerer. In these circumstances we are unable to hold that the appellant has made out any case calling for our interference in the matter. We are also unable to hold that the impugned orders dated 6-5-2009, 19-8-2009 and 8-10-2009 suffer from any illegality and we uphold the same. The appeal fails and is hereby dismissed with cost of ₹ 25,000. Thus company appeal No. 8/09 dismissed with costs of ₹ 25,000 payable by the appellant to the respondent No. 3.

Issues Involved:
1. Maintainability of the appeal under section 483 of the Companies Act, 1956.
2. Limitation period for filing the appeal.
3. Merits of the appeal regarding the confirmation of the sale by the company judge.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal under Section 483 of the Companies Act, 1956:

The primary contention was whether an appeal from the order of the company judge to the Division Bench is maintainable under section 483 of the Companies Act, 1956. The appellant argued that the jurisdiction conferred upon the company judge is original jurisdiction, and under the Madhya Pradesh Uchcha Nyayalaya (Khandpith Ko Appeal) Adhiniyam, 2005, an appeal from the original order passed by the learned single judge in exercise of original jurisdiction lies to the Division Bench. The court emphasized that where a statute provides a right of appeal, such a right should be regarded as a statutory right of appeal conferred upon a litigant for mitigating grievances. The court adopted a purposive construction approach, leaning towards the workability of section 483, and held that an appeal against an order of the learned company judge passed in exercise of original jurisdiction would lie to a Division Bench. Thus, the preliminary objection raised by respondent No. 3 was rejected.

2. Limitation Period for Filing the Appeal:

Respondent No. 3 contended that the appeals were barred by limitation as per article 117 of the Limitation Act, which provides a 30-day period for filing an appeal. The appellant argued that the certified copies of the orders were applied for and obtained within the stipulated period, and thus, the time spent in obtaining the certified copies should be excluded as per section 12(2) of the Limitation Act. The court, referring to the Full Bench judgment in Punjab Co-operative Bank Ltd., Lahore v. Official Liquidators, Punjab Cotton Press Co. Ltd., confirmed that the provisions of section 12 of the Limitation Act apply to a company appeal under section 483. Therefore, the court held that the appeal was within the limitation period and rejected the objection of respondent No. 3.

3. Merits of the Appeal Regarding the Confirmation of the Sale:

The court examined the facts and circumstances surrounding the confirmation of the sale by the company judge. It was noted that respondent No. 3 had submitted its bid and deposited the earnest money promptly. The appellant, despite wide publicity of the public notice, did not submit its offer pursuant to the public notice. The appellant was later permitted to participate in the negotiation proceedings by depositing earnest money and 18% of the offer value but failed to comply with this direction. The court observed that the appellant did not take any steps to challenge the order or deposit the required amounts, leading to the confirmation of the sale in favor of respondent No. 3. The court also noted that respondent No. 3 had deposited the balance consideration and taken possession of the property, making it impracticable and inequitable to set aside the confirmed sale. The court concluded that the appellant's offer did not portray the picture of a bona fide and higher offerer, and thus, there was no case for interference. The impugned orders were upheld, and the appeal was dismissed with costs.

Conclusion:

The court dismissed both Company Appeal No. 7 of 2009 and Company Appeal No. 8 of 2009, upholding the orders passed by the company judge and imposing costs of Rs. 25,000 each payable by the appellant to respondent No. 3. The judgment emphasized the principles of purposive construction and the necessity to give full effect to statutory rights of appeal while ensuring that the legislative intent is respected.

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