2016 (9) TMI 1049 - HC - Companies Law

Bidding procedures - extension of time to deposit the balance 75 % of the bid amount within 60 days from the date of acceptance of the bid - auction sales - Held that - It is true that once the appellant has voluntarily participated in the auction as per the terms & conditions knowing it fully well certainly he could not make any claim or raise grievance at the same time it also depicts from perusal of clause-12(iii) of the terms and conditions of auction that the Ld. Company Judge reserves its discretion to extend facility of payment of the remainder amount in monthly installments if considers proper in the given facts and circumstances. Keeping in view the surrounding circumstances and the fact that if the property is now put to re- auction as pleaded by the respondents it may take another six months and with a man of ordinary prudence the price which has been fetched in the present auction there is no possibility to fetch this price within a span of six months at the same time the official liquidator has informed to this Court that the total expenditure incurred from the office of official liquidator in preparation of the valuation report and the publication of the auction notice of the subject property in question including other ancillary charges is approx. ₹ 12 Lakhs and taking the matter in totality & the fact in particular that the appellant is ready & willing to deposit the remainder of 75% along with interest @ 24% within the time which this Court may consider appropriate, in our considered view the appellant deserves indulgence to deposit the remainder of 75% of the auction sale with interest @ 24% within a period of seven days invoking clause 12(iii) of the terms and conditions of the auction notice. Accordingly, in the light of what has been observed above while setting aside the order of the Ld. Company Judge impugned dt.13-5-2016, we grant opportunity to the present appellant to deposit the balance ₹ 53,62,500 (75% remainder) ₹ 3,93,250 (interest @ 24% for the period from 16-5-2016 to 4-9-2016) total ₹ 57,55,750 positively within seven days from today with no further extension and we make it clear that if the appellant makes the compliance as per the terms indicated the respondent may complete the process in terms of the tender notice dt.13-2-2016 and if the appellant fails to carry out the arrangement (supra) within the stipulated period, the respondents will be at liberty to proceed further in reference to the subject property in question including re-auction, if so advised

Summary

Issues involved:
- Appeal under Section 483 of Companies Act, 1956 against the order of Company Judge.
- Extension of time sought by the appellant to deposit 75% of bid amount.
- Auction process, highest bid, and terms and conditions of the tender notice.
- Company Court's rejection of the application for extension of time.
- Forfeiture of 25% security amount and subsequent actions by Official Liquidator.
- Arguments regarding the appellant's request for extension and respondent's objections.
- Legal provisions and discretion of the Company Judge in extending payment facility.
- Consideration of market circumstances, auction process, and financial implications.
- Decision on granting indulgence to the appellant to deposit the remainder of the bid amount.

Analysis:

The judgment involves an appeal filed under Section 483 of the Companies Act, 1956, challenging the Company Judge's order dismissing the appellant's application seeking an extension of time to deposit 75% of the bid amount within 60 days from bid acceptance. The auction process, where the appellant offered the highest bid, double the reserve price, was detailed. The Company Court accepted the bid, and the appellant deposited 25% timely but requested an extension for the remainder due to fund collection delays.

The Company Court rejected the appellant's extension application, leading to the forfeiture of the 25% security amount by the Official Liquidator. The judgment deliberates on the appellant's plea for extension, respondent's objections, and the legal provisions allowing the Company Judge discretion to extend payment facilities based on circumstances. The court considered market conditions, auction implications, and the appellant's readiness to pay the remaining amount with interest.

After a thorough analysis, the court decided to grant the appellant an opportunity to deposit the balance bid amount along with interest within seven days, setting aside the Company Judge's order. Failure to comply within the stipulated period would allow the respondents to proceed with actions regarding the subject property, including re-auction. The judgment concluded by disposing of the appeal without costs, emphasizing the importance of timely compliance with the terms set forth in the auction notice.