2021 (7) TMI 861 - HC - Companies Law

Auction and sale of immovable/scheduled property - Rejection of bid of applicant - seeking stay on the process of issuance of fresh public notice for auction of the scheduled properties - direction to respondent to file an appropriate report before this Hon'ble Court for the confirmation of sale of the scheduled properties in favour of the applicant herein - HELD THAT - The bid of the applicant was not accepted and the stage of negotiating with him did not arise to validly make the complaint that approval of the Court was necessary, could not be brushed aside lightly. Even if the said aspect is left aside, the scenario offered was that there was only one bid from the applicant. The comparative price was not available except quoted by the applicant. Respondent No.1 appears to have been guided by the said factum and only one offer having been received in the auction, it decided not to accept it and opt for fresh auction by publishing new advertisement. The paramount principle is always that the properties should fetch maximum price in the larger interests of revenue and in the cases like on hand, in public interest. It may be noted that the applicant, when was communicated about the decision of not acceptance of his bid, was conveyed that it will be open for him to participate in the fresh auction. As per the new advertisement which is produced and also screen shared, fresh auction has to be conducted in terms of the order dated 14th June, 2018 of the Company Court in Company Application No.314 of 2015, aforesaid. Under various terms and conditions of the auction and as per the schedule of auction, the inspection of property was undertaken on 23rd June, 2021 from 11 00 a.m. to 4 00 p.m. The last date for receiving the bids and uploading of the documents including proof of payment is 06th July, 2021. The e-auction date is fixed to be 07th July, 2021 between 1 00 p.m. to 5 00 p.m. with auto extension clause of five minutes. The current auction shall be held, conducted and concluded strictly in accordance with the order dated 14th June, 2018 passed in Company Application No.314 of 2015 and the conditions mentioned therein shall govern to the present auction as well - The auction shall be conducted in association with the Official Liquidator in its all stages and steps - application disposed off.

Summary

Issues Involved:
1. Rejection of the applicant's bid by SICOM Limited.
2. Issuance of fresh public notice for auction.
3. Compliance with the court's previous order regarding the auction process.
4. Applicant's right to have the sale confirmed by the court.

Detailed Analysis:

1. Rejection of the Applicant's Bid by SICOM Limited:
The applicant sought to quash and set aside the impugned order dated 14.05.2021, wherein SICOM Limited rejected the applicant's bid. The background facts reveal that Kemrock Agritech Pvt. Ltd. was under liquidation, and SICOM Limited, which had a mortgage over certain properties of the company, sought permission from the court to auction these properties. The court had previously granted SICOM Limited permission to auction and sell the properties under certain conditions, including the involvement of the Official Liquidator and seeking court approval for bid acceptance and sale confirmation.

2. Issuance of Fresh Public Notice for Auction:
The applicant also sought to stay the process of issuing a fresh public notice for auction as intimated in the impugned order. The court noted that the applicant was the only bidder in the previous auction, and SICOM Limited decided to issue a fresh advertisement for auction due to the receipt of only one bid. The court found that SICOM Limited's decision to reject the solitary bid and opt for a fresh auction was guided by the principle of securing the best possible price for the property.

3. Compliance with the Court's Previous Order Regarding the Auction Process:
The applicant contended that SICOM Limited and the Official Liquidator failed to comply with the court's previous order dated 14th June 2018, which required them to associate the Official Liquidator in fixing the upset price and seek court approval for bid acceptance and sale confirmation. The court acknowledged the importance of this condition but noted that since the bid was not accepted, the stage of seeking court approval did not arise. The court emphasized that the paramount principle is to ensure that the properties fetch maximum price in the larger interest of revenue and public interest.

4. Applicant's Right to Have the Sale Confirmed by the Court:
The applicant argued that the non-compliance with the court's order prejudiced their rights, as the court could have confirmed the sale in their favor. The court referred to Supreme Court decisions highlighting that the highest bidder does not have a vested right to the property unless the auction sale is confirmed by the authority, ensuring the property fetches an appropriate price without collusion between bidders. The court concluded that SICOM Limited's decision to reject the bid and opt for a fresh auction was within its rights under Section 29 of the State Financial Corporations Act.

Conclusion:
The court decided not to interfere with the ongoing auction process. It directed that the current auction should be conducted in strict accordance with the previous order dated 14th June 2018, ensuring the Official Liquidator's involvement at all stages. The applicant was allowed to participate in the fresh auction, with provisions for extending the deadline to submit the Earnest Money Deposit draft if necessary. The company application was disposed of with these directions.