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TMI Blog1939 (10) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Official Liquidator to sell the entire property belonging to the Guntur Cotton, Jute and Paper Mills Company Ltd. The permission was coupled with a condition that the sale should be for not less than Rs. 80,000. On the 19th January 1939 the Official Liquidator entered into a contract of sale of the properties to one Rowthmall Neopani for Rs. 95,000 (Ex. IX). On the 23rd January 1939 the District Judge approved of this contract of sale and permitted the Official Liquidator to compromise two suits (O.S. No. 15 of 1923 and O.S. No. 21 of 1924 on the file of the Sub-Court, Guntur) in which the Company was concerned as plaintiff in the first and defendant in the second. In pursuance of the orders of the District Court the Official Liquidator compromised both those suits and decrees were passed by the Subordinate Judge of Guntur in terms of the razinamas. On the 27th January 1939 one N. Madan Gopal who had been one of the creditors on whose petition the winding up order was made, put in the application, I.A. No. 73 of 1939 in the District Court, in which he prayed that the contract of sale said to have been entered into by the Official Liquidator with Rowthmall Neopani might be se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le entered into by the Official Liquidator for a sum considerably in excess of the stipulated price, and having sanctioned the compromise of two suits in another Court, should be able, by passing an order purporting to revoke its own sanction, to nullify the contract of sale and to render void the decrees passed by the Sub Court in the two suits. Mr. Rajah Ayyar for the respondents has not been able to refer us to any section in the Companies Act which would authorise the District Court to pass such orders as those now under appeal. The application of N. Madan Gopal was filed under sections 179 and 183 (5) of the Companies Act. Section 179 describes the powers of the Official Liquidator which he can exercise with the sanction of the Court. Section 183 (5) provides that. "if any person is aggrieved by any act or decision of the Official Liquidator, that person may apply to the Court and the Court may confirm, reverse or modify the act or decision complained of and make such orders as it thinks just in the circumstances." It is clear that section 179 has no bearing upon this question, and section 183 (5) clearly cannot apply to a case in which the act or decision of the Official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iter. The learned Advocate General lays stress very properly on the fact that in pursuance of the permission granted by the District Judge to the Official Liquidator the suits (O.S. Nos. 15 of 1923 and 21 of 1924) were compromised in the Sub Court, Guntur, and he asks how those decrees of the Sub Court can be rendered void by the order of the District Judge purporting to revoke the permission given by him on the 23rd January. I am not aware of any answer to this question. The District Judge could of course have revoked his sanction if he had done so before the Official Liquidator had acted upon it, but if once the Official Liquidator has acted upon it, has compromised the suits and has obtained decrees in terms of the compromises, I am entirely unable to see how the District Judge can have power to revoke it. Secondly, it seems to me quite clear that the District Judge's order was wrong on its merits. He recognises that the compromises in the suits were beneficial to all parties and it would seem that he only revoked his sanction because he thought that it was technically bad for want of notice to "the persons interested". He states also that there was no prior sanction of the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Gopal was well aware of the Official Liquidator's power to sell; he had been in negotiation with the Official Liquidator himself, he had on one occasion offered Rs. 81,001 on the 28th March 1938 and even then he made no deposit of earnest money. His complaint that the transaction between the Official Liquidator and Rowthmall Neopani was conducted behind his back was groundless. Rowthmall's offer of Rs. 95,000 was made in November 1938. The Vakil for the plaintiff in O.S. No. 21 of 1924 wrote to N. Madan Gopal on the 10th January 1939 [Ex. VIII (c) ] and in that letter he referred to the prospect of a compromise between the plaintiff in O.S. No, 21 of 1924 and the defendant Company. N. Madan Gopal's reply to that on the 15th January [Ex. VIII ( d )] was that he was afraid to negotiate the purchase of the Jute Mill owing to long-standing disputes and he made no offer. On the 16th January the same gentleman telephoned to N. Madan Gopal at Vizianagaram, and warned him that the offer of Rs. 95,000 made by Rowthmall Neopani was going to be accepted unless he made a higher offer. In these circumstances I think that the Official Liquidator was fully justified in paying no attention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale effected by the Liquidator in pursuance of the Court's sanction previously obtained are not mere conditional agreements subject to subsequent confirmation by the Court. I say so for reasons which I think are obvious. If the Liquidator's proceedings are merely provisional and subject to the subsequent confirmation of the Court he will not be able to dispose of the property to the best advantage. Offers for the purchase of the property will be merely tentative. A prospective purchase will not disclose to the Liquidator the final figure to which he is prepared to go if his offer is liable to be outbid by someone else when the sale comes up before the Court for approval. It appears to me therefore that having sanctioned the sale of the company's property and having fixed a reserve price the matter is closed so far as the Court is concerned and the Liquidator is free to dispose of the property provided he observes the conditions previously imposed by the Court. There must be some finality in the proceedings and if bids and offers made to the Liquidator are to be subject to the subsequent approval of the Court then the Liquidator will be a mere ministerial officer of the Court and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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