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TMI Blog1996 (7) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. In a letter for direction dated 16-4-1992 filed by the official liquidator for appointment of valuer, on or about 4-6-1993 this Court was pleased to direct the secured creditors to pay a sum of Rs. 10,000 towards the cost of valuation report and for advertisement of sale and accordingly the official liquidator by his letter dated 16-7-1993 requested all the secured creditors to send him a sum of Rs. 10,000 towards cost of valuation and adver-tisement for sale. 4. By an order dated 20-8-1993 Ajay Nath Ray, J. was pleased to appoint Mr. A.K. Dey of 33, Brabourne Road, Calcutta-1 valuer for making valuation of assets of the said company (in liquidation) and to file his report within 6 weeks from that date. 5. By an order dated 20-7-1994 Baboolal Jain, J. as he then was, was pleased to appoint Mr. Bhaskar Sen, engineer and valuer, in place and instead of Mr. A.K. Dey for the purpose of making valuation of the assets of the said company (in liquidation) with a direction to the valuer to file his report within 6 weeks from the date of order. 6. On 11-3-1994 Ajay Nath Ray, J., extended the time to file the valuer's report by 8 weeks. 7. On 6-5-1994 Baboolal Jain, J., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-5-1995 and the inventory list made by the valuer to all the secured creditors of the said company (in liquidation). 16. On 8-6-1995 the letter for direction filed by the official liquidator came up for hearing, in which the court directed the official liquidator to issue advertisements for sale of the assets of the said company (in liquidation) in three newspapers of Calcutta, one newspaper in Delhi Edition and one newspaper in Bombay Edition, with a direction to the secured creditors to give funds to the official liquidator within a fortnight from the date of the order and the date for sale was fixed by this Court on 21-6-1995. Leave was also given to the official liquidator to obtain money from the official liquidator's establishment charges account until he receives the amount in terms of the order from the secured creditors. 17. Pursuant to the said order dated 8-6-1995 the official liquidator published the sale notice in three newspapers of Calcutta Edition, one newspaper in Delhi Edition and one newspaper in Bombay Edition. 18. On 28-6-1995 advertisement for sale was published. No particular notice was given to the Allahabad Bank. 19. On 21-7-1995 the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad as pre-arranged left the office premises prior to receiving that letter. 28. On or about 27-10-1995 the said application was moved on behalf of the Allahabad Bank before Mrs. Ruma Pal, J. when the official liquidator submitted that in terms of the order dated 21-7-1995, the official liquidator upon receiving the entire consideration of sale from the purchaser, handed over the assets and properties of the said company (in liquidation) to the purchaser. 29. On 27-11-1995 and 28-11-1995 the matter was heard by me. 30. Several allegations have been made by the petitioner in this application on the basis of which prayer has been made for setting aside the sale. 31. The main allegations in the instant application against the official liquidator are that though the official liquidator asked the bank to pay the cost of security guards, cost of advertisement, etc., the sale was conducted by the official liquidator without giving any notice and/or any valid notice to the applicant and the official liquidator has failed to perform his obligations and/or statutory duty in accordance with the orders of this Court by which the Court was pleased to direct the official liquidato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e funds. After publication of the second set of advertisements the asset of the company (in liquidation) was sold on 21-7-1995 to Naffar Chandra Jute Mills Ltd. for a price of Rs. 65,00,000 only without notice to Allahabad Bank. It has further been alleged that the sale was confirmed without notice to the petitioner. It has also been alleged on behalf of the applicant that on 25-7-1995 official liquidator obtained signed copy of the minutes of the said order but failed to communicate the same to the applicant-bank when it wrote to the applicant's office at 36, Strand Road, Calcutta-1 for payment of Rs. 11,377 towards the cost of advertisements without disclosing that the sale has already taken place. The applicant- bank obviously carried the impression tht the advertisements were yet to be published and the official liquidator will apprise the same in due course. 36. The official liquidator accepted the money paid by the Allahabad Bank from 36, Strand Road, Calcutta-1 on or about 27-7-1995. 37. On or about 9-10-1995 the date of handing over possession was fixed but later postponed. During the long vacation on or about 10-10-1995 the official liquidator wrote to Allahabad Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of the minutes of the meeting held on 12-5-1995, the High Court's order dated 12-5-1995 and the inventory list made by the valuer to all the secured creditors. 41. It also appears that on 8-6-1995 when this Court by its order fixed the date for sale of the assets and properties of the said company (in liquidation) on 21-7-1995 at 2.00 P.M., the learned Advocate on record, who is at present the Advocate on record for Allahabad Bank as well as United Bank of India, was present on behalf of one of the secured creditors, U.B.I. So it is not the fact that the applicant-bank was not aware of the proceedings of the sale and the date fixed by this Court for such sale. 42. It has been submitted by the official liquidator that by the said order dated 8-6-1995 the Court was pleased to direct the official liquidator to issue advertisement for sale of assets and properties of the said company (in liquidation) in three newspapers of Calcutta, viz., the Statesman. The Ananda Bazar Patrika and the Viswamitra and once in Times of India, Delhi Edition, and once in Indian Express, Bombay Edition, with a further direction to the secured creditors to provide funds to the officia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een mentioned hereinbefore. The allegations do not, in my view, materially affect the sale. There is no reasonable nexus between irregularity and inadequacy of price which may warrant the setting aside of the sale. Had there been any higher offer, there could have been scope for fresh sale and bid in Court as had been done in other cases but in the instant case since no higher offer was available, there was no scope for bid and sale in Court ? 48. In this connection it may be noted that on 26-2-1996, an order was passed by me directing the applicant (Allahabad Bank) to bring forth the purchaser, who it was alleged by the applicant, was willing to purchase the assets of the company (in liquidation) at and for a price of Rs. 65 lakhs. I further directed the applicant to be present before this Court with a pay order for the entire sum of Rs. 65 lakhs on behalf of the alleged purchaser. The applicant was directed to present the said pay order before this Court on 11-3-1996. The aforesaid order was made at the instance of and on the basis of submissions of the applicant through its learned counsel. 49. Again on 11-3-1996 the matter was called on for hearing. On the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid order being the order of the Supreme Court dated 19-10-1995, where the Supreme Court rejected the special leave petition observing that their Lordships found no grounds to interfere with the High Court's order which clearly mentioned that in spite of repeated efforts made for the purpose, higher price for the property sold could not be obtained and even the secured creditors could not obtain a better offer for the property. The fact that the price fetched is below the valuation made by the valuer appointed by the Court is not enough for setting aside a sale. As stated earlier, there is no charge made out in the application that the property has been sold at an undervalue. In any event, mere inadequacy of price is not enough for setting aside the sale. It must be shown that there is a nexus between the undervalue and the alleged irregularity. It is essential to show some fraud on the part of the purchaser which has resulted in a sale at an undervalue. Reference may be made to the judgment and decision in the case of Radhy Shyam v. Shyam Behari Singh AIR 1971 SC 2337. 52. The courts are always inclined to obtain the highest price and even after the confirmation of sale, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 lakhs. The decree-holder, the Maharashtra State Finance Corpn., at the request of the receiver who was in possession of the properties, got the properties valued privately by a competent valuer who estimated the land and buildings to be worth Rs. 10,46,096 and the machinery Rs. 7,02,000, total Rs. 17,48,096. This was to guide the Court to sell whether a grossly unjust offer was being fobbed off on it. The auction held on 3-9-1969, however, fetched the highest offer, for the two lots, of only Rs. 5,65,000 and Rs. 5 lakhs respectively, in the latter case Rs. 40,000 less than on the previous occasion. After considerable persuation by the Judge, the auction purchaser agreed to raise the offer for both lots together to a gross sum of Rs. 11,50,000 and making an intelligent guess on the given circumstances the Court approved the sale : It was held (after discussing the principles applicable to Court sales) that the Court had exercised a conscientious and lively discretion in conclud- ing the sale at Rs. 11.5 lakhs. Mere inadequacy of price cannot demolish every Court sale. Here, the Court tried its best, time after time, to raise the price. Well known industrialists in the public and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a still higher price it may prove a self-defeating exercise, for industrialists will lose faith in the actual sale taking place and may not care to travel up to the place of auction being uncertain that the sale would at all go through. The judgment-debtor's plea for postponement in the expectation of a higher price in the future may strain the credibility of the Court sale itself and may yield diminishing returns as was proved in this very case." 55. In the said decision, the Supreme Court also took note of its earlier judgment in the case of Navalkha Sons v. Ramanya Das AIR 1970 SC 2037 wherein it was held that the principles which should govern confir-mation of sales are established. Where the acceptance of the offer by the Commissioners is subject to confirmation of the Court the offerer does not by mere acceptance get any vested right in the property so that he may demand automatic confirmation of his offer. The condition of confirma- tion by the Court operates as a safeguard against the property being sold at inadequate price whether or not is a consequence of any irregularity or fraud in the conduct of the sale. In every case it is the duty of the Court to sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to be produced by the bidder, the formation of a syndicate, the futility of postponements and the possibility of litigation and several other factors dependent on the facts of each case. Once that is done, the matter ends there. No speaking order is called for and no meticulous post mortem is proper. If the Court has fairly, even if silently, applied its mind to the relevant consideration before it while accepting the final bid, no probe in retrospect is permissible. Otherwise, a new threat to certainty of Court sales will be introduced." 57. In the unreported judgment and decision in the case of Indus Electron-ics Ltd. (In liquidation) ( supra ) the Division Bench of this Court also considered the question of inadequacy of price. In the said case, the property was sold at a price of Rs. 14 lakhs, whereas the valuation exceeded Rs. 2 crores. However, since in spite of repeated opportunities to the secured creditors to bring higher offers, the secured creditors failed to bring any higher offer. The Division Bench did not consider it proper to interfere with the decision of the learned company Judge. The special leave petition against the said judgment of the Division ..... X X X X Extracts X X X X X X X X Extracts X X X X
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