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TMI Blog2003 (7) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... orders. The Company Court by the order dated 13-6-2003 had disposed of the said application and the operative portion of the said order reads as hereunder: "In view of the fact that the Company was ordered to be wound up in 1999 and the value of the property put in auction will be diminished due to natural decay and to secure highest possible amount, the company application is disposed of directing the applicant to deposit entire amount of Rs. 52 lakhs (Rs. fifty two lakhs) as offered by it within two (2) weeks from today and on such deposit, the Official Liquidator can negotiate with the applicant as well as the respondent No. 1 for securing highest possible amount than that of the amount offered by them earlier. If the applicant offers highest amount for which the sale was confirmed, the same can be knocked down in its favour and if the first respondent is successful in making highest offer, time extended will be confirmed subject to depositing balance amount within three (3) weeks thereafter. If the applicant makes highest offer, extension of time granted in favour of the first respondent will be deemed to have been set aside and the Official Liquidator can move the Court with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain that the secured creditor himself had no objection to the bid made by the appellant and in such a case, the mere offer of 2% more by the rival participant after a lapse of one month cannot be sustained. The learned Counsel also had pointed out that the decisions cited had not been properly appreciated by the Company Court while making the impugned order. 4. Per contra , Sri Prakash Reddy, the learned Additional Advocate Gene-ral, made the following submissions. The learned Counsel would contend that when once the appellant - the highest bidder, failed to deposit, the 1st respondent - the second highest bidder, would automatically come into the picture and by virtue of lapse of time, a right accrues in favour of such a party for consideration of the offer made by him. The learned counsel also contended that the 1st respondent made an offer of Rs. 1 lakh more than the appellant through his letter dated 12-11-2002 and the Official Liquidator who was in know of this aspect had not brought this crucial fact to the notice of the Company Court when the appellant prayed for extension of time in C.A. No. 886/2002. The learned Counsel also would contend that even the 20% of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 16-11-1991 made in C.P. No. 14/87 was pleased to order winding up of M/s. Krishi Engines Limited. By the order dated 3-9-2001, the Company Court directed the Official Liquidator to take steps for disposing of movable assets lying in the sheds of the abovesaid Company and handover the same to A.P. Industrial Infrastructure Corporation. Subsequent thereto, the Official Liquidator in C.A. No. 579/2002 requested the company Court for passing an appropriate order enabling the disposal of the movable assets of the Company. The Company Court was pleased to pass order dated 6‑8‑2002 in C.A. No. 579/2002 permitting the Official Liquidator to sell the properties of M/s. Krishi Engines Limited inviting sealed tenders. Accordingly on 3-9-2002, notice was issued in Eenadu and Deccan Chronicle inviting sealed tenders and minimum upset price was fixed for the plant and machinery at Rs. 48,00,000. Fifteen different Companies had participated in the open auction and quoted their respective bids. The appellant herein initially quoted Rs. 40,76,786 and increased its bid to Rs. 51,00,000 and next to the appellant was the 1st respondent who had increased its bid to Rs. 50,75,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he report was filed on the next day on 14-11-2002. On 22-11-2002, the Company Court was pleased to direct the appellant to pay balance of sale consideration of Rs. 50,00,000 along with interest on or before 28-11-2002. On 5-12-2002, the Official Liquidator filed report before the Company Court stating that even by 4-12-2002, they have not paid the balance of sale consideration as directed by the Company Court vide its orders dated 28-11-2002. Subsequent thereto, C.A. No. 886/2002 came up before the Company Court on 9-12-2002 and on considering the explanation given by the counsel appearing on behalf of the applicant in C.A. No. 886/2002 that the demand draft for the balance of sale consideration of Rs. 39,80,000 and Rs. 10,20,000 and another Rs. 10,20,000 for which already cheques were issued and dishonoured are ready and having satisfied with the explanation offered, the Company Court was pleased to condone the delay on the ground that the demand drafts for Rs. 10,30,000 and Rs. 39,80,000 were obtained prior to 22-8-2002 and 9-12-2002 respectively. However, the request made by the counsel for the appellant to confirm the sale in favour of M/s. Venkata Sai Traders was rejected le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Official Liquidator on 14-10-2002. The applicant obtained various demand drafts during the period from 24-10-2002 to 12-11-2002 for an amount of Rs. 20.00 lakhs and also during the period from 19-11-2002 to 9-12-2002. Therefore, the prayer made in this application is bona fide. As the demand drafts for Rs. 10,30,000 were obtained even prior to 28-11-2002 and the remaining demand drafts prior to 9-12-2002, there is no much delay. Further Mr. V.S. Raju, the learned Counsel appearing for the second respondent submits that the delay, if any, may be condoned as it would be difficult to conduct fresh auction cancelling the sale. Having regard to the facts and circumstances of the case and having regard to the fact that there is no much delay on the part of the applicant in depositing the amount, the delay in paying the amount is condoned and the Official Liquidator undertakes to accept the payment to proceed further. Smt. Annapurna requests that sale may be confirmed in favour of M/s. Venkatasri Trader. As this Court already confirmed the sale by its order dated 10-10-2002 in favour of the applicant, her oral request cannot be accepted. It is, however, open to the applicant to seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order of the Company Court. The learned Judge had taking into consideration all the facts and circumstances and had arrived at a conclusion that suitable directions are to be given in this regard. The directions issued by the learned Company Judge also are only conditional directions. The 1st respondent made an independent application raising the ground that when default was committed by the highest bidder, a right accrues to the second highest bidder automatically since the offer of the second highest bidder has to be considered and in the light of the same, though the increase of the offer in the interregnum cannot be said to be very substantial, the Company Court thought it fit to exercise the discretion by issuing suitable directions. In Divya Mfg. Co. (P.) Ltd. v. Union of India AIR 2000 SC 2346 it was held that the Court is the custodian of the interests of the Company and its creditors and hence it is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud and that confirmation of sale by the Court at a grossly inadequate price, whether or not it is a consequence of any irregu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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