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TMI Blog2005 (4) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... nd along with building constructed thereon measuring 19.46 acres. The ear nest amount fixed for this lot was Rs. 10 lakhs. The second lot comprised plant and machinery with an earnest amount of Rs. 1 lakh. The bids were invited for both the lots by September 13, 2004. C. A. No. 661 of 2004 was filed by one Surinder Kumar asserting that he participated by submitting a tender for an amount of Rs. 55 lakhs for the land and Rs. 5 lakhs for the plant and machinery. It is further asserted that Rs. 10 lakhs and Rs. 1 one lakh by way of two demand drafts dated September 13, 2004, were pre pared and deposited with the official liquidator. It is further asserted that one Gurdial Singh respondent No. 2 came forward with a toppling bid of Rs. 85 lakhs for both the lots which was accepted by the official liquidator subject to confirmation of the same by this court. In paragraph 6 of the application, Surinder Kumar has offered the toppling bid of Rs. 90 lakhs as the higher bid could not be offered on September 13, 2004. It is further asserted that he is further prepared to deposit the entire amount as per terms and conditions mentioned in the advertisement once his bid is accepted and the sale i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic auction be held which would fetch a price more closer to the valuation report submitted by the valuer. According to learned counsel the difference between the highest bid and the value as per the valuation report is huge and therefore, it would be just and appropriate to order re-auction. Learned counsel has offered to bear expenses which may be incurred for undertaking the re-auction. However, Mr. Anand Chibber, learned counsel for the auction purchaser has pointed out that when the payment has to be made in accordance with the auction notice within a period of 15 days, then offers which may be received are likely to go down considerably because the period for payment is very short. Therefore, it has been submitted that no process of re-auction be undertaken because it would not be in the interest of the company in liquidation. After hearing learned counsel for the parties, I am of the considered view that the highest bid of Rs. 1,05,00,000 given by Shri Surinder Kumar representing M/s. Paras Chemicals deserves to be accepted. Accordingly, the sale of the property with the land asset and the machinery of the company in liquidation, more fully described in P-1 is confirmed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s already fixed the date for delivery of possession to be January 7, 2005. The possession of the property is to be delivered to the highest bidder according to the inter se bidding, to non-applicant-respondent No. 2 Surinder Kumar tomorrow, i.e., on January 7, 2005, provided the whole balance amount is deposited with the official liquidator by way of bank draft. Needless to mention here that a draft deposited by the applicant shall be returned expeditiously. Present application shall stand disposed of accordingly. A copy of this order be given dasti on payment of usual charges." However, C. A. No. 23 of 2005 was filed by M/s. S. R. Buildcon through Mr. Niranjan Gupta further hiking the bid to Rs. 1.50 crores which is higher by Rs. 19 lakhs] When the aforementioned application came up for consideration on January 7, 2005, notice was issued to Surinder Kumar through his counsel Mr. Kamal Sehgal as well as to the official liquidator. Then the case was ordered to be listed for arguments on January 14, 2005, with interim order that no further steps be taken in pursuance to the order passed on January 6, 2005. It was further directed that M/s. S. R. Buildcon was to deposit by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um price. Mr. Kamal Sehgal learned counsel for Surinder Kumar respondent No. 2 has argued that M/s. S. R. Buildcon represented through Mr. Niranjan Gupta has no locus standi to come forward with a toppling bid as he had participated in the inter se bidding held by this court on December 10, 2004. After inter se bidding Surinder Kumar had emerged as the highest bidder for Rs. 1.05 crores. Mr. Sehgal has further pointed out that Surinder Kumar was further pushed to the walls when Mittal and Garg Enterprises came forward with a higher bid and Surinder Kumar still survived at Rs. 1.05 crores. It has been emphasised that if the auction sales undertaken by the courts are not finalised by the courts expeditiously and promptly in the hope to obtain a better buyer, then prospective bidders are likely to lose faith in the court auction and no one would come forward to participate in the court auctions. According to learned counsel, inadequacy of price alone should not be considered a basis for setting aside a confirmed sale and a line should be drawn that after confirmation, no confirmed sale is to be set aside. In support of his submission, learned counsel has made reference to various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 650 of 2004 and C. A. No. 72 of 2005 in C A. No. 775 of 2003 in C. P. No. 226 of 1999, titled as Punjab Wireless Systems Ltd. (In Liquidation) v. Indian Overseas Bank [2005] 126 Comp. Cas. 554 (P. H.), decided on March 30, 2005. In that case after referring to rules 272 and 273 of the Rules and section 447 of the Companies Act, 1956 (for brevity, "the Act"), as well as various judgments of the Supreme Court in the cases of Navalkha and Sons's case ( supra ), Union Bank of India's case ( supra ) and Kayjay Industries (P.) Ltd. 's case ( supra ) has concluded that power of this court to set aside even a confirmed sale is unassailable. The following paragraphs from the judgment delivered by this court in Punjab Wireless Systems Ltd. 's case ( supra ) may be referred to and the same read as under (page 571) : "It is thus obvious that the power of the court to set aside even a confirmed sale is unassailable. The judgment of the Supreme Court in Navalkha and Sons's case ( supra ) has not dealt with such a power. However, in Union Bank of India's case ( supra ) the view taken in Navalkha and Sons's case ( supra ) has been con sidered. Emphasising that the object o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rous reasons for the Supreme Court to have followed this approach. After all the courts are not well equipped to undertake an auction. When an inter se bidding is held between two or three parties, the court is always conscious about a cartel between the bidders. The foremost factor which persuades the courts to set aside even a confirmed sale is the interest of unsecured creditors along with the interest of secured creditors as well as workers dues. It was for this reason that in Punjab Wireless Systems Ltd.'s case ( supra ) this court even after the confirmation of sale and partial delivery of possession had set aside the sale in favour of an auction purchaser and had directed re-auction. The ratio of that judgment would apply to the instant case even with more force. In that case, the sale was confirmed at a price more than the reserved price despite the fact that certain third party rights were created by the auction purchaser in whose favour the higher bid was confirmed. The argument that equitable rights have arisen in favour of the auction purchaser was rejected on the ground that such rights have been offset by the interest of the company, its secured, unsecured creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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