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TMI Blog2011 (3) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to be much more than the fair market value. In the circumstances, the learned company judge fell into error in setting aside the proposal made by the sale committee to confirm the bid of the highest bidder – Held that;- no objection from any corner that the properties in question can be sold at a higher price than the price offered by the highest bidder Wearit Global Ltd. The said proposal of the sale committee was not even objected by the second highest bidder. Neither the official liquidator who was party to the sale proceedings nor any other creditor of the company in liquidation ever submitted or stated before the company judge or before us that the properties can be sold at a higher 'price than the price offered by the highest bidder. company judge has committed an error in not approving the report submitted by the sale committee seeking declaration of Wearit Global Ltd., as successful bidder. Accordingly, we set aside the order dated December 9, 2010, passed by the learned company judge and declare Wearit Global Ltd. (appellant of Appeal No. 7 of 2010) a successful bidder and confirm the sale of assets of the company (in liquidation) in favour of Wearit Global Ltd. The sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form the appellant as to the dues of the workmen of the industry concerned. 3. The appellant shall also place before the learned company judge a list of the other secured creditors and the amount due to them. 4. The appellant-company shall file an undertaking before the company court to the effect that the appellant shall abide by the provisions of section 529A of the Companies Act as incorporated in section 13(a) of the SARFAESI Act, 2002." 3. In furtherance to the steps for sale of the properties in question, the ARCIL submitted I. A. No. 712 of 2010 before the learned company judge in the said Company Petition No. 8 of 2005, inter alia , praying for constitution of a sale committee comprising of representative of the ARCIL and the official liquidator attached to the company court. The learned company judge vide order dated July 14, 2010, allowed the said I. A. and ordered for formation of a sale committee comprising of the representative of the ARCIL and the official liquidator with a direction that the sale committee so constituted shall not finalise the sale without the leave of the company court. 4. On the basis of the valuation report dated June 9, 2010, which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffer of the highest bidder was much more than the fair market value of the properties in question. They also urged that the learned company judge has committed an error in not confirming the sale on the ground that the difference in the distress value, market value and the highest offer received is of a large magnitude and that the offer of the highest bidder is more than the fair market value. 8. Shri Vijay Assudani, learned counsel appearing for the proposed intervenor Ruby Traders has argued that out of the properties which are to be sold in the auction one diesel generator set belongs to Ruby Traders who had purchased the same from the company in liquidation prior to the sale notice by making a payment of Rs. 90 lakhs. In the circumstances, according to him, out of the sale proceeds of the properties in question, Ruby Traders is entitled to get Rs. 90 lakhs. Shri Sumeet Samvatsar, learned counsel appearing for the proposed intervener Sut Mill Kshramik Sangh, argued that while deciding the compliance report dated November 15, 2010, submitted by the sale committee the application filed by the proposed intervenor for disbursement of amount on priority basis has not been decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as good as an actual offer and variation within limits between such an estimate, however careful, and real bids by seasoned businessman before the auctioneer are quite on the cards. Businessman makes uncanny calculations before striking a bargain and that circumstance must enter the judicial verdict before deciding whether a better price could be had by a postponement of the sale. If the court sales are too frequently adjourned with a view to obtaining 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. In all public sales the authority must protect the interest of the parties and the rule as stated by the Supreme Court in Navalkha and Sons v. Sri Ramanya Das [1969] 3 SCC 537 should govern all auction sales be they by a receiver, commissioner, liquidator or court . . . But it is not as if the court should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acy of the price is one of the relevant factors for proper and reasonable exercise of the judicial discretion vested in it. There cannot be any doubt or dispute that when an auction is held upon compliance with the statutory provisions, withholding of auction on the ground that a still higher price may be obtained may prove to be self-defeating exercise as has been held in Kayjay Industries P. Ltd. v. Asnew Drums P. Ltd. [1974] 2 SCC 213 and State of Punjab v. Yoginder Sharma Onkar Rai and Co. [1996] 6 SCC 173, but having regard to the accepted position that the company judge in a case of this nature exercises a discretionary jurisdiction ; it is bound to act with great circumspection and caution. Such a jurisdiction should ordinarily be exercised in exceptional cases and when necessary for seeing the company as an on-going concern." (p. 842) 15. As already observed in the impugned order the learned company judge has not assigned reasons for not confirming the sale in favour of the highest bidder as prayed by the sale committee. Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision maker to the controversy in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation in the country to the proposed auction received various offers. After evaluation and inter se bidding it found the offer of Wearit Global Ltd. (appellant in Company Appeal No. 7 of 2010) to be the highest. The offer was also found to be much more than the fair market value. In the circumstances, the learned company judge fell into error in setting aside the proposal made by the sale committee to confirm the bid of the highest bidder. The difference in the distress market value, fair market value fixed by the sale committee than the highest offer which was much more than the distress market value and fair market value can by no stretch of imagination be a reason for not accepting the offer of the highest bidder. On the contrary the same is a good ground to accept the bid of the highest bidder. 18. We also find that there was no objection from any corner that the properties in question can be sold at a higher price than the price offered by the highest bidder Wearit Global Ltd. The said proposal of the sale committee was not even objected by the second highest bidder. Neither the official liquidator who was party to the sale proceedings nor any other creditor of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ruby Traders and counsel for the appellants as also the official liquidator did not dispute that the claim of Ruby Traders requires to be adjudicated by the learned company judge. They made a submission that the amount of Rs. 90 lakhs said to have been paid by Ruby Traders be ordered to be kept in a nationalised bank in an interest bearing fixed deposit which shall be payable subject to the result of the decision as may be taken by the learned company judge in that regard. This submission made by learned counsel for the parties appears to be reasonable. Accordingly, we direct that out of the sale proceeds an amount of Rs. 90 lakhs be kept in a nationalised bank in an interest bearing fixed deposit and payment of the said amount shall be subject to the orders as may be passed by the learned company judge in that regard keeping in view the provisions of the Companies Act and the Rules made thereunder. As regards, I. A. for intervention filed by the Sut Mill Kshramik Sangh, it has been stated by learned counsel for this intervenor that the prayer about disbursement of the amount has already been made before the learned company judge who would be directed to decide the same. This pray ..... X X X X Extracts X X X X X X X X Extracts X X X X
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