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TMI Blog2015 (8) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... of company in liquidation were heard before such acceptance Nobody ever objected including first respondent at that stage on any ground whatsoever No doubt, property in question became more valuable in view of subsequent development None of stake-holders of Company in liquidation ever objected to offer of appellant on ground that it is inadequate consideration for property Value of property in question must have escalated substantially in view of developments subsequent but allowing such attempt, would rob sales conducted by Courts of all sanctity Thus, he High Court was not justified in recalling order accepting highest bid Decided in favour of Appellant. - Civil Appeal No. 6165 OF 2015 (Arising out of Special Leave Petition (Civil) No.2198 of 2015) ,Civil Appeal No. 6166-6167 OF 2015 (Arising out of Special Leave Petition (Civil) Nos.10148-10149 of 2015) - - - Dated:- 13-8-2015 - J. Chelameswar and Abhay Manohar Sapre, JJ. For the Petitioner : Ms. Diksha Rai For the Respondent : Mr. Mohit D. Ram JUDGMENT Chelameswar, J. 1. Leave granted. 2. M/s Omex Investors Ltd. was ordered to be wound up by the Company Judge of the Gujarat High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est money deposit by the appellant and the first respondent be retained by the official liquidator and the earnest money deposits made by the other unsuccessful bidders be returned. 6. On 19.12.2013, the official liquidator addressed a letter to the appellant referring to the order dated 17.12.2013 of the High Court and informed the appellant as under: With reference to the subject cited above, I have to state that pursuant to order dated 17.12.2013 passed by the Hon ble High Court of Gujarat in Official Liquidator Report No.43 of 2013, the sale of Freehold land of the company in Liquidator (sic liquidation) admeasuring 13895 sq. mtrs. approx. at T.P. No.18, F.P. No.32/P, bearing Survey No.25, 27-B/1, 31, 38, Moje Rajpur Hirpur, Outside Raipur Gate, behind New Cloth Market, Opp. Hirabhai Market, Diwan Ballubhai Road, Raipur, Ahmedabad is confirmed in your favour for ₹ 148 Crores. A copy of said order is enclosed herewith for your ready reference and perusal. In this connection, you are requested to deposit sale proceed 25% i.e. ₹ 37.00 Crores on or before 16.02.2014 and balance remaining 75% i.e. ₹ 106.50 Crores on or before 16.04.2014, after adjusting & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cured creditors, by an order dated 31.03.2014, extending the time for payment up to 31.07.2014. However, the appellant deposited the entire balance amount of ₹ 106.5 crores on 16.04.2014 without availing the benefit of the extended time by the order of the High Court (referred to supra). The said fact is acknowledged by the official liquidator in his letter dated 16.04.2014 calling upon the appellant to take over the possession of the said land on 17.04.2014 at 11.30 am in presence of the representatives of the official liquidator. The relevant portion of the letter reads as follows: Accordingly, you have deposited the entire full sale consideration i.e. ₹ 148.00 Crores with this office. In this connection, you are requested to depute your authorized representative at freehold land admeasuring 13895 Sq. Mtrs. Approx. situated at T.P. No.18, F.P. No.32/p, bearing Survey No.25, 27-B/1, 31, 38 Moje Raipur-Hirapur, Outside Raipur Gate, behind New Cloth market, Opp. Hirabhai market, Diwan Ballubhai Road, Raipur, Ahmedabad for taking over possession of the said land on 17.04.2014 at 11.30 am,when the representatives of this office will remain present for handing over pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidator, who is present in the Court, today itself. The Deputy Official Liquidator has accepted it and shall pass the receipt of the same to the present appellant. The Official Liquidator shall see that the amount is kept in Fixed Deposit at least for one month so that there is no loss of interest. 3. It goes without saying that we have not entered into the merits of the matter and the deposit of ₹ 160 crores with Official Liquidator is without prejudice to the rights and contentions of the parties and we have adopted this only because of the view expressed by the Apex Court in the case of Shradhha Aromatics Private Limited (supra). 4. It goes without saying that once the application is made, it will be open for the learned Single Judge to decide the same on merits. The status-quo thereafter will be subject to the order which may be passed by the learned Single Judge after hearing the parties. 5. The order dated 31.03.2014 passed in Misc. Civil Application No.53 of 2014 by the learned Company Judge is interfered with to the above extent only. dated 17.04.2014 by issuing directions. The substance is: 1. That the first respondent herein would move an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the first respondent, he believed that the appellant herein would faithfully comply with the tender conditions and the earlier order of the Court in terms of which the appellant was bound to deposit the entire sale consideration on or before 16.01.2014. If only the respondent had known that the time schedule for the payment of sale consideration is flexible even the respondent would have offered price higher than what had been offered (Rs.148 crores) by the appellant. 19. The Division Bench without examining or recording any finding in regard to the tenability of the submissions made by the respondent chose to dispose of the matter with certain directions which are already extracted in the earlier part of this judgment. The reason given by the Division Bench for such an order is that the Division Bench has adopted such a course of action in view of an earlier decision of this Court in Shradhha Aromatics Private Limited v. Official Liquidator For Global Arya Industries Limited Others, (2011) 6 SCC 207. 20. The Division Bench recorded the submission made by the first respondent that by order dated 17.12.2013, the Company Judge accepted only the offer of ₹ 148 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a in which the property in question is located had been increased from 1.0 to 1.8. In other words, in view of the revised regulations, it would be open to construct a much larger built up area on the property in question than what was permissible as on 17.12.2013. 24. Two factors weighed heavily before the Company Judge for recalling the earlier Order dated 17.12.2013 by his Order dated 11.8.2014. They are: (i) by a notification dated 04.03.2014 of the Government of Gujarat, the FSI applicable to the area in which the land is located is increased from 1.0 to 1.8. As a consequence, the value of the property in question increased considerably, (ii) that during the pendency of the recall application, the first respondent herein, who had already deposited an amount of ₹ 160 crores as a condition precedent for filing the recall application, further enhanced his offer by another ₹ 40 crores, pursuant to the order of the Company Court dated 9.5.2014 and deposited the said amount, and it appears that the respondent agreed to further enhance the offer by another ₹ 14 crores, making it a total of ₹ 214 crores. 25. In view of the above-mentioned two facts, the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recalled its earlier order dated 17.12.2013 accepting the higher offer of the appellant of ₹ 148 crores and the relevant factors like potential development of the land were not considered which had a direct bearing on the determination of the market price . 27. The learned counsel argued that the submission made by the first respondent herein that everybody knew the fact which was not in existence as on 17.12.2013 could not have been accepted by the High Court on the ground that the appellant herein did not specifically dispute the same. Such a logically absurd submission was made and the first respondent made no effort to prove such an assertion though in law the burden of proving such an assertion lies on the maker of such assertion. 28. The learned counsel submitted that assuming for the sake of argument that the conclusion recorded by the Division Bench is legally tenable, such a conclusion is based on the plea of the respondent herein that everybody was aware of the change/increase in FSI, but it was not brought to the notice of the learned Company Court necessarily implies that even the first respondent herein was aware of it and he also failed to bring th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 17.12.2013. (ii) by the impugned order, the first respondent is not going to get the property in question, but it only throws open for everybody an opportunity to participate in the fresh auction to be conducted; (iii) the property would still be sold to the highest bidder, (iv) but in the process all the stakeholders would be benefited. Therefore, the impugned order calls for no interference. 33. It is also submitted on behalf of the first respondent that there is no confirmation of the sale in favour of the appellant herein though the order dated 17.12.2013 recorded that the highest bid by the appellant is accepted by the Court. Acceptance of the bid is different from confirmation of the sale. Confirmation of sale requires an active application of mind by the court to ensure that there is no irregularity in the conduct of the sale and the price fetched is the best price for the value of the property. It is also argued on behalf of the respondent that the company court being the custodian of the property of the company in liquidation, should always make an endeavour to secure the best price for the property put to sale in order to give maximum benefits to all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anoj I Naik Associates v. Official Liquidator, (2015) 3 SCC 112. 36. In Navalkha Sons v. Sri Ramanya Das Others, (1969) 3 SCC 537, certain moveable and immovable properties of a company in liquidation were brought to sale. The Company Court directed the sale to be conducted by three persons jointly appointed as Commissioners for the conduct of sale. The sale was conducted. The appellant before this Court was the only offeror. The offer was accepted by the Commissioners. The Commissioners made an application to the Company Court for the confirmation of sale. At that stage, a third party made an application claiming that he was willing to offer a higher price. The Company Court then decided to put the property once again for auction but only between the original offeror and the objector. In such a process, the original offeror once again became the highest bidder. That bid was accepted by the Company Judge. At that stage, another third party came forward objecting to the procedure adopted by the High Court for confining the auction only between the two parties without any fresh advertisement. Such an objection was rejected by the Company Judge. Aggrieved by the same, the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, should see that the price fetched at the auction, is an adequate price even though there is no suggestion of irregularity or fraud. It is well to bear in mind the other principle which is equally well-settled namely that once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received. (See the decision of the Madras High Court in Roshan Co s case). 37. Divya Manufacturing Company (P) Ltd. v. Union Bank of India Others, (2000) 6 SCC 69 was a case where the assets of the company in liquidation were sold in favour of the appellant before this court and the sale was confirmed by the Company Court. Within a week thereafter, an application came to be filed by one of the participants in the auction proceedings praying that the order of confirmation be recalled and the applicant was willing to offer an amount higher than what was offered by the appellant before this Court. Subsequently, more number of applications came to be filed before the Court offering higher amounts. Therefore, the Company Court recalled the order confirming the sale. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only recognized the existence of the discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of the sale is made. This Court also emphasized that it is equally a well-settled principle that once the Company Court recorded its conclusion that the price is adequate, subsequent higher offer cannot be a ground for refusing confirmation. 40. In FCS Software Solutions Ltd. v. LA Medical Devices Ltd. Others, (2008) 10 SCC 440, the property of a company in liquidation was brought to sale and confirmed by the company court. The Company Court directed the official liquidator to deliver possession of the property after executing the sale deed in favour of the successful bidder after receiving full and final payment. The official liquidator instead of delivering the possession of the property, filed an application before the Company Court saying that he had received two higher offers. Upon such application, the Company Court stayed the delivery of the possession of the property. The successful bidder moved the Company Court praying that the liquidator be directed to execute the sale deed and deliver the possession of the property. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore this Court for the purchase of the property of a company in liquidation. Subsequently, an application came to be filed by a third party offering a higher amount for the property which was rejected by the Company Court. However, a second application was filed by the same third party with a further enhancement of the offer. This time, the Company Judge thought it fit to recall its earlier order confirming the sale in favour of the above mentioned 2nd respondent by placing reliance on the judgment of this Court in Divya Manufacturing Company (supra). Aggrieved, the original purchaser carried the matter in an intra court appeal before the Division Bench. Once again, the Division Bench permitted both the parties to give further offers. However, after such a strange exercise, the Division Bench opined that learned Company Judge could not have recalled the confirmed sale because subsequently a higher price was offered by somebody else. Even before this Court, an intervener made a better offer. It may be mentioned here that there was a time gap of more than three years between the original confirmation and such subsequent higher offer made in this Court. However, this Court disposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove extract, such a decision was rendered on the PECULIAR FACTS of that case. 42. Manoj I Naik Associates v. Official Liquidator, (2015) 3 SCC 112, once again was a case where certain properties of a company in liquidation was brought to sale. The company Judge declined to accept the highest offer received on the ground that the value of the property would be much higher than what was offered. Eventually, when the matter reached this Court at the instance of the highest bidder, the highest bidder himself substantially raised his offer whereas certain other respondents also offered much higher amounts for the property. From the judgment, it appears that there was virtually a scramble for the property, each of the parties to the proceedings offering very high prices. While the original successful bidder s offer was only ₹ 1.3 crores, by the time the matter was heard and disposed of by this Court, it reached an amount of ₹ 70 crores. Once again, it must be noticed that there is a time gap of almost a decade. It is not possible to cull out from the judgment the actual date of the auction by the official liquidator. 43. But the fact remains that one of the secured cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent development. In our opinion, it is not a relevant consideration in determining the legality of the order dated 17.12.2013. Imagine, if instead of increasing the floor space index for construction from 1.0 to 1.8 the State of Gujarat had decided to reduce it below 1.0 subsequent to 17.12.2013, could the appellant be heard to argue that it would be legally justified in resiling from its earlier offer which was accepted by the Court and not bound by the contractual obligation flowing from such an offer and acceptance? 49. Certain incidental questions raised by the first respondent are required to be answered at this stage. 50. The first respondent submitted that the order dated 17.12.2013 only accepted the highest bid but it did not confirm the sale and, therefore, the Court is at liberty to decline confirmation of the sale in view of the subsequent developments. In our opinion, the said submission is to be rejected because there is no specific format in which a sale conducted by the official liquidator is to be confirmed by the Company Court. The mere absence of the expression that the sale is confirmed in the order dated 17.12.2013 is not determinative of the question. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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