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M/S AGGARWAL TRADERS, GURDEV NAGAR, LUDH versus M/S AMRIT CELLULOSE LIMITED & ORS

High Court of Punjab and Haryana, Chandigarh

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M/s Aggarwal Traders, Gurdev Nagar, Ludh v. M/s Amrit Cellulose Limited & Ors - CA-5-2006 [2006] RD-P&H 1308 (1 March 2006)

Company Appeal No.5 of 2006 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

Company Appeal No.5 of 2006

Date of decision: 3.3.2006

M/s Aggarwal Traders, Gurdev Nagar, Ludhiana Appellant.

Through:

Mr.Puneet Jindal, Advocate

v.

M/s Amrit Cellulose Limited and others

Respondents

Through: Nemo

CORAM:
Hon'ble Mr.Justice D.K.Jain, Chief Justice Hon'ble Mr. Justice Surya Kant

1. Whether Reporters of local papers maybe allowed to see the judgment ?

2. To be referred to the Reporters or not ?

3. Whether the judgment should be reported in the Digest? D.K.Jain, C.J. (Oral)

This appeal, under Section 483 of the Companies Act, 1956 (for short, `the Act'), is directed against order, dated 9.2.2006, passed by the learned Company Judge in C.A.No.120 of 2005, inter alia directing the Company Appeal No.5 of 2006 [2]

Official Liquidator to re-advertise the sale of moveable and immoveable properties belonging to the company in liquidation, namely, M/s Amrit Cellulos Limited, with the reserve price of Rs.5 crores.

2- The afore-mentioned company was ordered to be wound up by the Company Court, vide order dated 8.12.2000 and an Official Liquidator was appointed. After taking over the possession of the assets of the company on 9.1.2001, the Official Liquidator sought the permission of the Company Court for putting the moveable and immoveable assets of the company to sale. On permission being granted, the Official Liquidator published advertisements inviting offers for sale of the assets.

Pursuant thereto, the appellant submitted its bid. In all, 24 offers were received. The highest offer was found to be for Rs.2.09 crores.

In the open auction, which took place thereafter on 20.7.2005, the appellant, who had initially submitted its bid for Rs.2.09 crores, enhanced it to Rs.4.46 crores. The Official Liquidator sought the leave of the Company Court to accept the said offer. However, during the pendency of the matter, three fresh offers of Rs.4.67 crores, Rs.4.60 crores and Rs.5 crores were received by means of three applications.

Taking note of the subsequent offers, by the impugned order, Company Appeal No.5 of 2006 [3]

the learned Company Judge has ordered the Official Liquidator to re- advertise the sale of the assets of the company in liquidation. Being aggrieved, the appellant has preferred this appeal.

3- Mr.Puneet Jindal, learned counsel appearing for the appellant, has contended that the order passed by the learned Company Judge, declining to confirm the enhanced bid of the appellant is illegal and erroneous, inasmuch as the Court has failed to adhere to the time schedule fixed for confirmation of sale; offers/bids, received after the expiry of the due date for submission of the bids, were entertained without recording any reasons and if such a procedure is permitted, it would lead to endless and multifarious litigation, causing monetary loss to the bidders. It is also argued that marginally higher revised offers should have been ignored by the Company Court. In support of the proposition that the "upset price" should be substantially higher by at least 40%, which could be taken into consideration, learned counsel has placed reliance on a decision of the Supreme Court in LICA (P) Ltd. v. Official Liquidator, (1996) 85 Company Cases 788. In nut-shell, the submission is that there should be some finality in such sales, particularly when these are conducted under the directions of the Court.

Company Appeal No.5 of 2006 [4]

4- We are of the considered view that the appeal is bereft of any merit. The basic principle, which governs the confirmation of a sale of the assets of the company in liquidation, is that while exercising the discretion of accepting or refusing the highest bid, the Court must satisfy itself that the price fetched at the auction is adequate price, even though there is no suggestion of irregularity or fraud. [See: M/s Navalkha and Sons v. Sri Ramanya Das and others, (1969) 3 SCC 537 and Divya Manufacturing Company (P) Ltd. v. Union Bank of India and others, (2000) 6 SCC 69].

5- Having examined the impugned order in the light of aforenoted broad principles, we are of the opinion that in view of the subsequent offers, the Company Court was justified in holding the belief that price offered by the appellant was not adequate and thus, declined to confirm their bid. As noticed above, even the appellant had enhanced its offer from Rs.2.09 crores to Rs.4.46 crores, which shows that the initial offer was highly inadequate. Although it is not the case here, even a confirmed sale at a grossly inadequate price can be set at naught by a Company Court if it is in the interest of the company, its secured and unsecured creditors and its employees.

6- For all these reasons, we are of the view that the impugned Company Appeal No.5 of 2006 [5]

order does not suffer from any infirmity, factual or legal, warranting interference.

7- Accordingly, we decline to entertain the appeal. Dismissed.

( D. K. Jain )

Chief Justice

( Surya Kant )

Judge

3.3.2006

mk


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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