Gujarat High Court
Akshar Corporation vs O.L. Of Vivekanand Mills Ltd. on 29 September, 2004
Equivalent citations: [2005]59SCL680(GUJ)
JUDGMENT K.M. Mehta, J.
1. M/s. Akshar Corporation (applicant) has taken out Judge's Summons with a prayer that this Court may review or recall the orders dated 26th December 2003 and 17th January 2004 passed by this Court. This Court in those orders was pleased to confirm the sale of the land in question of M/s. Vivekanand Mills Ltd. (in liquidation) for an amount of Rs. 2 crores in favour of M/s. Khemaji Jodhaji & Brothers (respondent No. 3 herein). The applicant is ready and willing to pay Rs. 20 lakhs more than the aforesaid offer (i.e. Rs. 2 crores 20 lakhs) made by the respondent No. 3.
2. FACTS 2.1 Shree Vivekanand Mills Limited was a Company incorporated and registered under the provisions of the Companies Act. The same mill was closed on 31.3.1987. This Court had passed a winding up order dated 22.11.1991 in Company Petition No. 37 of 1987. The Official Liquidator took the possession of the property in question in 1992.
2.2. Situation and description of the property of the Company in liquidation are as under:
2.3 There is a property known as Vivekanand Mills property situated in T.P. Scheme No. 11 of Final Plot No. 39 which abuts on the main Rakhial road which is a major route both for intercity and intracity public transport. This final plot is in the general industrial zone of the development plan of the Ahmedabad Municipal Corporation and is located at about a kilometer away on the east of the walled city of Ahmedabad. The land is also situated near Raipur Mills and Ramkrishna Mills (all these textile mills are closed down and their buildings and machineries are sold and are cleared off the site). This property is known as property in question.
2.4 The details of the vacant land of the company (in liquidation) are as under:
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Survey Sq. Total Remarks
No. Yards Sq. Yards
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4 28193 Leasehold
2 12100 40293 Leasehold
7 9780 Ownership
5A 3993 Ownership
5B/1 629 Ownership
7(P) 620 Ownership
630 15655 Ownership
324A/1 6534 chawls sold
324 4114 -do-
324 6050 -do-
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55948
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All industrial developmental infrastructural facilities and civic amenities are available to this property.
2.5 The Official Liquidator has pointed out that in Company Application No. 192 of 1996 in Company Petition No. 37 of 1987, the Court (Coram: A.R. Dave, J.) passed an order dated 30.10.1996 in the matter of Rajkamal Ramavtar v. O.L. of Vivekanand Mills Limited. In the said matter, the Court directed for constitution of Sale Committee consisting of the Official Liquidator as its coordinator, a representative of Central Bank of India which is the only secured creditor and with the consent of Central Bank of India, one representative of workers, i.e. petitioner in Company Application No. 192 of 1996 Ramkamal Ramavtar. The above referred Sale Committee will decide the manner in which assets of the company should be sold. It would be open to the sale committee to decide whether assets should be sold in one lot or in different lots. The Committee would decide as to how necessary advertisement should be given for procuring offers. It was further directed that the Official Liquidator will incur necessary expenditure for issuance of advertisement and for getting the property valued after approval of Sale Committee from the funds available with him.
2.6 The Official Liquidator made the first attempt to sell the land by an advertisement in September 1997 and fixed upset price of the land at Rs. 5.25 crores. At that time, no offers were received.
2.7 The Official Liquidator had also given further advertisement on 18.8.1997 in Gujarat Samachar in connection with sale of land belonging to the Company (in liquidation). At that time, the upset price was fixed at Rs. 5.25 crores (Rupees five crores 25 lakhs only). From the record, it appears that, in response to the said advertisement, no offer was received.
2.8 The Official Liquidator thereafter made another/third effort to sell the property and issued advertisement dated 23.1.1999 which was published in Indian Express dated 23.1.1999. The Official Liquidator made fourth attempt to sell the land in question in February 1999 and fixed upset price of the land at Rs. 5.25 crores. No offers were received at the time of third effort also.
2.9 The Official Liquidator again published an advertisement for sale of the land in question on17.4.2000 in Sandesh. Thereafter, this Court passed an order and fifth attempt was made to sell the land. The Sale Committee fixed upset price of the land in question at Rs. 3.60 crores. At that time, one offer was received for Rs. 2.60 crore from one Monali Textiles which was rejected because of conditional offer and it was not as per the terms and conditions stipulated by the Court.
2.10 It may be noted that, thereafter, the Official Liquidator again published advertisements on 4.8.2000 in Gujarat Samachar Ahmedabad Edition and Indian Express Ahmedabad Edition. Thereafter, this Court passed further orders and 4th attempt was made by the Sale Committee in August 2000 fixing upset price at Rs. 2.80 crores. The Official Liquidator spent Rs. 13,107/- for the cost of advertisement. At that time, one offer was received from one Mahalaxmi Textiles which was rejected because of conditional offer and it was not as per the terms and conditions stipulated by the Court.
2.11 From the record, it appears that this Court passed an order in September 2000 in Civil Application No. 360 of 2000 regarding sale of the land in question. The Sale Committee received an offer from Shiva Corporation. However, before the sale could be finalized, Shiva Corporation withdrew earnest money deposit of Rs. 23 lakhs out of Rs. 28 lakhs afterwards as per the order of this Court dated 18.10.2000.
2.12 The Sale Committee held a meeting on 1.5.2003 and decided to get fresh valuation from the Central Bank of India. The Sale Committee held another meeting on 22.10.2003 wherein the valuation report was placed carried out by valuer Shri B.B. Shah valuing the said land/property in question at Rs. 2,50,64,100/-. At that time, the Ahmedabad Municipal Corporation had also addressed a letter dated 15.9.2003 determining total tax liability at Rs. 2,08,71,591/- on the said land.
2.13 It may be noted that the Official Liquidator had filed report dated 24.11.2003. The Official Liquidator has annexed valuation of the land which was to the tune of Rs. 2.50 crore and also the letter from the Ahmedabad Municipal Corporation dated 15.9.2003 whereby the Corporation has fixed the total liability of tax to the tune of Rs. 2,08,71,591/- provided the same is paid on or before 31.3.2004, and, regarding education cess, the rate of education cess for 2001-02 will be decided thereafter and will be sent which the purchaser will have to pay. The Official Liquidator has also stated that the advertisement for sale was issued on 17.4.2000 in Ahmedabad and Baroda Editions of Gujarat Samachar and Sandesh as per the order of this Court dated 2.2.2000 and it was also decided to fix upset price at Rs. 2.60 crore. In that report, it has been stated that M/s. Narnarayan Estate Developers Pvt. Ltd. has offered Rs. 1.81 crores plus liability of the Municipal Corporation which comes to Rs. 3,89,71,591/- and he has recommended confirmation of sale on certain conditions.
2.14 On the above report, this Court (Coram: M.S. Shah, J.) passed an order dated 28.11.2003 and directed the matter to be placed on 5.12.2003 along with Company Application No. 236 of 2000 along with report of the Official Liquidator. In the operative portion, the Court has passed the following order: "The Official Liquidator shall also issue notice along with a copy of Ahmedabad Municipal Corporation's letter dated 15.9.2003 to Shiv Corporation and Mahalaxmi Textiles Corporation to remain present before the Court on 5.12.2003 at 2.15 p.m. along with the EMD of Rs. 28 lacs by a demand draft and also stating that M/s. Narnarayan Estate Developers Pvt. Ltd has made a net offer of Rs. 1.81 crores exclusive of all taxes and dues payable to Ahmedabad Municipal Corporation and other authorities. If any party had deposited the EMD earlier by demand draft and the EMD is still lying with the Official Liquidator, the party shall produce the proof for the same before the Official Liquidator at 11.00 a.m. on 5.12.2003 and if any amount less than Rs. 28 lacs was given by demand draft by way of EMD, the party shall bring the EMD for the balance amount by a demand draft."
2.15 In view of the aforesaid circumstances, one Narnarayan Estate Developer Private Limited sent an offer for Rs. 1,81 crore excluding all tax liability of the Ahmedabad Municipal Corporation, which shall be borne by the purchaser. The Sale Committee decided to recommend the offer on the said terms and conditions.
2.16 Thereafter, M/s. Narnarayan Estate Developers Pvt. Ltd. filed Company Application No. 277 of 2003 in Company Application No. 37 of 1983 with prayer that this Court may be pleased to accept the offer made by the applicant for the purchase of land in question for Rs. 1,71,00,000 and the Official Liquidator may be directed to execute the sale deed. The judge's summons was taken out on 2.5.2003. The same was supported by the affidavit of Shri Rameshbhai Narainbhai Patel.
2.17 It may be noted that by order dated 5.12.2003, this Court accepted the offer of M/s. Nararayan Estate Developers Private Limited at Rs. 1,81,00,000/- (Rupees One Crore Eighty One Lacs only). In the said order dated 5.12.2003, it has been observed by the Court that the Official Liquidator has received a letter dated 15.9.2003 from the Ahmedabad Municipal Corporation regarding total outstanding of municipal tax dues of the property in question. As per the said letter, the total tax due is Rs. 3,60,44,063/-. However, by Resolution No. 1254 dated 22.3.2003, 50% benefit has been given in property tax and education cess as per the old formula. After giving this benefit, the outstanding tax of Vivekanand Mills worked out to be Rs. 2,08,71,591/-. The purchaser was liable to pay the said amount or any other amount which the Ahmedabad Municipal Corporation will determine in connection with the property tax and the Official Liquidator will not be liable to pay the tax. The Liquidator had given possession in favour of M/s. Narnarayan Estate Developers on 15.12.2003.
2.18 It appears that, after the order dated 5.12.2003 was passed and before the sale could be confirmed, one Khemaji Jodhaji & Brothers filed Civil Application No. 209 of 2003 on 20.12.2003 and offered to pay Rs. 2 crores for the property in question. In Civil Application No. 209 of 2003, this Court passed the order dated 26.12.2003 and confirmed the sale in favour of Khemaji Jodhaji & Brothers. In view of this order, the Official Liquidator took back possession of land from M/s. Narnarayan Estate Developers and gave to Khemaji Jodhaji & Brothers. This order was passed after this Court gave an opportunity to be heard to Narnarayan Estate Developers.
3. PRESENT CONTROVERSY 3.1 Thereafter, O.J. Application No. 12 of 2004 has been filed before this Court, as stated hereinabove. In the present matter, the applicant-Akshar Corporation has offered Rs. 2 crores 20 lakhs for the property in question and that is how the matter has come up for hearing before this Court. The applicant has prayed that now this court may set aside the orders dated 26.12.2003 and 5.12.2003 and recall the orders, as the applicant is willing to pay Rs. 2 crores 20 lakhs for the property in question. It is submitted that this being the highest offer, the same may be accepted and the orders dated 26.12.2003 and 5.12.2003 may be recalled and reviewed accordingly.
3.2 One Devanand Khemaji Vachheta has filed affidavit in reply on behalf of the opponent No. 3, M/s. Khemji Jodhaji Brothers on 19.2.2004 and opposed the said application.
4. CONTENTIONS RAISED BY LEARNED COUNSEL MR. S.N. SOPARKAR AS REGARDS MAINTAINABILITY OF THE APPLICATION 4.1 Before the learned counsel, Mr. Mihir Thakore, could argue the matter, on behalf of the applicant, the learned counsel, Mr. S.N. Soparkar, appearing for opponent No. 3, has raised the following contentions against the maintainability of the application:
4.2. PRELIMINARY CONTENTIONS RAISED BY LEARNED COUNSEL MR. S.N. SOPARKAR 4.3 The present application is for review of the order passed by this Court on 26.12.2003. The Court has passed order in the review proceedings as the Court has reviewed its earlier order dated 5.12.2003. Learned counsel has submitted that, in view of the provisions of Order 47 Rule 9 of the Code of Civil Procedure, review of the order passed in the review proceedings is not maintainable as the same is not entertainable and, therefore, the present application is not maintainable.
4.4 The present application is not maintainable as the applicant is not an "aggrieved party".
4.5 In this case, the Court passed the order dated 26.12.2003. Thereafter, the contract was entered into between the Official Liquidator and the respondent No. 3. The respondent No. 3 had taken over possession of the property in question. He has also paid municipal tax as part of the conditions. He has also spent some amount for levelling the land. He has also entered into agreement with third parties and not only the interest of the respondent No. 3 is created but third parties' interest is also created and, therefore, this Court may not hear the applicant even on merits of the case.
5. SUBMISSION OF LEARNED SENIOR ADVOCATE, MR. MIHIR THAKORE ON BEHALF OF THE APPLICANT
5.1 Learned Senior Advocate, Mr. Mihir Thakore, with learned advocate, Mr. Dhaval M. Barot, appearing for the applicant, has submitted that the present application of the applicant is not a 'review application' in terms of Order 47 Rule 1 of the Code. Relying upon Order 47 Rule 1 of the Code, he has submitted that, looking to the definition of 'review', the present application does not fall within the four corners of the criteria laid down in the said provision. Learned Senior Advocate, Mr. Mihir Thakore, has submitted that, under Order 47 Rule 1 of the Code, it is necessary that a party has to be aggrieved by the order passed by a Court, whereas, in the present case, the order of the Court sought to be modified/recalled is not such an order by which a party is aggrieved.
5.2 Learned counsel referred to and relied upon Rule 1 of Order XLVII, which provides for application for review of judgment. Rule 1 of Order XLVII reads as under:
"1. Application for review of judgment-
(1) Any person considering himself aggrieved-
(a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred,
(b) by a decree or order from which no appeal is allowed, or
(c) by a decision on a reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order."
5.3 Rule 9 of Code of Order 47 of the Code of Civil Procedure reads as follows:
5.4 "9. Bar of certain applications-
No application to review an order made on an application for a review or a decree or order passed or made on a review shall be entertained."
5.5 Relying upon the aforesaid provisions, the learned counsel for the applicant has made the following submissions.
5.6 In the present case, the applicant is not an aggrieved party, nor was the opponent No. 3 an aggrieved party when he moved Civil Application No. 209 of 2003 and made offer of Rs. 20 lakh more than the earlier successful bidder, and, in such a case, when a party is not an aggrieved party, then its application for modification/recall of an order cannot be termed as a 'review application' in terms of Order 47 Rule 1 of the Code.
5.7 The review application is maintainable only when the party aggrieved by an order has
(i) discovered new and important matter or evidence which he could not produce at the time of hearing or
(ii) on account of some mistake or error apparent on the fact of record or
(iii) for any other sufficient reason.
In the present case, none of the aforementioned conditions is satisfied and, therefore, the said application cannot be termed as a 'review application' under Order 47 Rule 1 of the Code. The words 'any other sufficient cause' have been interpreted by the Privy Council as reason analogous to discovering new and important matter or evidence which he could not produce or error apparent on the face of the record.
5.8 In support of the above submission, learned Senior Counsel has referred to and relied upon the judgment of the Court of Appeal, in the case of Chhajju Ram v. Neki and Ors., reported in 1922 Indian Appeals, p.144, wherein, (Privy Council) it is observed at page 150, as under: 5.9 "If their Lordships felt themselves at liberty to construe the language of Order XLVIL of the Code of Civil Procedure, 1908, without reference to its history and to the decisions upon it, their task would not appear to be a difficult one. For it is obvious that the Code contemplates procedure by way of review by the Court which has already given judgment as being different from that by way of appeal to a Court of appeal. The three cases in which alone mere review is permitted are those of new material overlooked by excusable misfortune, mistake or error apparent on the face of the record, or 'any other sufficient reason'. The first two alternatives do not apply in the present case, and the expression 'sufficient', if this were all, would naturally be read as meaning sufficiency of a kind analogous to the two already specified, that is to say, to excusable failure to bring to the notice of the Court new and important matters, or error on the face of the record. But before adopting this restricted construction of the expression 'sufficient' it is necessary to have in mind, in the first place, that the provision as to review was not introduced into the Code for the first time in 1908, but appears there as a modification of previous provision made in earlier legislation; and, in the second place, that the extent of the power of a Court in India to review its own decree under successive forms of legislative provision has been the subject of a good deal of judicial interpretation, not, however, in all cases harmonious. That the power given by the Indian Code is different from the very restricted power which exists in England appears plain from the decision of Charles Bright & Co v. Sellar (1), where the Court of Appeal discussed the history of the procedure in England and explained its limits."
5.10 The learned counsel has also referred to and relied upon the judgment of the Court of Appeal, in the case of Bisheshwar Pratap Sahi v. Parath Nath and Anr., reported in 1934 Indian Appeals p.378, wherein, at page 386, the Court (Privy Council) observed as under: "It is obvious that the above mentioned ground is not one of the grounds specified in Order XLVII, r.1, sub.r.1, and the application for review can only be supported, if at all, by reference to the words 'or for any other sufficient reason'. These words are of a general character, and apart from authority would seem to leave the sufficiency of the reason to the unfettered discretion of the Court. But there is authority to the contrary, and it has been held that a limited meaning must be put upon the above mentioned words."
5.11 The learned counsel also referred to and relied upon the judgment of the Supreme Court in the case of Lily Thomas and Ors. v. Union of India and Ors., reported in (2000) 6 SCC 224, wherein, the Apex Court, in paragraph 52, observed as under [page 247 of SCC]: 5.12 "52. The dictionary meaning of the word 'review' is 'the act of looking, offer something again with a view to correction or improvement'. It cannot be denied that the review is the creation of a statute. This Court in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji [AIR 1970 SC 1273] held that the power of review is not an inherent power. It must be conferred by law either specifically or by necessary implication. xx xx xx"
In paragraph 56 [on page 251] the Court held as under: 5.13 "56. It follows, therefore, that the power of review can be exercised for correction of a mistake but not to substitute a view. Such powers can be exercised within the limits of the statute dealing with the exercise of power. The review cannot be treated like an appeal in disguise. The mere possibility of two views on the subject is not a ground for review."
In paragraph 58 (on page 252) the Court held as under: [after referring to above two privy counsel judgments the court observed as under] 5.14 "58. Otherwise also no ground as envisaged under Order XL of the Supreme Court Rules read with Order 47 of the Code of Civil Procedure has been pleaded in the review petition or canvassed before us during the arguments for the purposes of reviewing the judgment in Sarla Mudgal case. [1995 (3) SCC 635) The words 'any other sufficient reason appearing in Order 47 Rule 1 CPC' must mean 'a reason sufficient on grounds at least analogous to those specified in the rule' as was held in Chhaju Ram v. Neki, AIR 1922 PC 112, and approved by this Court in Moran Mar Basselios Catholicos v. Most Rev. Mar Poulose Athanasius, AIR 1954 SC 526. Error apparent on the face of the proceedings is an error which is based on clear ignorance or disregard of the provisions of law.
5.15 Therefore, it can safely be held that the petitioners have not made out any case within the meaning of Article 137 read with Order XL of the Supreme Court Rules read with Order 47 of the Code for reviewing the judgment in Sarla Mudgal case. The petition is misconceived and bereft of any substance."
5.16 It is submitted that, even the present opponent's application i.e. C.A. No. 209 of 2003 for recalling/modification of an earlier order dated 5.12.2003 was not a 'review application' as the same was not falling within the provisions of Order 47 Rule 1 of the Civil Procedure Code and, therefore, it cannot be contended by the opponent No. 3 that the present application seeks to review an order passed on a review application. Learned Counsel has further submitted that the order which the present applicant seeks to be modified/recalled is not an order that has been passed in an adversorial proceeding. It is, further, submitted that the Court did not pass an order in an adversorial proceeding where the Court has to decide as to right between the parties and, therefore also, in strict sense, this is not a review application.
5.17 While deciding upon the present application or also at the time of passing the order dated 26.12.2003 upon the application of the opponent No. 3, this Court was exercising jurisdiction under Rule 9 read with Rule 6 of the Companies (Court) Rules, 1959. Both the applications were filed before this Court under Rule 9 of the Companies (Court) Rules, 1959 and this Court exercises inherent powers in deciding these applications. Since the Court exercises inherent powers given to it under the Companies (Court) Rules, 1959, to decide the present application, the provisions of Order 47 of the Code of Civil Procedure are not applicable.
5.18 The possession was also taken by the earlier successful bidder, i.e. Narnarayan Estate Developers Private Limited and, after the opponent No. 3 had bided higher offer that its offer was accepted and it was given possession of the property. The opponent No. 3 has not fully paid the price of the land and, therefore, it cannot be contended that, since it has got the possession of the land, the Court cannot reopen the auction. Just because the possession has been given to a successful bidder that does not preclude this Court from exercising its discretion to reopen the auction if the property is likely to fetch higher price than at what it has been sought to be acquired. The Court's paramount duty is to see that the property put up in auction fetches the highest adequate price and till that price is fetched the Court must in its discretion reopen the auction. A close look at the relevant particulars on the stamp papers shows that all the stamp papers have been purchased from the same stamp vendor, on the same day, i.e. 23.1.2004, and they have been notarized on the same day, i.e. 27.1.2004. The financial transactions in the said agreements are also in cash. In the Agreements to Sell, the lands which are sought to be transferred are identically described and there are no specific areas of lands which are transferred by the said agreements. All the above together would go to show that the opponent No. 3. has tried to back date the documents and, thereby, it has tried to create wrongful equities.
5.19 The history of auction with respect to the property in question has been narrated in the order dated 5.12.2003. It is very clear from the said order that, in the past, the said property was put up for auction at Rs. 5.25 crore but no bids had come and, thereafter, when it was reduced to Rs. 3.60 crore and Rs. 2.80 crore, bids had come but they were not accepted as the same were conditional and not as per terms and conditions. Thereafter, fresh valuation was done and the property was valued at Rs. 2.50 crore. Looking to the said fact, it is very clear that the property in question has more value (at least Rs. 50 lakh more) than the price at which it has been sought to be acquired by the opponent No. 3.
5.20 Section 457 of the Companies Act provides for power of the liquidator in a winding up to sell the movable and immovable property of a company by public auction the whole thereof to any person or body corporate or to sell the same in parcels with the sanction of the Court.
5.21 S.457. Powers of Liquidator:
(1) The liquidator in a winding up by the Court shall have power, with the sanction of the Court
(a) to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;
(b) to carry on the business of the company so far as may be necessary for the beneficial winding up of the company.
(c) to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels;
(d) to raise on the security of the assets of the company any money requisite;
(e) to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets.
(2) The liquidator in a winding up by the court shall have power-
(i) to do all acts to execute, in the name and on behalf of the company, all deeds, receipts, and other documents, and for that purpose to use, when necessary, the company's seal; (i-a) xx xx (ii) xx xx (iii) xx xx (iv) xx xx (v) to appoint an agent to do any business which the liquidator is unable to do himself.
(3) The exercise by the liquidator in a winding up by the Court of the powers conferred by this section shall be subject to the control of the Court; and any creditor or contributory may apply to the Court with respect to the exercise or proposed exercise of any of the powers conferred by this section. "
5.22 Rules 272 and 273 of the Companies (Court) Rules, 1959 read as under:
5.23 R.272 Sale to be subject to sanction and to confirmation by Court.
Unless the Court otherwise orders, no property belonging to company which is being wound-up by the Court shall be sold by the Official Liquidator without the previous sanction of the Court, and every sale shall be subject to confirmation by the Court.
5.24 R.273 Procedure at sale Every sale shall be held by the Official Liquidator, or, if the Judge shall so direct, by an agent or an auctioneer approved by the Court, and subject to such terms and conditions if any as may be approved by the Court. All sales shall be made by public auction or by inviting sealed tenders or in such manners as the Judge may direct.
5.25 There are various decisions of the Honourable Supreme Court as well as a recent decision of this Court wherein it has been stated that it is the primary duty of the Court to see that the property which is put to an auction acquires the best possible price and, therefore, it would be in the interest of all the creditors as well as in the fitness of things that the present applicant is allowed to put his bids so that proper price is paid for the property in question.
5.26 In support of the above submission, learned Senior Advocate has referred to and relied upon the judgment of the Supreme Court in the case of Divya Manufacturing Co. Pvt Ltd v. Union of India, reported in 2000 (6) SCC 69, wherein, it is held as under:
5.27 "That order was challenged before this Court by M/s. Navalkha. It was contended that there was no justification for the Division Bench to interfere with the order of the learned Single Judge. In that context, after quoting Rule 273 of the Companies (Court) Rules, 1959, the Court observed; (SCC pp.540-541, para 6) 5.28 '6. The principles which should govern confirmation of sales are well established. Where the acceptance of the offer by the Commissioners is subject to confirmation of the Court the offer does not by mere acceptance get any vested right in the property so that he may demand automatic confirmation of his offer. The condition of confirmation by the Court operates as a safeguard against the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. In every case it is the duty of the Court to satisfy itself that having regard to the market value of the property the price offered is reasonable. Unless the Court is satisfied about the adequacy of the price the act of confirmation of the sale would not be a proper exercise of judicial discretion. In Gordhan Das Chuni Lal Daduwala v. T. Sirman Kanthimanthinatha Pillai, it was observed that where the property is authorised to be sold by private contract or otherwise it is the duty of the Court to satisfy itself that the price fixed is the best that could be expected to be offered. That is because the Court is the custodian of the interests of the company and its creditors and the sanction of the court required under the Companies Act has to be exercised with judicial discretion regard being had to the interests of the company and its creditors as well. This principle was followed in Ratnasami Pillai v. Sabapathy Pillai, and S. Soundararajan v. Khaka Mahomed Ismail Saheb of Roshan & Co. In A Subbaraya Mudaliar v. K. Sundararajan, it was pointed out that the condition of confirmation by the court being a safeguard against the property being sold at an inadequate price, it will be not only proper but necessary that the court in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its orders, should see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud."
5.29 From the aforesaid observation, it is abundantly clear that the Court is the custodian of the interests of the company and its creditors. 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.
5.30 In the case of Lica (P) Ltd (No.1) v. Official Liquidator and Anr., reported in 85 Company Cases 788, the Supreme Court held as under (page 791): "The purpose of an open auction is to get the most remunerative price and it the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large. The court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case. One of the terms of the offer in this case is that even confirmation of the sale is liable to be set aside by the High Court as per clause 11 of the conditions of offer. The sale conducted was subject to confirmation. Therefore, mere acceptance of the offer of Mr. Shantilal Malik does not constitute any finality of the auction nor would it be automatically confirmed. The appellant offered a higher price even now at Rs. 45,00,000. Keeping in view the interest of the company and the creditors and the workmen to whom the sale proceeds would be applied, the learned company judge was right in exercising her discretion to reopen the auction and directing Mr. Shantilal Malik as well as to make a higher offer than what was offered by the appellant. In every case it is not necessary that there should be fraud in conducting the sale, though on its proof the sale gets vitiated and it is one of the grounds to set aside the auction sale. Therefore, the discretion exercised by the learned single Judge cannot be said to be unwarranted. Under the circumstances, we are satisfied that the Division Bench of the Calcutta High Court committed manifest illegality in interfering with the order of the learned single Judge. The appeal is allowed. The order of the Division Bench is set aside."
5.31 In LICA (P) Ltd (No.2) v. Official Liquidator, 85 Company Cases 792, the Supreme Court dealing with a similar question observed thus (page 794). "The purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large. The court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case."
5.32 In the case of Allahabad Bank v. Bengal Paper Mills Co. Ltd, reported in (1999) 4 SCC 383, it is held as under: (para 21-page 392) 5.33 "21. Upon liquidation, the assets and properties of the Company in liquidation vest in the Official Liquidator for the benefit of its creditors. It is only from out of the sale proceedings of these assets and properties that the creditors of the Company can hope to recoup their dues. To ensure that the best possible price is realised upon the sale of these assets and properties, the sale thereof by the Liquidator is required to be confirmed by the High Court. It is the obligation of the High Court to the creditors of the Company in liquidation to make sure that the best possible price has been realised."
5.34 The learned Counsel has referred to and relied upon the judgment of the Division Bench of this Court (Coram: N.G. Nandi and D.P. Buch, JJ.), in OJ Appeal No. 49 of 2003 [Abhisekh Shops & Warehouse v. Monali Textiles], wherein, it is held as under: 5.35 "7. Thus, in light of the above, price fetched by the property/land in question has to be considered adequate or not. The impugned order as observed above has indirectly suggested that the price fetched is inadequate while observing that the property could have fetched more price and that the Company Court could have ordered for revaluation of the property under the sale. In our opinion, this is sufficient to indicate whether the price fetched in the auction can be said to be adequate. We are in agreement with the observation in the impugned order that the property under sale could have fetched more price than Rs. 4,05,00,000/-. It need hardly be said that the effort of the Company Court has to be in the direction of obtaining the maximum price of the property in the auction for the benefit of workers, secured, unsecured creditors, and the company, and the entire class of creditors would stand to benefit by the higher price received by the property under the sale."
5.36 The learned Senior Advocate, after relying upon the above decisions, has submitted that it is the duty of the Court to see that the property put up on auction gets the best possible price and for that the Court should always reopen the auction when a new bidder comes forward with a higher price than the successful bidder. It is further submitted that, by such procedure, even the Court's credibility in the minds of people is preserved.
6. SUBMISSION OF LEARNED SENIOR ADVOCATE, MR. S.N. SOPARKAR ON BEHALF OF THE RESPONDENT NO. 3 6.1 Learned Senior Counsel, Mr. S.N. Soparkar, has submitted and elaborated his submission which I have noted earlier that the application filed by the opponent No. 3 is a review application under Order 47 Rule 1 of the CPC, because the order passed becomes final and the party has acted upon the said order by depositing the amount, taken possession and incurred expenses. He further submitted that the present applicant is not a party to any proceedings and, therefore, the order cannot be recalled and/or modified at the instance of the present applicant. The word 'Recall' and 'Review' has the same meaning. The expression 'recall a judgment' is to be understood either to revoke, cancel, vacate or reverse a judgment when there is an error in the order or judgment which is sought to be reversed.
6.2 The provisions of the Companies Act read with the Company (Court) Rules and also read with the provisions of the Civil Procedure Code, do not confer any power upon the Company Court either to recall or revoke the order pronounced in the open court unless and until a Review Application is preferred under O.47 R.1 of the CPC as the Civil Procedure Code is applicable to the Company (Court) Rules and, therefore, the contention of the applicant that the application is not filed under O.47 R.1 of the CPC and is filed under Rule 9 of the Company (Court) Rules, 1959, has no substance. The Court cannot exercise its inherent powers to upset and/or distort the earlier order which came to be passed before two months and the opponent No. 3 has invested huge amount and also executed various agreements with third parties.
6.3 The word 'Review' means a judicial reexamination of the case in certain specified and prescribed circumstances. The word 'Review' is defined in 'The Law Lexicon, 1997 Edition" that "A review is a proceeding which exists by virtue of statute. It is in its nature a new trial of the issue previously tried between the parties, the cause of actin being brought into court again for trial by a new petition. The proceedings in some respects resembles a writ of error, and also a new trial.
6.4 The Court may review its judgment and order but no application for review will be entertained in Civil Procedure Code except on the grounds mentioned under Order 47 Rule 1. In the present case, the applicant was never a party and that too not an aggrieved party and the applicant has approached this Court with mala fide intention after a considerable long time. In the earlier proceeding, the present opponent No. 3 had filed an application immediately on the next day the order came to be passed by the Company Court and further the opponent No. 3 was very much there before the Sale Committee right from the beginning. Therefore, it is submitted that the applicant cannot claim that the opponent No. 3 had filed the application for review of the order and that by this application he is also doing the same thing.
6.5 There is no provision in the Companies Act and in the Companies (Court) Rules for recall of an order except by way of review of its own order. Further, there is no provision in the entire the Companies (Court) Rules that a third party can apply for review and/or revocation or recalling of the order. The only remedy available either to initiate appropriate proceedings as available under the Companies Act and under the Companies (Court) Rules.
6.6 On the grounds stated in the application, it clearly shows that it amounts to recall/review of the order passed by the Court. When there is no mistake apparent on the face of record nor any new grounds have been mentioned in the application, the present application is not maintainable at law and deserves to be dismissed with costs.
6.7 It is further submitted that the applicant has relied upon a judgment of the Privy Council, reported in AIR 1922 p.122, i.e. Chhajju Ram (supra) which is not applicable in the present case, and, on the contrary, it is helpful to the opponent No. 3 as the opponent No. 3 had satisfied all the three grounds before filing the review application. It is submitted that the sufficient grounds for review of an order means the grounds should be analogous to the grounds mentioned therein. Neither new evidence is brought on record nor any mistake apparent on the face of the record has been pointed out by the applicant so as to review or recall the order in question.
6.8 It is submitted that considering this view of the Privy Council and the Supreme Court cases and comparing with the facts of the present case, which has no application in the facts of the present case because the applicant was never a party to the proceedings and, therefore, he is not an 'aggrieved party'. The words 'aggrieved party' is defined once again in The Law Lexicon that 'a term of very ancient origin, appearing on the Statute Roll of 1363. For purposes of ascertaining rights of appeal, any person who is in any sense a party to a legal proceedings is 'aggrieved' by a wrong decision with regard to the proceedings. "Under statues granting the right of appeal to, the 'party aggrieved' is one [whose order or judgment, the party aggrieved is one] whose pecuniary interest is directly affected by the adjudication; one whose right of property may be established or divested thereby." In view of this fact, the applicant cannot be termed as aggrieved party and, therefore also, the present application is not maintainable under O.47 R.1 of the CPC as he is not aggrieved in any manner.
6.9 It is further submitted that the applicant has also relied upon a decision of the Privy Council reported in 1934 Privy Council 213 : 61 IA 378, i.e. Bishwa Pratap Sahi (supra) which has no relevance in the facts of the present case because none of the conditions as prescribed in the said decision has been satisfied by the applicant.
6.10 It is further submitted that the applicant has further contended that the opponent No. 3 had filed Civil Application No. 209 of 2003 for reviewing and/or modifying the earlier order dated 5.12.2003 under O.47 R.1 of the CPC. It is not open to the applicant to raise this issue because the opponent has filed the application immediately and further originally the opponent No. 3 had participated before the Sale Committee. It is further submitted that considering this fact that, even assuming for a moment, the present application also is filed for review of the order or recalling of the order, then the second review is not maintainable. It is further submitted that the review application is required to be filed within the prescribed period and, in the present case, the application came to be filed after long delay and, therefore also, the application is not maintainable and deserves to be dismissed.
6.11 It is further submitted that under Order 47 Rule 9, no application to review an order made on an application for review or decree or an order passed or made on review shall be entertained. Assuming the contention of the applicant that the opponent No. 3 had already filed Civil Application No. 209 of 2003 for recalling or modification of the order, it is a review application as per the say of the applicant. It is submitted that once the Court reviewed it's order, the Court cannot review or recall the same order under O.47 Rule 1 (9) of the Code and, therefore, the present application must fail and meet with the fate of dismissal only.
6.12 The decisions mentioned by the applicant pertain to review and the applicant has not mentioned under which provision the present application came to be filed before this Court.
6.13 It is the case of the respondent No. 3 that the contention of the applicant is that the Code of Civil Procedure is not applicable directly to the provisions of Companies Act. The learned advocate for the respondent No. 3 submitted that the said contention of the applicant is not right and in support of the same he has relied upon the following decisions in this behalf and made following submissions.
6.14 In the case of Saurashtra Cement and Chemicals Industries Limited v. Esma Industries Private Limited, reported in 69 Company Cases 372, the Gujarat High Court held as under (page 284): 6.15 "In my view, therefore, before applying any provisions of the Code to the proceedings under the Act, it would be necessary to find out the nature of the proceedings an the relief claimed therein and the effect of the applicability of the concerned procedural provisions of the Code to these proceedings, meaning thereby, whether the applicability of procedural provisions would in any way thwart or stultify these proceedings and the reliefs claimed therein ? If the concerned procedural provisions are found to have such obnoxious effect, their applicability will have to be suitably modified, so that the procedural provisions may not overreach the substantive provisions. But if, on the other hand, the concerned procedural provision is not found to have such obnoxious effect and if it is found running parallel to it and also found to streamline the procedure and make it more effective, such procedural provisions, instead of being found to be deleterious, would be found to be fully commensurate with the substantive provisions of the Act and can fully and harmoniously coexist in all their vigore and rigour with the concerned provisions of the Act."
The Court further held as under(page 388): 6.16 "I entirely agree with the submission of Mr. Jethmalani for the respondents that, by applying Order 14, rule 2 in all its vigour to the present proceedings, public interest underlying these proceedings would get better subserved rather than by ruling out the applicability of these provisions to these proceedings. For all these reasons, therefore, it must be held that the provisions of Order 14, rule 2 of the Code apply in their entirety to proceedings under sections 397 and 398 of the Act."
6.17 The Honourable Court, ultimately, held that Order 14 Rule 2 of the Code of Civil Procedure can be applied to the proceedings under Sections 397 and 398 of the Companies Act.
6.18 It is submitted that save as provided by the Act or by these Rules the practice and procedure of the Court and the provisions of the Code so far as applicable shall apply to all proceedings under the Act and these Rules. It is submitted that, in view of the judgment of this Court in the case of Saurashtra Cement and Chemical Industries Ltd (supra), the present application under Rule 9 is nothing but an application under Order 47 Rule 1 of the CPC and, therefore, it is a 'Review Application' and the same deserves to be dismissed. It is submitted that the inherent powers cannot be used to upset or distort the scheme of things under the Act and the Rules. It is submitted that the inherent powers of the Court under Section 151 of the CPC cannot be resorted to when the aggrieved party has got exclusive remedy available under law. Thus, where the relief sought required modification or correction of earlier order, such relief could be granted under the specific provisions of Order 47 Rule 1 of the Code and not under S. 151 of the Code or under analogous Rules 6 and 9 of the Company (Court) Rules, 1959.
6.19 This view has also been taken by the Andhra Pradesh High Court in the case of Jalan (O.P.) v. Deccan Enterprise (P) Limited, reported in (2000) 100 Company Cases 1993. It is submitted that the inherent powers of the Court is not a substantive power but merely a procedural power and it cannot be exercised if it conflicts with what is expressly provided by the Code.
6.20 The learned counsel submitted that for the disposal of the property, the Company Court has power under Section 457 of the Act read with the provisions of Rules 272 and 273 of the Companies (Court) Rules. It is submitted that Rule 272 of the Companies (Court) Rules permits the Official Liquidator to sell the property of the Company in liquidation subject to sanction and to confirmation by the Court, and the Court has inherent wide powers under said provisions. The power has been vested in the Court and it is the duty of the Court to see that the price offered by the offerer must be a reasonable or adequate price. In the present case, the sale confirmed in favour of the opponent No. 3 cannot be set aside because it does not suffer from any illegalities as observed by the Supreme Court. If there is case of allegation of illegalities, then this Court can set aside the confirmed sale in view of the decision of the Apex Court in the case of Allahabad Bank v. Bengal Paper Mills Co. Ltd, reported in (1999) 4 SCC 383 : AIR 1999 SC 1715, wherein the sale was confirmed by a single Judge and possession was handed over to the buyer. The Bank filed an appeal against the confirmation. The Division Bench refused to set aside the sale owing to the fact that the buyer had incurred some expenditure on the property. This approach was held by the Supreme court to be not proper especially when the sale showed several irregularities. The sale was set aside and directions were issued for organizing fresh sale. For a sale of high magnitude involved, the publicity was inadequate (only one announcement). Wider publicity might have fetched higher price.
6.21 Whereas, in the present case, the sale came to be confirmed in favour of the opponent No. 3 after advertisements in the newspapers and also taking into consideration various facts. It is submitted that there is no illegality or fraud committed by the opponent No. 3 and that this Court cannot reopen the same especially when the sale came to be confirmed in the favour of the present opponent No. 3 after wide publicity.
6.22. It is submitted that the applicant has relied upon a decision of this Court in O.J. Appeal No. 49 of 2003 in the case of Abhishek Shops & Warehouse v. Monali Textile, (Coram: N.G. Nandi and D.P. Buch, JJ.) which has no relevance in the facts of the present case.
6.23 It is submitted that the applicant has placed reliance on a decision of the Court in the case of Divya Manufacturing Co. Pvt. Ltd v. Union of India, reported in (2000) 6 SCC 69, which has no application in the facts of the present case. It is submitted that the facts of that case and the facts of the present case are entirely different one, and the same cannot be compared with the facts of the present case. In the said decision, the Court has categorically mentioned that the possession of the property has not been handed over and no development on the land in question took place and, therefore, in that circumstances, the Court was pleased to accept the higher offer because the earlier offer was at much below price.
6.24 While, in the present case, the sale was confirmed and before the amount came to be deposited, it was reopened on the application being made by the opponent No. 3 on the very next day. Therefore, the possession given was only paper possession and no further expenses have been incurred by the earlier purchaser. It is submitted that, in the present case, the sale came to be confirmed in favour of the present opponent No. 3 on 5.12.2003 and the physical possession was given. Thereafter, the opponent No. 3 has raised funds by executing deeds in favour of various persons and it is the normal practice available in the market as any development would not have 100% finance and the investment has been made by raising funds from the market, and for that agreements have been executed. The Official Liquidator has produced on record a letter dated 8.3.2004 in which the opponent No. 3 stated that they have already paid Rs. 2 crores to the Official Liquidator. They have also paid earlier Rs. 1 crore and by this they have paid the remaining amount. Along with the said letter, the opponent No. 3 had also annexed cheque of Rs. 1 crore. Hence, it is proved that opponent No. 3 had paid full price. As regards the Municipal Tax, it has been stated that the opponent No. 3 has paid dues of the Municipal Tax raised by one bill of Rs. 15,00,000/- and another bill for Rs. 17,04,527/-. Thus, for the year ending March 2004, the opponent No. 3 had paid the entire dues, i.e. Rs. 32,04,527/- of the Municipal Corporation. The opponent No. 3 has incurred expenses approximately Rs. 40 lakhs for leveling plots, earmarking, compound walls, etc. These are the vital facts which are required to be looked into by this Court and, therefore, merely because the present applicant has shown his willingness to purchase the same after a lapse of two months by offering Rs. 20 lakhs more, this Court should not set aside the sale confirmed in favour of the opponent No. 3 and the application must be dismissed with exemplary costs in the interest of justice and fairness of things.
6.25 The learned counsel, further, submitted that the respondent No. 3 has already filed affidavit-in-reply on 19.2.2004 and he has relied upon the following circumstances also to show that this Court may not exercise power of review as earlier order was passed after recalling the order dated 5.12.2003. It was further submitted that this Court may not exercise power which may be detrimental to the interest of the respondent No. 3.
6.26 (i) After the order dated 26.12.2003 was passed by this Court, the opponent No. 3 filed Misc. Civil Application No. 3 of 2004 in Civil Application No. 209 of 2003, inter alia, praying for modification of the order passed by this Court dated 26.12.2003 because the possession of the land was given to the present opponent No. 3 only on 29.12.2003 pursuant to the amount deposited by the opponent No. 3, and, therefore, the Court was pleased to pass an order on 17.1.2004.
(ii) The opponent No. 3 had deposited Rs. 1 crore with the Official Liquidator on 18.12.2003 (at that time only).
(iii) On 29.12.2003, the Official Liquidator sent a letter whereby he confirmed the handing over the possession of the land to the opponent No. 3.
(iv) After getting possession of the land, the opponent No. 3 had approached the Ahmedabad Municipal Corporation for payment of Municipal Taxes of Rs. 2,00,48,000/- and the opponent No. 3 had also submitted a blank cheque in favour of the Ahmedabad Municipal Corporation towards the dues of the Municipal Taxes/Education Cess.
(v) The opponent No. 3 would make the remaining amount of Rs. 1 crore on or before the due date specified in the order by this Court.
(vi) The opponent No. 3 has also paid land revenue to the City Mamlatdar to the tune of Rs. 4,42,147/-.
(vii) The opponent No. 3 has also appointed a contractor for repairing of the compound wall. The opponent No. 3 executed a contract on 27.1.2004 for an amount of Rs. 7,21,000/- and the work is in progress.
(viii) The opponent No. 3 has also appointed one M/s. .K. Corporation for levelling the land as the land of M/s. Vivekanand Mills Limited has been remained idle and, therefore, the local people dig the land and taken away the soil. It is, therefore, necessary for the opponent No. 3 to level the land for making development of the land. The work is in progress. The entire work has been awarded to M/s. A.K. Corporation for an amount of Rs. 9.61 lakhs and an amount of Rs. 50,000/- has already been paid as advance payment.
(ix) The opponent No. 3 has paid the fee to the City Surveyor for measurement and the measurement has been done.
(x) The opponent No. 3 has paid Rs. 30,000/- to the Architecture also.
6.27 The learned counsel, therefore, submitted that the total consideration which has been paid by the opponent No. 3 is not Rs. 2 crores, but, over and above that amount, the opponent No. 3 is required to pay an amount of more than Rs. 2 crores towards municipal tax and other expenses. It is further submitted that the funds are the integral part and, therefore, the opponent No. 3 had received various amounts from various parties, who had shown their interest to purchase the land in question and an agreement to that effect has been entered into by the opponent No. 3 with a third party for the sale of 1,000 sq. meters of land for an amount of Rs. 11 lakhs and, accordingly, the amount has been received by the opponent No. 3 from the proposed purchaser also. It is, further, submitted the opponent No. 3 had entered into an agreement for sale of 1000 sq.mtrs of land for an amount of Rs. 1 lakh and the opponent No. 3 had received Rs. 15,000/- from the purchaser as advance and the remaining amount will be paid by the purchaser as soon as the execution of sale deed is completed. It is further submitted that all these facts go to establish beyond reasonable doubt that the present application has been filed with ulterior motive after much delay and after so many steps have been taken by the opponent No. 3. Thus, in this case, third parties rights are created. In view of the aforesaid facts, this Court may be pleased not to exercise the power of review and may not recall the orders dated 17.1.2004 and 26.12.2003 whereby this Court confirmed the sale of the land in question of the company (in liquidation) for an amount of Rs. 2 crores in favour of the opponent No. 3
7. SUBMISSION OF LEARNED ADVOCATE, MR. MISHRA, FOR THE WORKERS 7.1 Learned advocate Mr. Mishra, who is appearing for the workers, has stated that it is no doubt true that the valuation was done in June 2003 and we are in July 2004. Normally, the price of real estate is increasing, but, so far as Ahmedabad is concerned, the land is situated surrounding the mill area which is thickly populated. There are other Mills closed. So there is large number of open land available in the vicinity of the said land. In view of the facts that there was heavy rain in 2000, earth-quake in 2001 and communal riots in 2002 in Gujarat generally and particularly in Ahmedabad, the price of the land has not increased but to some extent it has decreased because of financial crisis in the market. He has submitted that, if this Court permits the applicant to rebid, there will be further inordinate delay. The workers are interested in more money if the Company fetches but the Court must consider that the workers should get money during their life-time. Some of the workers are very old people, and they will not be able to see the colour of money during their life-time if further bidding is again permitted. He has also stated that some of the workers have expired. In view of the same, he has stated that the Court may not entertain further bidding in this behalf as per the offer of the applicant.
8. CONCLUSION 8.1 REVIEW 8.2 I have considered the rival submissions made by the learned advocates for the parties. I have also considered the merits of the case. It is no doubt true that this Court has reviewed its order dated 5.12.2003 and confirmed the sale in favour of the opponent No. 3 by its order dated 26.12.2003. I have considered the provisions of Order XLVII (47) of the Code. Strictly speaking, none of the conditions mentioned in Order XLVII (47), Rule 1, of the Code, for review, namely, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by the applicant at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, did exist when the Court recalled and reviewed the order dated 5.12.2003.
8.3 Further, immediately after the order dated 5.12.2003 was passed, the opponent No. 3 had immediately approached the Court, and before the previous sale was confirmed and before the possession of the property was given to the said applicant, the Court was obliged to review its order and, therefore, the review of the said order was not strictly under Order XLVII of the Code, but under Rule 9 of the Companies (Court) Rules, 1959, read with the power analogous to Order XLVII of the Code. In view of the same, strictly speaking, the bar provided under Rule 9 of Order 47 is not applicable in the present case.
8.4 Further, 'sufficient cause' has to be read with the causes mentioned in this behalf. In the present case, the only cause shown by the applicant is that he is ready to offer a higher price. That cause is not contemplated under Order XLVII. However, the Court has exercised power under Rule 9 of the Companies (Court) Rules. Therefore, Rule 9 of Order XLVII of the Code is not applicable in the present case and, therefore, the present application is maintainable.
8.5 The power to review is the creation of a statue. It must be conferred by law either specifically or by necessary implication. Review is not an appeal in disguise. It cannot be denied that justice is a virtue which transcends all barriers and the rules or procedures or technicalities of law cannot stand in the way of administration of justice. Law has to bend before justice. If the court finds that the error pointed out in the review petition was under mistake and the earlier judgment would not have been passed but for erroneous assumption which in fact did not exist and its perpetration had resulted in miscarriage of justice, nothing would preclude the court from rectifying the error. The mere fact that different views on the same subject are possible, is no ground to review the earlier judgment passed by a bench of the same strength. [Re: Power to Review: Its scope. Mulla on CPC -16th Edition-Vol 4 -page 4105] 8.6 In view of this, the application made by the present applicant does not fall strictly within Order 47 of the Code of Civil Procedure, i.e. review of the order. In view of the same, the contention of the opponent No. 3 that, in view of the Rule 9 of Order 47 of the CPC, the present application is not maintainable, cannot be accepted by this Court. However, still the application made by the applicant is maintainable in view of the inherent provisions contained in Rule 9 of the Companies [Court] Rules. Rule 9 is analogous to Section 151 of the CPC, which also provides for inherent powers. What is meant by 'inherent' ? According to the dictionary meaning, "inherent" means 'natural', 'existing and inseparable from something', 'a permanent attribute or quality', 'an essential element, something intrinsic, essential, vested in or attached to a person or office as a right or privilege'. Inherent powers are thus powers which may be exercised by a court to do full and complete justice between the parties before it.
8.7 The section (i.e. Sec.151 of CPC) is thus declaratory in nature. It does not confer inherent powers in a court but declares that such powers have been vested in every court of civil jurisdiction. It further states that no provision of the Code should be taken or deemed to limit or otherwise affect these inherent powers. These powers are inherent in the court by virtue of its duty to do full and complete justice between the parties before it.
{See: Code of Civil Procedure, By Justice C.K. Thakker, pages 900-901} 8.8 The Code of Civil Procedure is not exhaustive [Durga Dihal Das v. Anoraji (1895) 17 All 29, 31; Jogendra Chandra Sen v. Wazidunnisa Khatun (1907) 34 Cal 860], the simple reason being that the legislature is incapable of contemplating all the possible circumstances, which may arise, in future litigation, and consequently for providing the procedure for them (Jai Rani Puri v. Vinod Kumar Puri AIR 1998 Del 212). The court has, therefore, in many cases, where the circumstances so require, acted upon the assumption of the possession of an inherent power to act ex debito justitios, and to do real and substantial justice for the administration, for which alone, it exists (Hukum Chand v. Kamalanand (1906) 33 Cal 927; Shankar Hari v. Damodar Vyankaji (1945) ILR Bom 463, AIR 1945 Bom 380, 47 Bom LR 104, Vrajlal v. Jadhavji (1972) 13 Guj LR 555, AIR 1972 Guj 148, Multivakaji v. Kalindivakaji AIR 1994 Guj 42). However, the power, under this section, relates to matters of procedure. If the ordinary rules of procedure result in injustice, and there is no remedy, they can be broken in order to achieve the ends of justice (Atul Chandra Vora v. M/s. Assam Tea Brokers Pvt Ltd AIR 1995 Gau 73). The law cannot make express provisions against all inconveniences such that their dispositions express all the cases that may possibly be covered. It is, therefore, the duty of a judge to apply them, not only to what appears to be regulated by their express provisions of the law or within the consequences that may be gathered from it (Shankar Hari v. Damodar Vyankaji supra; Hurro Chunder Roy v. Shoorodhone Debia (1868) 9 WR 402, 406. {See: What is inherent power CPC by Mulla 16th Edition, 1st Volume, page 1422} 8.9 The Gujarat High Court, in the case of Sinha Watches (India) P. Ltd v. Gujarat State Financial Corporation, reported in 58 Company Cases p.489, more particularly, on page 497, observed as under: "It must be stated at the outset that r.6 of the Companies (Court) Rules, 1959, provides that save as provided by the Act or by these rules, the practice and procedure of the court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and the Rules. Rule 9 provides that nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court. It is, therefore, obvious that sitting as a company court, I have ample jurisdiction both under the inherent powers of this court as well as under the relevant provisions of the CPC as applicable to the company proceedings to pass appropriate orders for setting aside an ex parte order, if interest of justice requires me to do so."
8.10 I have already held that the present application is not maintainable under Order 47 of the Code under guise of either review or recall of the order. However, in view of Rule 9 of the Companies [Court] Rules, and, as the Court has always inherent power to review/recall the order, the Court exercised power of recall/review of the order under Rule 9 of the Companies (Court) Rules.
8.11. In view of the same, the present application filed by the applicant is maintainable under Rule 9 of the Company (Court) Rules.
8.12 On the ground of delay of the matter, I have considered the judgments of the Supreme Court cited by the learned advocate for the applicant. I have also considered the affidavit-in-reply filed on behalf of the opponent No. 3 and the subsequent developments which took place in the matter. The possession of the property in question has been taken over by the opponent No. 3 in compliance with the order dated 26.12.2003, whereas the present application has been filed in February 2004. Therefore, in my view, the present application is also not maintainable on the ground of delay, laches and acquiescence.
8.13 Not only that, in view of the subsequent developments that took place, payment of municipal taxes and education cess, and various acts carried out by the opponent No. 3, it is not possible for this Court to cancel the contract entered into between the Official Liquidator and the opponent No. 3 in pursuance of the order dated 26.12.2004. The third parties rights are created.
9. MERITS OF THE MATTER 9.1 VALUATION OF THE PROPERTY 9.2 From the record, it appears that the Sale Committee held a meeting on 1.5.2003 and decided to get the valuation from the Valuer. From the record, it appears that one B.B. Shah, Town Planner, was appointed as Valuer. He has submitted his report dated 12.6.2003. According to him, the land is situated in Final Plot No. 39 of T.P. Scheme No. 11, at Rakhial Road, Ahmedabad. The land is admeasuring 46415 sq.mtrs equivalent to 55698 sq.yards. He had valued the property at Rs. 450 per sq.yard, and the net value of the property is Rs. 2,50,64,000/- (Rupees two crores 50 lakhs sixty four thousand only). He has done his valuation on the oral instructions of the Central Bank of India, Ahmedabad. In his valuation report, the Valuer has observed that the aforesaid land in which Vivekanand Mills premises are situated abuts on the main Rakhial road which is a major route both for intercity and intracity public transport. This final plot is in the general industrial zone of the development plan of the Ahmedabad Municipal Corporation and is located at about a kilometer away on the east of the walled city of Ahmedabad. The land is also situated near Raipur Mills and Ramkrishna Mills (all these textile mills are closed down and their buildings and machineries are sold and are cleared off the site). In view of the availability of large plots of industrial land in such large supply as compared to comparatively lessor demand for industrial land on account of recession in the industrial development and in the property market at large, the land value of the premises of Vivekanand Mills will be necessarily low. The value of developed land charged by the GIDC Industrial Estate at Odhav is at present Rs. 900 per sq.mtr. Actual rate at which lands are sold in this estate varies from Rs. 1000 to Rs. 2000 per sq.mtr. These are values obtainable for plots of comparatively small sizes. However, The area of Vivekanand Mills premises being very large i.e. 46415 sq.mtrs i.e. 55698 sq.yds, and in light of the large supply of the industrial land in relation to the demand in the area around Vivekanand Mills and general recession in the industrial development and in real estate market, the valuer valued the land of Vivekanand Mills at Rs. 450 per sq.yard. The total value of the land will be thus, Rs. 2,50,64,000/-.
VALUATION OF LARGE AREA OF PLOT COMPARED TO SMALL AREA 9.3 Where the small extent of land sold is significant when compared with large extent of land acquired, the market value of large extent of acquired lands shall not be determined on the basis of value fetched by sale of infinitesimally small extent of land. How far the value fetched by sale of small extents of lands could form the basis for determining the market value of the acquired land has to inevitably depend upon the allowances to be made for factors which distinguish the acquired land from the plots of land sold and the sale value of which is relied upon as the basis for determining the market value of the acquired land. {Re: (1995) 2 SCC 305 - P. Ram Reddy v. Land Acquisition Officer.
9.4 It is a well-recognized principle of valuation of lands not to value large areas of land on the basis of sales of small areas without making suitable deductions from sale price of small plots of land on account of the largeness of the size of the land sought to be evaluated with reference to the said small plots. xx xx xx xx While evaluating a large plot of land by reference to the sale instance of a small plot of land, several factors must enter into account and no definite rule can be laid down as to the exact extent of deduction to be made. {Re: Fabrics Pvt Ltd v. Spl. Land Acquisition Officer, Kaira, 1971 GLR 319.} LIABILITY OF MUNICIPAL TAX ON LANDS 9.5 It may be stated that the Municipal Corporation has addressed a letter dated 15.9.2003 to the Official Liquidator wherein it has been stated that originally the property tax, education cess and interest upto 15.9.2003 as per the old formula upto 31.3.2001 was Rs. 3,28,37,912/- and as per the new formula Rs. 32,06,151/- and the total comes to Rs. 3,60,44,063/-. However, it is stated that the Standing Committee of the AMC has passed a resolution dated 22.3.2003 wherein 50% benefit has been given in property tax and education cess as per the old formula. After giving the said benefit, the outstanding tax of Vivekanand Mills stands currently at Rs. 2,08,71,591/-.
9.6 It was further stated that the benefit of closure will be given from the date of closure. After giving this benefit, if the remaining amount of property tax and education cess is paid fully before 31.3.2004, then total amount of interest/warrant fee/ notice fee of old formula will be given as rebate. Rates of education cess from the year 2001-02 are to be decided. As and when they are decided, education cess bills from the year 2001-02 will be given and the amount of such education cess will also have to be paid.
9.7 In view of this letter of the Municipality, the purchaser has offered Rs. 2 crores and also accepted the additional liability of property tax. On over all consideration of the price offered by the respondent No. 3 along with the existing liability of the property tax as well as education cess, and the valuation report, in my view, the respondent No. 3 has offered a very fair, remunerative, adequate, and reasonable price before this Court.
9.8 This Court, while considering the facts and circumstances of the case, has to take a pragmatic view and dispose of the property by seeing that maximum price is fetched. However, merely because once the contract is completed, part of sale consideration is paid, possession has been handed over, the purchaser has also entered into third party contract and, thereafter, if a slight higher price is offered, this Court cannot set aside the sale confirmed in favour of the respondent No. 3 who had paid almost full consideration, incurred huge expenditure on the land in question. The Company Court, while confirming the sale of the company through the Official Liquidator is satisfied that the price offered by the respondent No. 3 was reasonable having regard to the market value of the property and also liability of property tax and education cess. This Court was, thereafter, satisfied that the price offered by the respondent No. 3 was adequate and reasonable and it should be noted that though the applicant has offered a higher price, but, the said offer cannot constitute a valid ground for setting aside the sale in favour of the respondent No. 3. If the contention of the applicant is accepted that the contract entered into between the Official Liquidator and the respondent No. 3 should be set aside, then it will cause a great harm and prejudice to the respondent No. 3.
10. RE: CONTRACT ENTERED INTO BY THE OFFICIAL LIQUIDATOR - PROVISIONS OF LAW OF CONTRACT - AUCTION 10.1 I have considered analogy of Sections 4 and 19 of the Sale of Goods Act. The word 'sale' means transfer of absolute or general property in goods for a price. Section 19 provides for intention of the parties to enter into a contract. In this case, when the Official Liquidator invited offers, it was an invitation to offer. Thereafter, the respondent No. 3 decided to accept the said invitation to offer and showed his acceptance of the said offer before this Court. This Court considered the said invitation of offer as well as offer and, ultimately, accepted the offer and passed the order in this behalf. In this case, the respondent No. 3 has accepted offer which is absolutely reasonable and no condition is attached so far as the offer made by him is concerned. He has also accepted condition of payment of property tax and education cess which this Court imposed upon him and, in fact, he has paid part of amount in this behalf. Thus, offer and acceptance corresponded to each other and resulted into a binding contract. The said contract has been accepted by this Court by passing the order. Here, the Liquidator has already accepted the offer and the same has been communicated to the respondent No. 3 and, thereafter, this Court has passed the order and further agreement is entered into between the Official Liquidator and the respondent No. 3 and, in fact, the respondent No. 3 has also entered into agreement with other third party in this behalf.
10.2 What is meant by tender An invitation for tenders for the supply of goods or for execution of works is not an offer. It is a mere attempt to ascertain whether an offer can be obtained within such a margin as the employer is willing to adopt; it is an offer to negotiate, an offer to receive offers. The actual tender is the offer, and if accepted, it becomes a binding contract. The mere fact that a person makes a highest tender cannot entitle the tenderer to claim acceptance Re: Mulla on Contract p.50] 10.3 As per the provisions of the Contract Act, an agreement can be reached by process of offer and acceptance. It is settled position of law that every transaction to be recognized as contract must in its ultimate analysis resolve into a proposal and ts absolute and unqualified acceptance.
10.4 Contractual obligation to consider the Tender The jurisprudence in some other common law jurisdictions takes the approach that, depending upon the intentions of the parties, an invitation to tender can give rise to contractual obligations upon the submission of a bid. In this case, the liquidator is perfectly entitled to enter into a contract with a private party and, for this purpose, he can choose a person, who has offered highest bid at the relevant time.
10.5 In this case, the Liquidator has selected a person with whom he can enter into a contract which has been approved by this Court. The purchaser is bound by the obligations of the contract entered into with the Liquidator and every transaction entered into in exercise of its discretionary powers. However, after the Liquidator entered into the field of ordinary contract, the relations are governed by the contract, which would determine the rights and obligations of the parties inter se. In this case, the contract is completed and binding to all the parties. The conveyance has been executed. The contract became complete contract and the Company Court has given approval to it. Therefore, the applicant has not been able to show any valid ground on which the contract, which has been approved and executed, can be set aside.
10.6 We have noted that the concept of freedom of contract and sanctity of contract were at their strongest during the nineteenth century. In 1875 Sir Georgy Jessel M.R. stated: 'if there is one thing more than another which public policy requires, it is that men of full age and competent understanding shall have the utmost liberty in contracting, and that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by Courts of Justice.
10.7 This was said to have led to the reduction of supervision over the contractual terms to a bare minimum and the deprivation of the tools available for such control of much of their effectiveness. The doctrine of consideration acquired a predominantly formal meaning, although it was on occasion used to invalidate unfair agreements. A substantial part of the law of contract was attributed to the parties' agreement, and the role of equity, with its discretionary remedies, and its ability to avoid common law rules, was less central."
[Re: Sanctity of Contracts {Anson's Law of Contract, 27th Edition, page 7 - 16]
11. RE :CASE LAW 11.1 In the case of Wellworth Vanijya (P) Ltd v. Chowdhury Udyog (P) Ltd, reported in 2003 (2) Company Law Journal p.1 the Honourable Supreme Court has held in paragraphs 3 and 4, as under (page 3 and 4):
11.2 "3. The company in question was wound up as far back as on 28.2.1986 when its assets were valued at Rs. 7.50 crores (approx.) Since the property in question could not be sold, the property was revalued on 19.11.2001 at Rs. 4.16 crores (approx). When the property was put to sale for the last time, the first respondent in this appeal offered Rs. 3 crores which is far less than the value fixed by the official valuers. However, the sale was confirmed on 7.12.2001, but the Appellate Bench on 21.12.2001 set aside the said sale, among other things, coming to the conclusion that the amount offered by the first respondent being very much on the lower side, under clause 11 of the terms and conditions of sale, it had the jurisdiction to set aside the confirmation of the sale made earlier. While doing so, the court did not take into consideration the offer made by the appellant herein which was for a sum of Rs. 4.25 crores. The contention on behalf of the appellant in this case is that the value of the property is diminishing day by day and by directing a fresh sale all over again, it would not benefit the creditors of the company in any manner, therefore, the offer made by it ought to have been accepted by the High Court. We have also considered the arguments addressed in opposition by the first respondent herein. It is necessary to note herein that when the matter had come up for further orders on earlier dates starting from 11.11.2002, noticing the fact that the value of the property was diminishing, we called upon the parties to offer their bids in this court so that the matter could be settled once for all without further delay so as to safeguard the interest of the creditors to the extent possible. Though this matter was adjourned from time to time, expecting the respondent to make a better bid than what was made by the appellant, we are informed today that the said respondent is not willing to make any higher bid. On the contrary, he wanted to question the judgment of the High Court which has cancelled the confirmation of sale made in his favour.
11.3 As noted above, the company was wound up as far back as on 28.2.1986 and the creditors of the company have not been able to receive anything only because of the fact that the assets of the company could not be sold. The value of the assets of the company has come down from Rs. 7.5 crores to Rs. 4.25 crores which is the best offer received as on today; whereas the offer made by the first respondent is only Rs. 3 crores and he is not willing to enhance it. In the above fact-situation, without going into the legality of the questions involved, bearing in mind solely the interests of the creditors, we think the offer made by the appellant of Rs. 4.25 crores should be accepted. Therefore, allowing this appeal and setting aside the impugned judgment, we direct the Company Court to accept the offer of Rs. 4.25 crores made by the appellant and on the appellant depositing the balance amount, necessary documents may be executed in its favour."
11.4 In the case of Union Bank of India v. Official Liquidator, High Court of Calcutta, and Ors., reported in 101 Company Cases 317, the Honourable Supreme Court held in page 323 as under: "At the outset, we would state that in proceedings for winding up of the company under liquidation, the court acts as a custodian for the interest of the company and the creditors. Therefore, before sanctioning the sale of its assets, the court is required to exercise judicial discretion to see that properties are sold at a reasonable price. For deciding what would be reasonable price, the valuation report of an expert is a must. Not only that, it is the duty of the court to disclose the said valuation report to the secured creditors and other interested persons including the offerors. Further, it is the duty of the court to apply its mind to the valuation report for verifying whether the report indicates the reasonable market value of the property to be auctioned even if objections are not raised."
11.5 Before the Division Bench of the Andhra Pradesh High Court in the case of Bharat Scrap v. Haryana & Steel Centre, reported in (2004) 49 SCL 603 (AP), the facts of the case are as under: 11.6 "The Company Court ordered winding-up of the company 'K'. The Official Liquidator was directed to sell the properties of the said company by inviting sealed tenders. Different companies had participated in the open auction and quoted their respective bids. The appellant-company initially quoted a price and increased its binds. Next to the appellant was the respondent, thus, the sale was confirmed in favour of the appellant. A cheque was issued towards 20 per cent of the offer. Since the balance of sale consideration could not be paid by the appellant within the time fixed, an application was filed seeking extension of time. A report was filed by the Official Liquidator in the Company Court that the cheque issued by the appellant was dishonoured. The respondent offered its bid of higher amount to the Official Liquidator as the appellant had failed to deposit the balance sale consideration. The Company Judge taking into consideration all the facts and circumstances and on being satisfied with the reasons submitted by the appellant, condoned the delay and extended the time. The respondent-applicant filed an appeal against the order of the Company Court contending that in view of the delay caused by the appellant, a right accrued in favour of the respondent, being the second highest bidder."
11.7 In that situation, the Court held, in paragraphs 15 and 16, as under (page 611):
11.8 "15. We have carefully gone through the impugned order of the Company Court. The learned Judge had taken 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 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 irregularity or fraud in the conduct of sale could be set aside on the ground that it was not just and proper exercise of judicial discretion.
11.9 16. It is no doubt true that when an order passed by a sitting learned Judge has to be reviewed, judicial discipline requires that the same learned Judge has to pass an order either by way of modification or by way of review, as the case may be. As can be seen from the facts of the case, C.A. No. 1035/2002 is an independent application moved raising several grounds and hence the learned Company Judge at the relevant point of time thought it fit to dispose of the application with certain directions. Apart from this aspect of the matter, when the Company Court had exercised the discretion in a particular way, unless the exercise of such discretion is not exercised judicially, the appellate Court should be slow in interfering with such orders of the Company Court made in exercise of such judicial discretion. Having satisfied with the reasons recorded by the Company Court while disposing of the application with certain directions, we do not see any compelling reasons to interfere with such directions or to disturb the findings recorded by the learned Company Judge in this regard."
12. I have considered the judgments of the Supreme Court in the cases of Lica (P) Ltd (1) and Lica (P) Ltd (2). In the first case, the Supreme Court observed that the purpose of an open auction is to get the most remunerative price and it the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed then the Court has jurisdiction. Secondly, one of the conditions was that even after confirmation of sale, the same is liable to be set aside as per clause 11 of the conditions of sale. In that case, before the learned single Judge, more remunerative price was offered and the learned single Judge exercised discretion to accept that offer. Against that, the matter went to the Division Bench and the Division Bench set aside the order of the learned single Judge. Thereafter, the matter went to the Supreme Court and the Supreme Court held that the Division Bench committed an illegality in interfering with the order of the learned single Judge. In those peculiar facts and circumstances of the case, the Supreme Court interfered with the judgment of the Division Bench. As regards the second case (i.e. Lica (P) Ltd.), the Supreme Court permitted fresh bid to fetch highest market price. I have considered both the cases. In the present case, those factors are not existent and, therefore, I do not find any force in the contention of the applicant that, merely because he has offered Rs. 20 lakhs more, this Court should again reopen the bid in this behalf.
12.1 I have also gone through the judgment of the Supreme Court in the case of Nani Gopal Paul Private Limited (supra) wherein it is held that the Supreme Court or the Appellate Court would not remain a mute or helpless spectator to obvious and manifest illegality committed in conducting court sales. The decision is binding on me. But, in the facts and circumstances of the present case, in my view, there is no illegality alleged much less proved by the applicant in this behalf and, therefore, the judgment of the Supreme Court in the case of Nani Gopal Paul Private Limited (supra) is not applicable to the facts of the present case.
12.2 I have also gone through the judgment of the Supreme Court in the case of Divya Manufacturing Co. Pvt. Ltd (supra). In that case, the Supreme Court held that unless the Court is satisfied about the adequacy of the price the act of confirmation of the sale would not be a proper exercise of judicial discretion. In this case, I am satisfied that the price offered by the opponent No. 3 is adequate price looking to the market conditions and, in that case, the possession of the property was not given to the purchaser whereas in this case the possession had already been given and the opponent No. 3 has already created third party rights in this behalf. In view of this, the aforesaid judgment is not applicable to the facts of the present case.
12.3 Similarly, the judgment of the Supreme Court in the case of Allahabad Bank (supra) is also not applicable to the facts of the present case.
12.4 As regards the judgment of the Division Bench of this Court in the case of Abhisekh Shops & Warehouse (supra), there also, the person had given very high price and, therefore, the learned single Judge had decided to have reauction of the property. There also, the observation of the learned single Judge was that the price fetched was inadequate. Now, this is not the case here and, therefore also, all these judgments are distinguishable on the facts of the case, though the same are binding on me.
12.5 It may be noted that, in view of catena of decisions of the Supreme Court, more particularly in the cases of Lica, Divya Manufacturing Company Limited and Allahabad Bank, which I have referred to earlier, it is no doubt true that in a given situation the Court has power and jurisdiction to reopen the bid which has been given in auction. However, from the aforesaid decisions, the Court has power and jurisdiction provided two conditions are satisfied.
12.6 One is that, if there is any fraud or illegality or any procedural irregularity committed in the auction held earlier, then, certainly, the Court has power and jurisdiction to reopen or recall or review of the order. In this case, admittedly, the applicant has neither alleged nor proved any fraud or illegality or procedural irregularity while accepting the bid of the opponent No. 3. In this case, the earlier sale where this Court passed an order confirming the sale on 5.12.2003 was passed in the open Court.
12.7 It is not the allegation of the applicant that, in the earlier transaction, there is any fraud or illegality or procedural irregularity. His only case is that the earlier bid of opponent No. 3 was for Rs. 2 crores whereas today he is prepared to pay Rs. 2 crores 20 lakhs, i.e. Rs. 20 lakhs more. Besides this, there is no other allegation in his application by which he prays that this Court may recall/review the order.
12.8 Therefore, in view of the decision of the Supreme Court in Divya Manufacturing (supra), now the Court will have to consider the question as to whether the price paid by the opponent No. 3 is satisfactory price or not looking to the facts and circumstances of the case. Under the Contract law, 'consideration' is defined as a valuable consideration in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered, or undertaken by the other.
12.9 In view of this, 'consideration' is an important part in the realm of contract. Now, judging contract entered into by and between the Liquidator and the opponent No. 3, the Court has to consider as to whether the opponent No. 3 has paid adequate price or not. In the foregoing paragraphs, I have considered valuation of the property. I have also considered the letter of the Ahmedabad Municipal Corporation. I have also considered the offer given by the opponent No. 3 and his acceptance of payment of municipal tax and education cess which the Municipality may determine from time to time. I have also considered the provisions of Sales of Goods Act and the sanctity of contract in this behalf. I have also considered the affidavit-in-reply filed by the opponent No. 3. I have also considered previous history of litigation by which there are four or five attempts made and this also shows that the property is not a prime property which can be sold at any price. All these considerations are relevant for judging adequacy of consideration.
12.10 The Court may have jurisdiction to consider acceptance of tender provided the consideration is not adequate. Say for example, the price of the land is Rs. 1 lakh and the same is sold at Rs. 50,000/- i.e. at half the value. In that situation, the Court has jurisdiction to recall or review the order on this behalf. It is established by evidence on record by showing valuation of the land, and the offer made by the opponent No. 3 in the auction for which earlier there was adequate publicity and so many people had come and ultimately the offer was previously accepted at Rs. 1 crore 80 lakhs. However, before this Court accepted that offer, the opponent No. 3 gave offer of Rs. 2 crores and at that time at the instance of the secured creditors and the workers, the Court had recalled the previous order because the contract between the Official Liquidator and the then purchaser was not finalised.
12.11 However, in this situation, not only the price is not inadequate, but the opponent No. 3 has also carried out certain activities by which third party rights are created and, therefore, it will not be possible for this Court to recall or review the order. This Court is of the view that the consideration paid by the opponent No. 3 is adequate in the eye of law. For what price the goods are purchased, also depends upon the commercial sagacity of the contract. It is not the function of the Court to consider as to whether the price offered by the opponent No. 3 is X or X+1. The Court is only required to see whether the price offered by the opponent No. 3 is adequate. Once the Court comes to the conclusion that the price is adequate, then it is not the function of the Court to see whether adequate price is 'X' or X+1' price. That is the function of the parties to consider in this behalf. This Court is satisfied that the price, which has been offered by the opponent No. 3, is adequate in the eye of law.
12.12 Over and above, the Court has to consider the principle regarding acceptance of the contract, the principle underlying tender agreement and also sanctity of the contract. Once the parties have entered into a contract, the intention was clear that the sale is confirmed, contract is completed and the same is binding to all the people. Not only that, the said sale has been confirmed and approved by this Court also. The applicant has not been able to allege much less prove that there is any irregularity or invalidity in the procedure prescribed in this behalf.
13. In view of the aforesaid circumstances, this Court is not able to accept the application of the applicant on the following grounds:
14. This Court has already narrated earlier facts in this behalf. The property in question is very large property having 55,948 sq.yards situated in the vicinity of other mills premises which are also available in this behalf. The Court has also considered valuation report and the price offered by the respondent No. 3 is in consonance with the valuation of the land in question. It may be noted that, earlier, the Court has made 4-5 efforts and it was difficult to sell the land. In this case, after great difficulty (i.e. after 5th or 6th effort), the Court is able to obtain purchaser which has paid part of price and also paid municipal tax, has taken possession and also tried to develop the land in question. In view of the same, if the Court has power to review, but the same power is very limited and, in the facts and circumstances of the case, this Court does not desire to exercise the said power of review in this behalf. Even if the Court has power, the Court has to exercise judicial discretion looking to the facts of the case. The Court has to exercise power with commercial sagacity and wisdom. Over and above, even if the power of review is available, the applicant has come after a great delay and, therefore, on the ground of delay also, power of review is not to be exercised.
14.1 As regards the price of the land in question and the auction, it is no doubt true that the applicant has cited several decisions. The respondent No. 3 has also cited certain decisions. I have also considered various decisions of the Supreme Court and the High Court in this behalf. This Court is of the view that, earlier when the sale was confirmed in favour of the respondent No. 3, the applicant has not been able to show any illegality or irregularity in the said sale which has been confirmed by this Court after great deliberations. The applicant has only offered Rs. 20 lakhs more and that is not a circumstance in favour of the applicant by which the Court can set aside the same. The Court has considered the adequacy of the consideration accepted, conclusion of the contract, right of third party, and also sanctity of the contract. In view of this, this Court is not prepared to accept the contention of the applicant nd, therefore, the application is rejected.
14.2 A feeble attempt was made by the applicant that the price of the land was shown as Rs. 2 crores 50 lakhs. It is submitted by the learned Senior Advocate for the applicant that the land is situated within the limits of Ahmedabad Municipal Corporation and under the Town Planning Scheme and, therefore, the offer of Rs. 2 crores is less than the valuation report and, therefore also, when the applicant has offered Rs. 2 crores 20 lakhs, this Court may recall and review the order dated 26.12.2003 and the parties may be permitted to go for inter-se bidding in the open court in order to fetch a higher price for the land in question.
14.3 In this case, this offer, though attractive, cannot be accepted on the ground that the opponent No. 3 had, in addition to the price, already paid substantial amount towards the municipal tax and other expenditure and, therefore, the total price of the land in question would come to Rs. 3 crores and above. Furthermore, at the time of passing the order dated 5.12.2003, the Court had considered ten offers received by the Official Liquidator from time to time.
14.4 In the foregoing paragraphs, I have narrated the fact that previously the Official Liquidator had made efforts right from September 1997 to sell the property in question. In fact, every time the Official Liquidator had given wide publicity in the local newspapers in this behalf. Thereafter, about five to six attempts were made, but the property could not be sold. In view of the same, if I allow the application of the applicant for further auction of the property, that will unnecessarily delay the proceedings.
14.5 Secondly, last time when I confirmed the sale in December 2003 also, adequate opportunity was given to all and the Official Liquidator could obtain the maximum price of Rs. 2 crores and the contract has been confirmed after due verification.
15. I have considered the valuation report, existing liability of the municipal tax and also the judgments of the Supreme Court in Divya Mfg Divya Mfg Co. (P) Ltd v. Union of India, AIR 2000 SC 2346, Allahabad Bank v. Bengal Paper Mills Co. Ltd, reported in 96 Company Cases p.804, Lica (P) Ltd (No.1) v. Official Liquidator and Anr., reported in 85 Company Cases 788, and Lica (P) Ltd (No.2) v. Official Liquidator and Anr., reported in 85 Company Cases 792. It is no doubt true that the trend of the judgments is to see that the Court should always get more price. The Court is custodia-legis of the property of the company and it is always desirable to have more money. But I have also considered the adequacy of the price offered, the overall aspect regarding sanctity of contract and offer given by the respondent No. 3. The respondent No. 3 has not only made part payment and obtained physical possession of the property, but has also parted with a part of the property to third party. Therefore, third party rights have been created. In view of the same, in my view, there is no necessity to accept the offer of the applicant.
16 In the result, the application filed by the applicant is rejected.
17 At this stage, the learned Senior Advocate, Mr. Mihir Thakore, with Mr. Dhaval Barot, appearing for the applicant has prayed that this order may not be implemented till October 14, 2004, so as to enable the applicant to approach the Higher Forum. The said prayer is granted. This order shall stand suspended till October 14, 2004.
18. The Court is extremely grateful to learned Senior Advocate, Mr. Mihir Thakore assisted by learned advocate Mr. Barot and learned Senior Advocate Mr. S.N. Soparkar assisted by learned advocate Mr. B.T. Rao, for rendering able and valuable assistance in resolving the difficult questions of fact and law in this behalf.