Gujarat High Court
Prashant Mukundray Shah vs Official Liquidator Of M/S. Khodiyar ... on 10 January, 2025
NEUTRAL CITATION
C/COMA/58/2023 ORDER DATED: 10/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/COMPANY APPLICATION NO. 58 of 2023
In R/OFFICIAL LIQUDATOR REPORT NO. 86 of 2022
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PRASHANT MUKUNDRAY SHAH
Versus
OFFICIAL LIQUIDATOR OF M/S. KHODIYAR PTTERY WORKS LTD. (IN
LIQN) & ORS.
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Appearance:
MR RAVI PAHWA, LD.ADVOCATE FOR THAKKAR AND PAHWA
ADVOCATES(1357) for the Applicant(s) No. 1
BHOOMI M THAKORE(6237) for the Respondent(s) No. 1
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CORAM HONOURABLE MRS. JUSTICE MAUNA M. BHATT
:
Date: 10/01/2025
ORAL ORDER
1. This application is filed seeking following reliefs:
"(A) That this Hon'ble Court may be pleased to direct respondent no.1 Official Liquidator to forthwith refund EMD of Rs. 1,70,00,000/- in favour of applicant, in the interest of justice; (B) That this Hon'ble Court may also be pleased to issue any other consequential and incidental reliefs as may be deemed appropriate by this Hon'ble Court."
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NEUTRAL CITATION C/COMA/58/2023 ORDER DATED: 10/01/2025 undefined
2. Heard learned advocate Mr. Ravi Pahwa for the applicant (original respondent No.7) and learned advocate Ms. Bhoomi Thakore for respondent No.1 - Official Liquidator.
3. Learned advocate Mr. Pahwa for the applicant submitted that applicant herein is the second highest bidder in the e-auction conducted by M/s. RailTel Corporation of India Limited, New Delhi on 30.11.2022 for Lot No.III (Composite Lot) being Freehold Industrial Land admeasuring about 11230 sq. meters situated at Revenue Survey No.41/2pl, Opp. Sihore Railway Station, Ghanghali Road, Sihore, District-Bhavnagar and Leasehold Industrial land admeasuring about 96751.78 sq. meters (excluding chawls/quarters) situated at Revenue Survey No.64/1p2, 64/2, 64/3, 65, 85/p/1, 86/p/2, 87/p/1, 87/p/2, 88, 89, 90/p/1, 90/p/2, 91, 92, 93, 94, Opp. Sihore Railway Station, Ghanghali Road, Sihore, District- Bhavnagar.
4. The applicant participated in the e-auction by giving bid of Rs. 17,00,00,000/- and deposited an amount of Rs.1,70,00,000/- with the respondent No.1 - Official Liquidator towards EMD in October 2022. Respondent No.6 also participated in e-auction and gave a bid of Rs.17,15,00,000/- and therefore e-auction was concluded in favour of respondent Page 2 of 8 Uploaded by MAYA S. CHAUHAN(HC01402) on Sat Jan 18 2025 Downloaded on : Sat Feb 01 00:02:31 IST 2025 NEUTRAL CITATION C/COMA/58/2023 ORDER DATED: 10/01/2025 undefined No.6 being the highest bidder on 31.10.2022. Undisputedly, respondent No.6 herein is the highest bidder and applicant herein is the second highest bidder in the e-auction dated 30.11.2022. Pursuant to the e-auction conducted, respondent No.1 - Official Liquidator filed OLR No.86 of 2022 seeking to consider the highest bid for lot No.III (Composite Lot) of respondent No.6 for an amount of Rs. 17,15,00,000/-. In the OLR No. 86 of 2022, this Court had issued notice on 16.12.2022. Pending OLR, thereafter, respondent No.1 - Official Liquidator filed a report in January 2023, requesting to implead opponent No.8 and 9 as party respondents. The said request was accepted by permitting respondent No.8 and 9 as party respondents in OLR No.86 of 2022 by an order dated 07.07.2023. Thereafter, the OLR No.86 of 2022 was listed and adjourned time and again.
4.1 Learned advocate submitted that though respondent No.7 was a successful bidder, the sale could not get confirmed in his favour, because he failed in depositing 25% of total amount as per the terms and conditions. As per condition No. 39 the highest bidder is required to deposit 25% of the amount. In view of non-finalization of auction in favour of highest bidder (respondent No.7), the applicant herein also could not get back his EMD which he deposited of Rs.1,70,00,000/-.
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NEUTRAL CITATION C/COMA/58/2023 ORDER DATED: 10/01/2025 undefined 4.2. Learned advocate therefore submitted that on account of non-finalization of auction in favour of highest bidder (respondent No.7), the amount of EMD deposited by the applicant is lying with the office of the Official Liquidator and therefore, the present application is filed seeking refund of the EMD deposited being the second highest bidder. Learned advocate further submitted that in view of non- confirmation of the sale till date in favour of the highest bidder (respondent No.7), the applicant herein is ready not to participate in the auction and therefore, the EMD of Rs.1,70,00,000/- may be returned back. Learned advocate also submitted that the applicant being second highest bidder is now no more interested to continue in the auction proceedings. The applicant is not required to any more adhere with the terms and conditions of the auction proceedings for which no prejudice would cause to highest bidder (respondent No.7). In support of his submissions learned Advocate relied upon order dated 15.07.2024 in OLR No. 53 of 2023.
5. Opposing the application, learned advocate Ms. Bhoomi Thakore submitted that the reliance placed on the order dated 15.07.2024 in OLR No. 53 of 2023 is misconceived since that order was passed in facts and circumstances of Page 4 of 8 Uploaded by MAYA S. CHAUHAN(HC01402) on Sat Jan 18 2025 Downloaded on : Sat Feb 01 00:02:31 IST 2025 NEUTRAL CITATION C/COMA/58/2023 ORDER DATED: 10/01/2025 undefined that case and the Court has observed that the same shall not be observed as precedent. Further as per the terms and conditions of the auction bid, Conditions No.38, 39, 41, 45 reads as under:
"38. The offeror shall not be entitled to withdraw or cancel his offer once submitted. If the offeror withdraw or cancel his offer the Earnest Money Deposit (EMD) shall be liable to be forfeited and he will also be liable to pay to the Official Liquidator the loss, damage suffered consequent upon his backing out off their offer. The property/assets in question will then be re-sold at the risk and consequences of the offeror.
39. The EMD of unsuccessful bidders will be returned to them as may be directed by the Hon'ble High Court of Gujarat. The EMD of highest bidder and also of the second highest bidder will be retained by the Official Liquidator. The EMD of the Second Highest bidder will be returned only after receipt of 25% of the sale consideration from the Successful bidder. EMD will be refunded only by RTGS/NEFT mode by online banking payment system by transferring the amount directly to the Bank Account of the bidders. Therefore, the bidders are required to Page 5 of 8 Uploaded by MAYA S. CHAUHAN(HC01402) on Sat Jan 18 2025 Downloaded on : Sat Feb 01 00:02:31 IST 2025 NEUTRAL CITATION C/COMA/58/2023 ORDER DATED: 10/01/2025 undefined furnish their Bank Account details and their KYC on a separate sheet attached with these Terms and Conditions, for refund of EMD accordingly.
41. Pending the confirmation of sale by the Hon'ble High Court of Gujarat bidders will not be allowed to withdraw their offer.
45. The bidders shall be deemed to have read and understood all the Terms and Conditions of sale and are bound by such Terms and Conditions."
5.1 She therefore, submitted that pending confirmation of sale as specifically referred in Condition No.41, bidders will not be allowed to withdraw their offer. In the alternative, the office of official liquidator may be directed to put the said amount in a fixed deposit so that no loss would cause to the applicant. Moreover, any deviation from the conditions referred in the auction may create uncalled for precedent. She therefore submitted that the present application deserves rejection.
6. Considered the submissions and the conditions referred herein above. Re-visitation of facts reveals that the applicant herein is the second highest bidder who upon auction being finalized on 30.11.2022 deposited EMD of Rs.1,70,00,000/- in Page 6 of 8 Uploaded by MAYA S. CHAUHAN(HC01402) on Sat Jan 18 2025 Downloaded on : Sat Feb 01 00:02:31 IST 2025 NEUTRAL CITATION C/COMA/58/2023 ORDER DATED: 10/01/2025 undefined the office of respondent No.1 - Official Liquidator. Accordingly, an OLR No.86 of 2022 was filed seeking confirmation of sale, however, for one or the other reason, the sale could not get confirmed in favour of highest bidder (respondent No.7) till date. This Court cannot be ignorant about the time lapsed from 30.11.2022 to January 2025. It is true that one of the conditions of confirmation of sale refers to not allowing to withdraw the offers given by bidders pending confirmation of sale by this Court. However, the contention of the applicant that he is no more inclined or interested to participate or to continue in the auction proceedings cannot be ignored. Since the applicant herein has decided not to participate in the auction proceedings, there being no embargo as regards return of EMD on unsuccessful second highest bidder. Further, it is made clear that if first highest bidder for any reason withdraws his offer, then also the applicant in view of the averment made in this application that he is not inclined or interested to participate in the auction proceedings shall not be permitted to participate in the said auction proceedings in future. In other words, he would be declared as unsuccessful bidder with regard to the auction which took place on 30.11.2022.
8. In view of above, the Official Liquidator is directed to refund the EMD of the second highest bidder i.e. PRASHANT Page 7 of 8 Uploaded by MAYA S. CHAUHAN(HC01402) on Sat Jan 18 2025 Downloaded on : Sat Feb 01 00:02:31 IST 2025 NEUTRAL CITATION C/COMA/58/2023 ORDER DATED: 10/01/2025 undefined MUKUNDRAY SHAH, (applicant herein - respondent No.7 in OLR No.86 of 2022) within a period of two weeks from the date of receipt of this order. It is also clarified that applicant herein - respondent No.7 in OLR No.86 of 2022 shall not create any equity in relation to auction proceedings which conducted on 30.11.2022. Further, this order is passed in the facts and circumstances of the present case and shall not be treated as precedent. With this, the present application is disposed of.
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