Madhya Pradesh High Court
Shree Bhageshwari Papers Ltd. vs Lakhani Footcare Pvt.Ltd. on 2 March, 2020
Author: Prakash Shrivastava
Bench: Prakash Shrivastava
HIGH COURT OF MADHYA PRADESH
1 COMP No.8/14
COMP No.8/2014
Indore, Dated : 2.3.2020
OLR No.31/19, IA No.7202/19 & IA No.6678/19:-
Shri H.Y. Mehta, learned counsel for the OL.
Shri Vijayesh Atre, learned counsel for the applicant in
IA No.6678/19.
Shri Pradeep Gupta, learned counsel for the applicant
in IA No.7202/19.
Shri Abhishek Tugnawat, learned counsel for the Bank
of India-secured creditor.
Shri Ravi Data with Ms. Trishla Salghat, learned
counsel for the Ex-Directors.
Heard.
OLR No.31/19 has been field by the OL with a prayer to
confirm the sale of the properties of the Company-in-
Liquidation in Lot No.1 in favour of the highest bidder M/s
Seabright Landmark Projects LLP, Indore (M.P.). IA
No.7202/19 has been filed by the highest bidder M/s
Seabright Landmark Projects LLP for confirmation of sale
and direction to the OL to execute the sale deed and IA
No.6678/19 has been filed by one M/s.Om Gurudev
Enterprises with a prayer to accept its offer, which is more
than the offer made by the highest bidder and sale the assets
in Lot No.1 to it.
The brief facts are that this Court had passed the
winding up order in the matter on 9.9.2016. Thereafter the
attempts were made to sale the assets of Lot No.1 but since
no buyer had come forward to purchase the said assets,
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therefore, in the meeting of the assets sale committee dated
28.8.2018 it was decided to sale the assets of Lot No.1 at a
price of Rs.27.90 Crores and EMD of Rs.2.80 Crores. Hence
the OLR No.29/2018 was filed before this Court seeking
permission to sale the assets of Lot No.1 at the reserved
price of Rs.27.90 Crores and the same was allowed by this
Court by order dated 17.12.2018. Thereafter the
advertisement of sale notice was issued in Dainik Bhaskar,
All M.P. Edition and the Economic Times, All India Edition on
9.3.2019 and inspection of the assets/properties was given to
the interested buyers on 18.3.2019. In order to give wide
publicity of sale of the aforesaid assets, the sale notice was
uploaded on MCA portal. The e-auction was held on
4.4.2019. The meeting of the assets sale committee/secured
creditors was held on 16.4.2019. The E-auction agency M/s
e-Procurement Technologies Ltd., Ahmedabad had submitted
the final report in respect of the tender and highest offer
received in the e-auction. As per the report of e-auction
against the reserved price of Rs.27.90 Crores, the highest
offer of Rs.28,15,00,000/- was received from M/s Seabright
Landmark Projects LLP, Indore (M.P.). After receipt of the
highest offer, on 12.4.2019 an offer of Rs.29 Crore was
received from one M/s Aviral Buildcon Pvt. Ltd. vide email
dated 12.4.2019. During the meeting the representative of
the Bank of India had requested the assets sale committee to
consider the highest offer of Rs.28,15,00,000/- from M/s
Seabright Landmark Projects LLP, Indore (M.P.). This is duly
reflected in the minutes of the meeting of the assets sale
committee dated 16.4.2019. Thereafter on 10.6.2019 the
offer of M/s. Om Gurudev Enterprises of Rs.30.69 Crores
was received and on 18.6.2019 one offer of Shri Girish
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Panchal without disclosing any amount was received. Hence
the OL has filed the report OLR No.31/19 mentioning the
details of all these offers and making alternate prayers of
confirming the sale in favour of highest bidder or in favour of
the subsequent offeree M/s Om Gurudev Enterprises, Indore.
The submission of learned counsel for the highest
bidder is that the bid of the highest bidder M/s Seabright
Landmark Projects LLP, Indore (M.P.) was already found to
be highest and accepted by the assets sale committee and it
had deposited the EMD at that time and thereafter almost an
year was passed, therefore, subsequent offers may not be
considered at this stage.
As against this, the submission of counsel for M/s Om
Gurudev Enterprises, Indore (M.P.) is that he is offering the
amount higher than the amount offered by the highest bidder
and the object of the auction by this Court is to fetch the
maximum possible price, therefore, its bid should be
accepted.
The submission of counsel for the OL is that no proper
explanation for submitting the bid at the time of e-auction has
been given by M/s Om Gurudev Enterprises, Indore.
Counsel for the Bank of India, secured creditor has also
submitted that the offer made by the highest bidder be
accepted and the subsequent offer may not be considered as
that will effect the credibility of auction sale and in other
matters after making such offers, subsequently similar
applicants have later on backed out creating complications.
I have heard the learned counsel for the parties and
perused the record.
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The law in regard to considering the offers after
approval of the highest bid at the stage of confirmation of
sale is now well settled. It has been held that a subsequent
higher offer is not a valid ground for refusing confirmation of
sale or offer already made. It is also well settled that if the
price offered is adequate and the court is satisfied about the
market value of the property and that the price offered is
reasonable, then it would be appropriate to exercise the
judicial discretion of confirming the sale. The Supreme Court
in the matter of Vedica Procon Pvt. Ltd. Vs. Balleshwar
Greens Pvt. Ltd. and others reported in (2015) 10 SCC 94
after considering the earlier judgments on this issue has held
that:-
"35. In Navalkha & Sons v. Sri Ramanya Das &
Others, (1969) 3 SCC 537, certain movable and immovable
properties of a company in liquidation were brought to sale.
The Company Court directed the sale to be conducted by
three persons jointly appointed as Commissioners for the
conduct of sale. The sale was conducted. The appellant
before this Court was the only offeror. The offer was
accepted by the Commissioners. The Commissioners made
an application to the Company Court for the confirmation of
sale. At that stage, a third party made an application
claiming that he was willing to offer a higher price. The
Company Court then decided to put the property once
again for auction but only between the original offeror and
the objector. In such a process, the original offeror once
again became the highest bidder. That bid was accepted by
the Company Judge. At that stage, another third party came
forward objecting to the procedure adopted by the High
Court for confining the auction only between the two parties
without any fresh advertisement. Such an objection was
rejected by the Company Judge. Aggrieved by the same,
the objector carried the matter in an intra court appeal to
the Division Bench successfully. Hence the appeal before
this Court by the original offeror. This Court dismissed the
appeal approving the view of the Division Bench that the
procedure adopted by the learned single Judge was not
legally sustainable.
36. In the process, this Court indicated the
principles governing the confirmation of sales conducted by
the Company Courts by the official liquidators. (Navlakha
case, SCC pp. 540-41, para 6)
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"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 offeror 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 Dakuwala v. T. Sriman
Kanthimathinatha 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 Rathnasami Pillai v. Sadapathy Pillai
and S. Soundararajan v. M/s. 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.
It is well to bear in mind the other principle which is
equally well- settled namely that once the court
comes to the conclusion that the price offered is
adequate, no subsequent higher offer can constitute
a valid ground for refusing confirmation of the sale or
offer already received. (See the decision of the
Madras High Court in Roshan & Co. case)."
37. Divya Mfg. Co. (P) Ltd. v. Union Bank of India &
Others, (2000) 6 SCC 69 was a case where the assets of
the company in liquidation were sold in favour of the
appellant before this court and the sale was confirmed by
the Company Court. Within a week thereafter, an
application came to be filed by one of the participants in
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the auction proceedings praying that the order of
confirmation be recalled and the applicant was willing to
offer an amount higher than what was offered by the
appellant before this Court. Subsequently, more number of
applications came to be filed before the Court offering
higher amounts. Therefore, the Company Court recalled
the order confirming the sale. Hence, the appeal before
this Court.
38. This Court, while reiterating the principles laid
down in Navalkha case, declined to interfere with the order
of the court and held as follows:
(Divya Mfg. Co. case, SCC p. 79, Para 16)
"16. ....As stated above, neither the possession of
the property nor the sale deed was executed in
favour of the appellant. The offer of Rs.1.30 crore
is totally inadequate in comparison to the offer of
Rs.2 crores and in case where such higher price is
offered, it would be in the interest of the Company
and its creditors to set aside the sale. This may
cause some inconvenience or loss to the highest
bidder but that cannot be helped in view of the fact
that such sales are conducted in Court precincts
and not by a business house well versed with the
market forces and price. Confirmation of the sale
by a 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. In such cases, a meaningful
intervention by the Court may prevent, to some
extent, underbidding at the time of auction through
Court. In the present case, the Court has reviewed
its exercise of judicial discretion within a shortest
time."
39. We cannot help pointing out that their Lordships
came to such a conclusion placing reliance on para 6 of
Navalkha case. Their Lordships failed to take note of the
last sentence of the paragraph but placed reliance on the
penultimate sentence of the paragraph. No doubt, the
penultimate statement of the paragraph recognises the
discretion of the Company Court either for accepting or
refusing the highest bid at the auction, it also emphasizes
the obligation of the Court to see that the price fixed at the
auction is adequate price even though there is no
irregularity or fraud in the conduct of the sale. However,
the penultimate sentence restricts the scope of such
discretion in the following words: (Navalkha case, SCC
p.541, para 6)
"6. ...... It is well to bear in mind the other
principle which is equally well settled namely
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that once the court comes to the conclusion that
the price offered is adequate, no subsequent
higher offer can constitute a valid ground for
refusing confirmation of the sale or offer already
received. (See the decision of the Madras High
Court in Roshan & Co. case."
40. In other words, in Navalkha case, this Court only
recognized the existence of the discretion in the Company
Court either to accept or reject the highest bid before an
order of confirmation of the sale is made. This Court also
emphasized that it is equally a well-settled principle that
once the Company Court recorded its conclusion that the
price is adequate, subsequent higher offer cannot be a
ground for refusing confirmation.
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47. A survey of the abovementioned judgments
relied upon by the first respondent does not indicate that
this Court has ever laid down a principle that whenever a higher offer is received in respect of the sale of the property of a company in liquidation, the Court would be justified in reopening the concluded proceedings. The earliest judgment relied upon by the first respondent in Navalkha & Sons laid down the legal position very clearly that a subsequent higher offer is no valid ground for refusing confirmation of a sale or offer already made. Unfortunately, in Divya Mfg. Co. this Court departed from the principle laid down in Navalkha & Sons. We have already explained what exactly is the departure and how such a departure was not justified."
In the present case the record reflects that in the earlier round the attempt to sale the properties of Lot No.1 had failed, therefore, a decision was taken by the assets sale committee to fix the reserved price of Rs.27.90 Crores and considering the circumstances of the case, this Court had approved it by order dated 17.12.2018. After wide publicity the e-auction was held on 4.4.2019, in which as against the Digitally signed by Trilok Singh Savner Date: 05/03/2020 18:29:14 HIGH COURT OF MADHYA PRADESH 8 COMP No.8/14 reserved price of Rs.27.90 Crores, the highest bid of Rs.28.15 Crores has been received from M/s Seabright Landmark Projects LLP, Indore (M.P.). The explanation furnished by the subsequent applicant M/s Om Gurudev Enterprises for not submitting the bid in e-auction on the ground that the marriage of his daughter was to be performed at a subsequent date on 17.4.2019, does not inspire confidence. No other subsequent offerer has approached this Court pressing his claim for its alleged highest bid, therefore, their claim before the OL are not found to be bonafide. The record further reflects that the highest bid of M/s Seabright Landmark Projects LLP, Indore (M.P.) has been considered by the assets sale committee and has been accepted. Before this Court also counsel for the Bank of India has supported the confirmation of sale in favour of the highest bidder M/s Seabright Landmark Projects LLP, Indore and has opposed the consideration of the bid of M/s Om Gurudev Enterprises. It is not disputed by any party that the price which has been offered by M/s Seabright Landmark Projects LLP, Indore (M.P.), the highest bidder, is the adequate market price having regard to the value of the Lot No.1 at the time of auction and this Court is also satisfied that the price which has been offered by M/s Seabright Landmark Projects LLP, Indore is reasonable and adequate. Therefore, having regard to the law which is laid down in the case of Vedica Procon Pvt. Ltd. (supra), the OLR No.31/19 and IA No.7202/19 are allowed by confirming the sale in favour of the highest bidder M/s Seabright Landmark Projects LLP, Indore and the IA No.6678/19 filed by M/s Om Gurudev Enterprises is rejected.
Digitally signed by Trilok Singh Savner Date: 05/03/2020 18:29:14HIGH COURT OF MADHYA PRADESH 9 COMP No.8/14 The highest bidder M/s Seabright Landmark Projects LLP, Indore is directed to deposit the balance sale consideration amount of Rs.25,35,00,000/- in respect of Lot No.1 after adjustment of EMD amount of Rs.2.80 Crores within a period of 60 days from today. On receipt of the full consideration amount, the OL is directed to execute the sale deed in favour of M/s Seabright Landmark Projects LLP, Indore and handover the possession of the assets.
C.C. as per rules.
(Prakash Shrivastava) Judge trilok/-
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