Gujarat High Court
Arvind Ambalal Patel vs Official Liquidator Of on 1 October, 2013
Author: K.M.Thaker
Bench: K.M.Thaker
ARVIND AMBALAL PATEL FOUNDER CUM MANAGING DIRECTORV/SOFFICIAL LIQUIDATOR OF ARVIN LIQUID GASES LTD (IN LIQN.) O/COMA/74/2013 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY APPLICATION NO. 74 of 2013 With OFFICIAL LIQUDATOR REPORT NO. 14 of 2013 In OFFICIAL LIQUDATOR REPORT NO. 96 of 2012 With OFFICIAL LIQUDATOR REPORT NO. 96 of 2012 In COMPANY PETITION NO. 51 of 1996 ================================================================ ARVIND AMBALAL PATEL FOUNDER CUM MANAGING DIRECTOR & 1....Applicant(s) Versus OFFICIAL LIQUIDATOR OF ARVIN LIQUID GASES LTD (IN LIQN.) & 2....Respondent(s) ================================================================ Appearance: (MRSURESHMSHAH), ADVOCATE for the Applicant(s) No. 1 - 2 MR MEHUL S SHAH, ADVOCATE for the Applicant(s) No. 1 - 2 MR ABHIJIT P JOSHI, ADVOCATE for the Respondent(s) No. 2 MR GAURANG H BHATT, ADVOCATE for the Respondent(s) No. 1 NOTICE UNSERVED for the Respondent(s) No. 3 ================================================================ CORAM: HONOURABLE MR.JUSTICE K.M.THAKER Date : 01/10/2013 COMMON ORAL ORDER
1. The applicant of Company Application No. 74 of 2013 preferred an application with below mentioned request:-
13 (A) An appropriate order and / or direction may kindly be issued, directing revision / modification in the upset price and the EMD fixed in the order at Annexure-A herein in terms of the valuation report produced at Annexure-D herein. And accordingly direct the revision of the schedule of program for sale of the property in question.
(B)....
(c) ....
2. In support of the said request the applicant has averred in the application that:-
4.
That on the basis of the averments made in the said Official Liquidation Report this Hon'ble Court, after hearing the parties passed an order on 29.1.2013 permitting to fix the upset price for the building at Rs.30,00,000/- and for the land at Rs. 1,35,00,000/- and permitted the respondent no. 1 to invite offers for the purchase of the property in question accordingly by fixing the schedule of programe.
5. That the respondent no.1 on 14.2.2013 accordingly issued terms and conditions for sale of the property in question where in condition no.4, it is specified that the sale shall not relieve the directors or any persons who may be liable to the secured creditors as guarantor or otherwise.
6. That respondent no.1 accordingly on 15.2.2013 issued advertisement in the newspapers from which the present petitioners came to know about the order at annexureA herein.
7. That in fact the present actual valuation as per the market rate of the property in question is much more than what is indicated in OLR no. 96 of 2012 particularly in view of various facilities of communication, water resources, electricity and other inducing offers being made available by the state of Gujarat for the industries in the locality where the property in question is situated.
8. That in view of the aforesaid facts, the petitioner no.1 through his advocate address a letter on 25.2.2013 making a request to the respondent no. 1 to revise the upset price as is referred to in the order at annexure-A by making appropriate application before this Hon'ble Court for the same.
9. That despite the said request at annexure-C, the respondent no.1 has not taken any action in the matter as requested and has proceeded further with the schedule of programe as mentioned in order as annexure-A, and the petitioners herein are vitally affected and adversely prejudiced by the fixation of very low upset price and EMD for the sale of the property in question, they being the director and the creditor of the company in liquidation.
10. That in fact as per the recent valuation report got done through Government Approval Registered Valuer in respect of the property in question, it clearly transpires that the present true market value of the property in question is Rs.6,75,44,000 (Rupees. 88,65,000 for the total building and Rs.5,86,78,200 for the land).
11. That in view of the above referred facts and circumstances, it is in the interest of justice to pass appropriate order to revise / modify the upset price and the EMD as fixed in the order at Annexure-A herein in the terms of the valuation report at Annexure-D herein and accordingly order a revised schedule of program for sale of the property in question.
3. Thus, the applicant has come forward with a case that valuation of the assets, which are put up for auction-sale, is defective and the upset price declared by OL is inadequate and undervalued and the property in question is capable of fetching higher price therefore, upset price fixed by the Court and which came to be declared / published in the advertisement inviting bids, deserves revision / modification.
The Court considered said request and asked the applicant to demonstrate and justify its assertion viz. that the property in question is likely to fetch more price and upset price determined on the basis of valuation report is inadequate or on lower side.
5. The Court also invited the bidder (who submitted his offer in response to bid) and the secured creditors to oppose or support the application.
6. Before proceeding further it is relevant to mention that on earlier occasion the Court, vide order dated 29.1.2013 determined upset price for lot No.I @ Rs. 30 lacs and for lot No.II @ Rs. 1,35,00,000/-.
6.1 In the said order dated 29.1.2013 the Court also fixed the schedule for auction sale of the property.
6.2 On the scheduled date OL informed the Court that only one bid is received in response to the advertisement inviting offer.
6.3 It was also informed to the Court that the only bid which the OL has received is at par with the upset price declared in the advertisement and the said bidder has not offered any higher amount than the upset price.
6.4 In the said background, present applicant came forward with this application asserting that the property in question can fetch higher price.
7. As mentioned above, considering the said submission of the applicant, opportunity to demonstrate that property in question can fetch higher price was granted to the applicant by allowing him to come forward with bidder who would be ready and willing to pay higher price for the property in question.
7.1 The said opportunity was granted to the applicant so as to test as to whether there would be really any purchaser who would be ready and willing to pay higher price of the property in question.
7.2 In pursuance of the said aspect the applicant informed the Court that according to his knowledge there is one bidder who is ready and willing to offer Rs. 2.5 Crores for the same property which was put up for auction sale by OL, therefore, direction was given asking the said interested bidder to approach OL and to establish its bonafide, and deposit 10% of his offer amount as EMD.
As recorded in the order dated 26.9.2013 the said interested bidder approached OL and submitted his offer for Rs.2.5 Crores and also deposited Rs.25 Lacs as EMD with OL. The said aspect is confirmed by OL at the time of previous hearing and has been recorded under order dated 26.9.2013.
8. What emerges from the foregoing discussion is the fact that as against the upset price / reserve price @ Rs. 1.65 Crores, which was suggested by OL on the basis of the valuation report and was placed before the Court by OL, there is a bidder who is ready and willing to offer Rs.2.5 Crores for the same property.
8.1 The said aspect demonstrates that reserve price / upset price determined on the basis of valuation report is inadequate, unreasonable and the applicant appears justified in his contention that the property in question is likely to fetch more price.
8.2 At this stage, it is necessary to mention that in view of the said development, State Bank of India, who is a secured creditor, desired that the sale of the property in question may be confirmed in favour of the said other bidder who has submitted offer for Rs.2.5 Crores.
8.3 The anxiety and urgency on part of the secured creditor to complete the sale as early as possible is understandable. However, without following the procedure and without giving similar and equal opportunity to interested / prospective bidders, it would not be proper and justified to confirm the sale in favour of the bidder who has come forward with higher offer after the last date for submitting the bids and that too outside the auction proceedings and when Court is merely deciding the applicant's request in this application.
8.4 It is also necessary and relevant to mention that so as to offer an opportunity to raise its offer, an intimation through OL was sent to the bidder (who submitted his offer in response to the advertisement) and said bidder was asked to remain present before the Court and to declare as to whether he would participate in bidding (with other bidder who has given higher offer) or not.
9. Though representative of the said bidder is present in Court and the said bidder who submitted his bid in response to the advertisement issued by OL is also represented by advocate, any clear intimation as to whether said bidder is willing to participate in the bidding process with bidder who has given higher offer, is not made by the representative of the said bidder or his advocate.
9.1 In present case what is pertinent is the fact that at this stage not only sale is yet not confirmed in favour of anyone, actually the auction sale process has not even commenced before the Court inasmuch as the only bidder whose bid is received in response to the advertisement issued by the OL has yet not been taken up for consideration and before it could be considered and much before the Court would even consider to confirm the bid/sale the applicant came up and submitted by present application asserting that valuation of property in question is inadequate.
10. In light of the above mentioned details the Court is satisfied that valuation of the property in question is unreasonable and inadequate and the valuer appointed by OL does not appear to have taken into account all relevant factors for determining the market value of the property in question.
10.1 Huge gap between the value of the property suggested by valuer and the offer made by bidder would satisfy the Court that valuation of the property in question is inadequate or on lower side.
11. Therefore entire process commenced pursuant to order dated 24.1.2013 is set aside and cancelled with the clarification and direction that OL shall appoint another valuer for the purpose of valuation of the property in question.
11.1 The OL shall place above mentioned factual aspects before the valuer and ask for fresh valuation of the property in question.
11.2 After submitting copy of the valuation report to all secured creditor and sale committee seek appropriate orders for determining the upset price of the property in question and for issuing advertisement inviting bids.
12. At the stage when such request is made by OL, the details of present proceedings and the entire record of present applications i.e. Company Application No. 74 of 2013, OLR No. 96 of 2012 and OLR No.14 of 2013 shall also be placed before the Court by OL.
12.1 It is clarified that EMD deposited by both the bidders before the OL may be returned if the bidders want to reclaim on or before 3.10.2013 to the respective bidders or it may be invested in Fixed Deposit with a Public Sector Bank.
12.2 It is also clarified that it will be open to the bidders to participate in the process which may be commenced by OL after inviting fresh valuation report.
With the aforesaid clarification Company Application No. 74 of 2013, OLR No. 96 of 2012 and and OLR No.14 of 2013 are disposed of.
(K.M.THAKER, J.) Suresh* 11