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11. On 27th October, 2005 itself M/s PVR Housing Private Limited wrote another letter revising their offer to Rs. 55 lacs. This offer was again reiterated by a letter written by their advocate on 28th October, 2005.

12. Application CA No. 1645/2005 was filed by M/s PVR Housing Private Limited on 8th November, 2005 i.e. before the possession of the property was given by the Official Liquidator to the auction purchaser. Copy was also duly received in the office of the Official Liquidator on 8th November, 2005. It may also be noted that as per the valuation report the market value of the property in question on the date of valuation was Rs. 1.14 crores. The reserve price fixed was 60% of the value mentioned in the valuation report. There is, therefore, substantial difference betweenthe bid received and the market price as per the valuation report. Supreme Court in the case of Divya Manufacturing Company (P) Limited and Anr. v. Union Bank of India and Ors. has held that it is the guiding principle and duty of the Company Court to ensure that most remunerative price is received. There should be openness in the auction and all intending bidders should be given a free hand to offer higher bids. It is also the duty of the Official Liquidator to ensure that maximum price is obtained so that the claims of the creditors and workers can be paid to the maximum extent possible. While laying down these guidelines, the Supreme Court in the case of Divya Manufacturing Private Limited (supra) departed and took a different line from the general principles applicable to confirmation and sale of properties under Order XXI of the Code of Civil Procedure, 1908, where courts normally interfere only when there is material irregularity or fraud in conduct of court sales. This principle laid down by the Supreme Court in the case of Divya Manufacturing Private Limited (supra) has been followed in the case of Lica (P) Limited (supra) and the relevant portions of the said judgment are reproduced below:-

13. Following these two judgments, this Court in the matter of Elson Cotton Mills Limited (in liquidation) 122 (205) DLT 669 set aside a sale that had already been confirmed after one and half years. In the said case the High Court noticed that the case of Lica (P) Limited and Divya Manufacturing (supra) were clearly applicable as the possession had not been handed over to the auction purchaser and the sale deed had not been executed. Relevant extract from the judgment is as under:-

The cases cited by the learned Counsel were of cases related to general auction and not auction of property of a company in liquidation. Insofar as these later kinds of sales are concerned, these are specifically governed by the principles laid down by the Apex Court in Divya Manufacturing (supra), and LICA (P) Ltd. (supra), and that is the only way two sets of judgments can be harmonised. The Supreme Court set down different principle altogether while dealing with sale of certain properties of the company in liquidation and for good reasons. The guiding principles laid down by the Apex Court in such cases are that attempt should be made to get the most remunerative price and it is the duty of the Court to keep openness of the auction so that intending bidder feel free to offer the higher value. This principle has public purpose behind it. The assets are sold of a company which have gone into liquidation. It is the duty of the Liquidator to ensure that maximum price is obtained from the sale of these assets so that creditors and workers of the company (in liquidation) are paid to the maximum extent possible. It is for this reason that in such sales the Supreme Court departed from the general principle that after the confirmation of the sale it should be interfered only when there is a material irregularity or fraud. Obviously in these cases sale can be set aside even in those cases where the Official Liquidator is getting better price.

14. In the present case sale deed admittedly has not been executed in favor of the auction purchaser. The possession was handed over to the auction purchaser on 10th November, 2005 but before the said date on 8th November, 2005, M/s PVR Housing Private Limited had already filed CA No. 1645/2005 enhancing their bid to Rs. 55 lacs. It is impossible to believe that the auction purchaser was not aware about this offer made by M/s PVR Housing Private Limited. Further, M/s. PVR Housing Pvt. Ltd. had expressed its willingness to purchase/bid for the property vide letter dated 25th October, 2005, giving bid of Rs. 52 lakhs. The Official Liquidator did not respond to the said letter and inform M/s.P.V.R. Housing Pvt. Ltd about the next date of hearing on 27th October, 2005. On the said date, the bid of M/s.Arora Udyog Ltd was confirmed. This was done in the absence of M/s. P.V.R. Housing Pvt. Ltd. In these circumstances, I feel that the judgment of the Supreme Court in the case of Lica (P) Limited (supra) and Divya Manufacturing (supra) should be applied.

15. However, I make it clear that as held in Divya Manufacturing (supra), the auction purchaser will be entitled to participate in the inter se bidding with M/s PVR Housing Private Limited and will be adequately compensated by way of interest on the amount already paid. Accordingly, CA No. 90/2006 is dismissed and CA No. 269/2006 and CA No. 1645/2005 are partially allowed and it is directed that there shall be open inter se bidding between M/s PVR Housing Private Limited and M/s Arora Udyog Limited in open Court on 6th July, 2006. The Official Liquidator will also take out advertisement on the earlier terms and conditions in newspapers The Tribune (English), The Hindustan Times (English) and in a hindi newspaper having circulation in Punjab and Himachal Pradesh. Other bidders will also be entitled to participate in the inter se bidding.