Document Fragment View

Matching Fragments

35. On the other hand, learned counsel for the first respondent relied upon decisions of this Court in Navalkha & Sons v. Sri Ramanya Das & Others, (1969) 3 SCC 537, Divya Manufacturing Company (P) Ltd. v. Union Bank of India & Others, (2000) 6 SCC 69, FCS Software Solutions Ltd. v. LA Medical Devices Ltd. & Others, (2008) 10 SCC 440, Shradhha Aromatics Pvt. Ltd v. Official Liquidator for Global Arya Industries Limited & Others, (2011) 6 SCC 207 and Manoj I Naik & Associates v. Official Liquidator, (2015) 3 SCC 112.

37. Divya Manufacturing Company (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 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. This Court, while reiterating the principles laid down in Navalkha case (supra), declined to interfere with the order of the court and held as follows:

41. In Shradhha Aromatics Pvt. Ltd v. Official Liquidator for Global Arya Industries Ltd & Others, (2011) 6 SCC 207, the Company Judge approved the highest bid of the 2 nd respondent before this Court for the purchase of the property of a company in liquidation. Subsequently, an application came to be filed by a third party offering a higher amount for the property which was rejected by the Company Court. However, a second application was filed by the same third party with a further enhancement of the offer. This time, the Company Judge thought it fit to recall its earlier order confirming the sale in favour of the above mentioned 2 nd respondent by placing reliance on the judgment of this Court in Divya Manufacturing Company (supra). Aggrieved, the original purchaser carried the matter in an intra court appeal before the Division Bench. Once again, the Division Bench permitted both the parties to give further offers. However, after such a strange exercise, the Division Bench opined that learned Company Judge could not have recalled the confirmed sale because subsequently a higher price was offered by somebody else. Even before this Court, an intervener made a better offer. It may be mentioned here that there was a time gap of more than three years between the original confirmation and such subsequent higher offer made in this Court. However, this Court disposed of the appeal accepting the much higher offer made by the intervener in this Court and directing the execution of the sale deed in favour of such intervenor for the following reasons:

43. But the fact remains that one of the secured creditors objected to the sale in favour of the appellant before this Court on the ground that the value of the property even on the date of the original sale was worth around Rs.6.25 crores as against the highest offer of Rs.1.3 crores of the appellant herein. Therefore, the decision of the Company Judge to reject the highest offer is perfectly justified.

44. 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 (supra) 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 Manufacturing Company (supra) this Court departed from the principle laid down in Navalkha & Sons (supra). We have already explained what exactly is the departure and how such a departure was not justified.