Delhi High Court
Narender Kumar Nehra vs Bhupinder Singh & Ors. on 13 February, 2020
$~41 & 42
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 13.02.2020
+ CO.APP. 19/2019, CM APPLs. 42613/2019 & 42615/2019
NARENDER KUMAR NEHRA ..... Appellant
Through: Mr. Abdhesh Chaudhary, Mr. Om
Prakash Shukla, Mr. Manav Sharma
and Mr. Ajit Rajput, Advocates.
versus
BHUPINDER SINGH & ORS. ..... Respondents
Through: Mr. Amit Kumar Chadha, Senior
Advocate with Mr. C.S. Gupta and
Ms. Shristi Gour, Advocates for R-3.
Mr. Sandeep P. Agarwal, Senior
Advocate, Advocate for R-1.
Ms. Ruchi Sindhwani, Senior
Standing Counsel with Ms. Megha
Bhargava, Advocate for Official
Liquidator.
+ CO.APP. 21/2019, CM APPL. 44407/2019 & 479/2020
NARENDER KUMAR NEHRA ..... Appellant
Through: Mr. Abdhesh Chaudhary, Mr. Om
Prakash Shukla, Mr. Manav Sharma
and Mr. Ajit Rajput, Advocates.
versus
BHUPINDER SINGH & ORS. ..... Respondents
Through: Mr. Amit Kumar Chadha, Senior
Advocate with Mr. C.S. Gupta and
Ms. Shristi Gour, Advocates for R-3.
Mr. Sandeep P. Agarwal, Senior
Advocate, Advocate for R-1.
Ms. Ruchi Sindhwani, Senior
CO.APP. 19/2019 & CO.APP. 21/2019 Page 1 of 20
Standing Counsel with Ms. Megha
Bhargava, Advocate for Official
Liquidator.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
HON'BLE MR. JUSTICE SANJEEV NARULA
VIPIN SANGHI, J. (Oral):
CO.APP. 19/2019, CM APPLs. 42613/2019 & 42615/2019 &
CO.APP. 21/2019, CM APPLs. 44407/2019 & 479/2020
1. We have heard learned counsel for the Appellant in both the appeals as
well as Ms. Sindhwani, learned Senior Standing Counsel representing the
Official Liquidator and Mr. Amit Kumar Chadha learned Senior Advocate
who represents Respondent No.3 - Fashion Accessories.
2. In CO.APP. 19/2019, the Appellant has assailed the order dated
25.07.2019 passed by the learned Company Judge in CA No. 611/2019 in
CO. PET. 329/2011. The aforenoted application had been moved by
Respondent No.1 - Bhupinder Singh, the Ex-Director of Koutons Retail
India Ltd. - the company in liquidation, to make a better offer of Rs. 26
crores without disclosing the name of the prospective bidder. The
application had been made with a view to seek recall of the confirmation of
sale of the property in favour of the Appellant herein for an amount of Rs.
21.83 crores, which amount had already been deposited by the Appellant.
On 30.05.2019, the Court while issuing notice in CA No. 611/2019 passed
the following order:
CO.APP. 19/2019 & CO.APP. 21/2019 Page 2 of 20
"CA No. 611/2019
1. By this application, the applicant who states himself to be one
of the former directors and promoters of the respondent
company, seeks to set aside the sale of the property being Plot
Nos.539-539A, Sector 37, Udyog Vihar, Phase-II, Gurgaon and
rejection of the bid of Sh.Narender Kumar Nehra.
2. The grievance of the applicant is that the reserve price of the
said property of Rs.21.83 crores was below even the circle rate.
The learned senior counsel appearing for the applicant states
that the applicant is ready to pay much higher than the reserve
price of Rs.21.83 crores.
3. This court on 06.09.2018 accepted the bid of Sh.Narender
Kumar Nehra for Rs.21.83 crores.
4. The learned counsel for the Official Liquidator informed that
the bidder has already paid the full bid amount on 09.04.2019. It
is also pointed out that the possession of the said property has
not been handed over to the bidder.
5. In my opinion, it would be in the interest of the respondent
company that the bidding may be held between the applicant and
Sh.Narender Kumar Nehra. However, till then the Official
Liquidator may not hand over the possession of the said property
to Sh.Narender Kumar Nehra. This is also subject to the
applicant handing over a banker cheque for a sum of Rs.2.183.00
crores as earnest deposit to the Official Liquidator within two
weeks from today.
6. In case, the necessary earnest deposit has not received by the
Official Liquidator, the Official Liquidator is free to take steps in
accordance with the order dated 06.09.2018.
7. In case, the earnest deposit is made by the applicant, an
auction shall take place between the applicant and Sh.Narender
Kumar Nehra on the next date of hearing.
CO.APP. 19/2019 & CO.APP. 21/2019 Page 3 of 20
8. Notice of this application be also sent to Sh.Narender Kumar
Nehra, returnable for 25.07.2019. Bidding shall take place in
court of the said property on the same terms for which the sale
notice was issued.
9. A copy of this order be given dasti under the signatures of the
court master."
3. The Appellant preferred CO.APP. 16/2019 being aggrieved by the order
dated 30.05.2019. The said appeal was disposed of on 23.07.2019 by the
Division Bench in the following terms:
"CM Appl. No. 32811/2019 (Exemption)
1. Exemption allowed, subject to all just exceptions.
CM Appl. No. 32809/2019 (delay)
2. For the reason stated in the application, the delay of 12 days
in filing the appeal is condoned and the application is disposed
of.
Co. App. No. 16/2019 & CM Appl. No. 32810/2019 (stay)
3. This is an appeal against an order dated 30 th May, 2019
whereby the bid sale of the property belonging to the company in
liquidation located at Udyog Vihar, Gurgaon in favour of the
present Appellant has been kept in abeyance. As is seen from the
impugned order dated 30th May, 2019 this was on account of
another person, described by the Appellant herein as a
shareholder of the company, coming forth to offer a higher
amount for the same property.
4. All that the learned Single Judge has done by the impugned
order is to list the matter on 25th July, 2019 for a bidding to
CO.APP. 19/2019 & CO.APP. 21/2019 Page 4 of 20
happen in the Court in the presence of the said Applicant and the
present Appellant.
5. The Court sees no reasons to interfere in the matter at this
stage.
6. Any submission that the present Appellant has to oppose the
said sale can be raised before the learned Single Judge in
accordance with law at the appropriate stage. The bona fides of
the fresh bidder will be examined by the learned Single Judge.
7. The appeal is dismissed."
4. It is clear that the Division Bench did not rule upon the submissions of the
Appellant with regard to his grievance regarding the reopening of the sale,
which stood confirmed in his favour. All issues were left to be decided by
the learned Single Judge.
5. Thereafter, the impugned order dated 25.07.2019 came to be passed,
which reads as follows:
"CA No.611/2019
1. Pursuant to the order of this court dated 30.05.2019, the
learned counsel for Mr.Narender Kumar Nehra has appeared.
He has denied the contention of the learned senior counsel for
the applicant about any wrong doing by the said bidder. He,
however, states that though this court has power to enhance the
sale realisation/consideration of the sale of assets of the
respondent company but in terms of the order dated 30.05.2019,
Mr.Narender Kumar Nehra would not like to participate in any
bidding process. He also states that he denies the allegation
made against Mr.Narender Kumar Nehra in this application. He
also states that in the application moved by the applicant, the
CO.APP. 19/2019 & CO.APP. 21/2019 Page 5 of 20
applicant has stated that they have a prospective buyer and they
are willing to pay a sum of Rs.26 crores. Hence, the bid of the
applicant be accepted only at Rs.26 crores.
2. This court had on 30.05.2019 directed that the bidding will
take place between Mr.Narender Kumar Nehra and the
prospective buyer today. However, it transpires that
Mr.Narender Kumar Nehra is not interested in further bidding.
3. In the light of this, learned senior counsel for the applicant
states that the bid of the applicant may be accepted at Rs.23
crores.
4. Keeping in view of the fact that additional sum of Rs.1.20
crores approximately is being realised for sale of the assets of
the respondent company, the bid of the prospective buyer - M/s.
Fashion Accessories is accepted. They have already paid a sum
of Rs.2.183 crores to the OL as earnest deposit. In terms of the
terms and conditions of auction, M/s Fashion Accessories will
deposit 25% of the bid amount (excluding earnest deposit) within
7 days from today. The balance bid amount shall be paid within
60 days from today.
5. At this stage, the learned counsel appearing for Mr.Narender
Kumar Nehra submits that this court may retain the
consideration paid by Mr.Narender Kumar Nehra till the new
bidder pays the entire bid amount. He states that in case there is
any default by the new bidder, Mr.Narender Kumar Nehra would
be ready to take the property at the original amount of
Rs.21,83,24,000/-.
List on 14.11.2019.
A copy of this order be given Dasti under the signatures of the
court master."
CO.APP. 19/2019 & CO.APP. 21/2019 Page 6 of 20
6. In CO.APP. 21/2019, the Appellant has assailed the order dated
18.09.2019 passed by the learned Single Judge in C.A. No. 975/2019 in
CO.PET. 329/2011. The aforenoted application was moved by Respondent
No.3 - Fashion Accessories, seeking a direction to the Official Liquidator to
handover the vacant and peaceful possession of the property in question. By
the said order, the sale was confirmed in favour of Respondent No. 3 -
Fashion Accessories, and the Official Liquidator was directed to handover
physical possession of the property to Fashion Accessories within a period
of three weeks from the date of the said order and to also execute the
necessary sale deed.
7. It appears that property No. 539-539A, Sector-37, Udyog Vihar, Phase-
IV, Gurgaon, Haryana was advertised for sale by auction by the Official
Liquidator with a view to liquidate the assets of the company under
liquidation. The auction notice was published on 22.03.2018 by the Official
Liquidator. The reserved price of the said property was fixed at Rs.
21,83,24,000/-. It appears that no tenders were received and, consequently,
no auction took place on the fixed date i.e. on 03.05.2018. As a result, the
property could not be sold and the auction failed. At that stage, the
Appellant proposed to purchase the property at the reserve price of Rs.
21,83,24,000/- by moving an application i.e. CA No. 976/2018 in CO.PET.
329/2011 on 23.08.2018. This application was allowed by the learned
company Judge on 06.09.2018 in the presence of and with the consent of the
Official Liquidator. It appears that the Appellant made partial deposit of the
sale amount and repeatedly sought extension of time to make the balance
deposit. Initially, the Court granted the extension, subject to payment of
CO.APP. 19/2019 & CO.APP. 21/2019 Page 7 of 20
interest at the rate of 8% per annum. However, it appears that subsequently,
the interest was waived, presumably, since neither the Court nor the Official
Liquidator were able to find any buyer for the said property even at the
reserve price. In any event, there is no dispute about the fact that the
Appellant made the complete deposit of the amount of Rs. 21,83,24,000/- on
or before 09.04.2019. Nearly after fifty days of the receipt of the entire sale
consideration from the Appellant, Respondent No. 1 - a former Director of
the company in liquidation, moved CA No. 611/2019 on the premise that
there are bidders available who would offer Rs. 26 crores for the purchase of
the property. However, no identified bidder was disclosed. In that
application, the learned Company Judge passed an initial order on
30.05.2019, as taken note of hereinabove. Since the Appellant's appeal
being CO. APP. No. 16/2019 against the order dated 30.05.2019 was
rejected, though all his rights and pleas were preserved, he appeared before
the Court on 25.07.2019, but did not participate in the bidding inter se the
Respondent No. 3 and himself. According to the Appellant, the same was
unjustified. Consequently, the learned Company Judge proceeded to pass the
impugned order dated 25.07.2019, as taken note of hereinabove. This led to
the passing of the second impugned order in CO.PET. 329/2011 on
18.09.2019.
8. The submission of learned counsel for the Appellant is that in the facts of
the present case, there was no justification for the learned Single Judge to
entertain CA. No. 611/2019 preferred by Respondent No. 1. The Appellant
offered a price that no other bidder had offered till the date the tender was
open, and even till the date when Appellant's application being CA No.
CO.APP. 19/2019 & CO.APP. 21/2019 Page 8 of 20
976/2018 was considered and allowed. In fact, even thereafter, till the time
that the Appellant deposited the entire consideration i.e. 09.04.2019, no
better offer was received. It is much later i.e. on 29.05.2019, that CA No.
611/2019 was moved by Respondent No. 1, which did not even disclose an
identified bidder willing to offer a higher amount of Rs. 26 crores. Learned
counsel further submits that eventually, Respondent No. 3 offered a lesser
amount of Rs. 23 crores and, keeping in view the fact that the Appellant had
already deposited the amount of Rs. 21.83 crores, the difference between the
amount offered by Respondent No. 3 for purchase of the property in
question was only about 5%, and not substantial.
9. Learned counsel for the Appellant has placed reliance on the decisions of
the Supreme Court in Valji Khimji and Company v. Official Liquidator of
Hindustan Nitro Product (Gujarat) Limited and Others, (2008) 9 SCC 299
and in Vedica Procon Private Ltd. v. Balleshwar Greens Private Ltd. and
Ors., (2015) 10 SCC 94 to submit in in the aforesaid background, that there
was no justification for undoing the confirmed sale in favour of the
Appellant when he had already deposited the entire amount and all that
remained to be done was the handing over of the vacant and peaceful
physical possession of the property by the Official Liquidator and
completion of the sale transaction by execution of the relevant sale deed.
10. On the other hand, Ms. Sindhwani has placed reliance on Divya
Manufacturing Company (P) Ltd. Tirupati, Woolen Mills Shramik
Sangharsha Samiti and Anr. V. Union Bank of India and Ors., (2000) 6
SCC 69 to submit that even after confirmation of sale, the Company Court is
CO.APP. 19/2019 & CO.APP. 21/2019 Page 9 of 20
not powerless to recall the sale. Therefore, there is no established principle
that in every case, once the sale is confirmed, the same cannot be recalled.
11. Mr. Chadha, who represents Respondent No.3 submits that Respondent
No. 3, made a bona fide offer of Rs. 23 crores. Respondent No. 3 decided to
purchase a property to expand its business and since the sale of the property
in question has got entangled in the present litigation, the Respondent No. 3
would be happy to receive its amount and let go of the property in case the
appeal of the Appellant is allowed.
12. Mr. Agarwal learned counsel for the Respondent No.1 submits that the
Appellant repeatedly sought time to make the entire deposit of the offer
amount of Rs. 21.83 crores which was granted by the Court. Appellant also
obtained waiver of partial interest. In this regard, he has placed before the
Court, the orders dated 04.12.2018, 08.02.2019 and 09.04.2019 passed by
the Company Court. These orders read as follows:
"ORDER
04.12.2018
CA No. 1426/2018
By this application, the applicant seeks various reliefs including
extension of two months for making the balance payment.
The sale notice was issued on 22.03.2018. The applicant made a
bid at the reserve price of Rs.21,83,24,000/-. The bid was
accepted.
Learned counsel for the applicant submits that they have already
paid a total amount of Rs.7,65,00,000/-. He seeks two months
CO.APP. 19/2019 & CO.APP. 21/2019 Page 10 of 20
extension w.e.f. 06.12.2018.
In the interest of justice, extension is granted for a period of two
months w.e.f. 06.12.2018. However, the applicant will pay simple
interest @ 8% per annum w.e.f. 06.12.2018 till the date of
payment on the unpaid amount.
Regarding division of plots into three, it is for the applicant to
approach the lessor, namely, HUDA for the needful. It is not for
the OL to enter into this exercise. The OL may however execute
three separate sale deeds for the plot in question i.e. being 1/3rd
undivided share, if permissible.
The application stands disposed of.
ORDER
08.02.2019
CA 141/2019
By this application the applicant seeks enlargement of the time
for balance sale consideration amount with the OL on or before
31.3.2019. It also seeks waiver of Simple Interest @ 8% per
annum w.e.f. 6.12.2018. The case of the applicant is that on
6.9.2018 this court had accepted the bid of the applicant to the
tune of Rs.21,83,24,000/- for property located at Plot No.539-
539A, Sector-37, Udyog Vihar, Phase-VI, Gurugaon, Haryana.
Part sale consideration of Rs.7,65,00,000/- has been deposited
with the Official Liquidator. On 4.12.2018 this court granted
further extension of two months w.e.f. 6.12. 2018 to the
applicants to deposit the balance sale consideration to the tune
of Rs.14,18,24,000 with directions that the applicants would pay
simple interest @ 8% per annum w.e.f. 6.12.2018.
In the interest of justice, time is granted till 31.3.2019 to pay the
balance amount. Applicant will also pay the necessary simple
interest @ 8% per annum, for the period. The above order to the
extent it directs payment of simple interest @ 8% per annum
w.e.f. 6.12.2018 would stand satisfied in case the necessary
payment is made by 31.3.2019.
Application stands disposed of.
ORDER
09.04.2019
CA No. 355/2019
By this application, the applicant-Mr.Narendar Kumar Nehra
seeks extension of time for depositing the balance sale
consideration of Rs.14,18,24,000/-.
This court had on 08.02.2019 directed the applicant to deposit
the necessary bid amount on or before 31.03.2019 failing which
the interest was payable.
Learned counsel for the applicant states that the demand drafts
were ready on 03.04.2019 but the Official Liquidator did not
accept the same as they were beyond the time stipulated of this
court in the order dated 08.02.2019.
In the interest of justice, the said demand drafts have been
handed over to the learned counsel appearing for the Official
Liquidator. The interest amount as on directed 08.02.2019 is
waived off. In view of the above, full bid amount of Rs.
21,83,24,000/- has been received for the property being Plot No.
539-539A, Sector 37, Udyog Vihar, Phase IV, Gurgaon,
Haryana. The possession of the premises may be handed over to
the applicant. Other consequential steps may also be taken.
The application stands disposed of."
13. The controversy in the present case revolves around the rights of the
Appellant arising out of the acceptance of its bid for the purchase of the
property in question. Indisputably, the complete sale consideration has been
deposited by the Appellant and the same has also been accepted by the OL.
Although the payments were made in installments after seeking extensions
from the Court, yet, this cannot detract the fact that the entire payment of
Rs. 21,83,24,000/- stood deposited on or before 09.04.2019. The delay in
payment was condoned by the Court and no objection was raised by the OL.
Thereafter, necessary steps for completing the said transaction were not
undertaken and there is no clarity as to why that did not happen. The
Appellant states that there was bereavement in his family and, thus, the
matter got delayed. Be that as it may, the fact remains that the sale
documents for the transfer of the property were not executed despite the
payment of the entire sale consideration. This fact cannot dilute the rights
that stood crystallized in favour of the Appellant. The transaction was
complete and attained finality on the deposit having been made in terms of
orders of the Court.
14. The Learned Single Judge embarked upon an exercise to invite fresh
offer from another party. The intent of the learned Single Judge was,
perhaps, to get a better price for the property in question. However, in our
opinion, such a course was improper and contrary to the settled legal
position in the facts of the present case. Undeniably, there is no allegation of
fraud or illegality in the sale process that was undertaken by the Company
Court in favour of the Appellant, or in the acceptance of the bid of the
Appellant. In absence of any such allegations, there was no ground for
recalling the order accepting the appellant's bid, especially at the instance of
the party, who on a later date was willing to offer only a marginally higher
price. If we are to permit such a practice, it would imply that a completed
transaction can be reopened merely because a slightly better price is
available. The certainty and finality attached to the bidding process
undertaken by the court, would be adversely affected. Such a course of
action undermines the sanctity of the sale process. Adopting such a path is
also bound to have serious repercussions that could be detrimental to the
process of public auction and also to the public interest. Merely because
there is a possibility of getting a marginally better offer, it cannot be a valid
ground to upset a concluded transaction. The situation may be different if a
substantially higher genuine offer is received, as that would itself be
indicative of the earlier successful bidder making a considerably lower offer
compared to the market price on fair value of the property. Thus, in the
absence of any ground of fraud or illegality, we are of the opinion that the
learned Single Judge has erred in inviting offers from Respondent No.3.
15. At this stage it is relevant to note the judgement of the Supreme Court in
the case of Valji Khimji and Co. v. Official Liquidator of Hindustan Nitro
Product (Gujarat) Ltd., (2008) 9 SCC 299 wherein it was held as under:
"28. If it is held that every confirmed sale can be set aside the
result would be that no auction-sale will ever be complete
because always somebody can come after the auction or its
confirmation offering a higher amount. It could have been a
different matter if the auction had been held without adequate
publicity in well-known newspapers having wide circulation, but
where the auction-sale was done after wide publicity, then setting
aside the sale after its confirmation will create huge problems.
When an auction-sale is advertised in well-known newspapers
having wide circulation, all eligible persons can come and bid
for the same, and they are themselves to be blamed if they do not
come forward to bid at the time of the auction. They cannot
ordinarily later on be allowed after the bidding (or confirmation)
is over to offer a higher price. Of course, the situation may be
different if an auction-sale is finalised, say for Rs 1 crore, and
subsequently somebody turns up offering Rs 10 crores. In this
situation it is possible to infer that there was some fraud because
if somebody subsequently offers Rs 10 crores, then an inference
can be drawn that an attempt had been made to acquire that
property/asset at a grossly inadequate price. This situation itself
may indicate fraud or some collusion. However, if the price
offered after the auction is over which is only a little over the
auction price, that cannot by itself suggest that any fraud has
been done."
(emphasis supplied)
16. Further, in case of Navalkha & Sons v. Ramanya Das, (1969) 3 SCC
537 it was held as under:
"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 offerer
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 v. S. Sriman Kanthimathinatha Pillai [AIR 1921 Mad
286] 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 Rathnaswami Pillai v. Sadapathi Pillai [(1925) Mad 318]
and S. Soundarajan v. Roshan & Co. [AIR 1940 Mad 42] In A.
Subbaraya Mudaliar v. K. Sundarajan [AIR 1951 Mad 986] it
was pointed out that the condition of confirmation by the Court
being a safeguard against the property being said 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)."
(emphasis supplied)
17. Having regard to the aforesaid view of the Supreme Court, we hold that
the Company Court was not justified in passing the impugned order dated
25.07.2019, whereby the bid of Rs.23 crores of prospective buyer
(Respondent No.3) was accepted, thereby setting aside the earlier order
dated 06.09.2018, accepting the bid of the Appellant. The Company Court
failed to take into consideration that vide the aforesaid order dated
06.09.2018, the OL was directed to hand over the possession of the property
once the entire bid amount was paid by the Appellant. On the date of
passing of the impugned order dated 25.07.2019, the entire amount stood
deposited and the transaction stood concluded. No doubt, the bid of
Respondent No.3 would result in realizing an amount of Rs.1.16 crores
(approx.) more for the property in question and that would enure to the
benefit of the creditors of the company. At the same time, one cannot lose
sight of the fact that the appellant would be entitled to refund of the amount
deposited with interest accrued thereon. Thus, the OL would lose the interest
on the amount deposited by the Appellant upto 09.04.2019. Moreover,
financial gain that may result, cannot be the sole criteria for deviating from
the sale process. The auction reserve price for the sale of the property was
fixed after taking into consideration the valuation report of the valuer of
Punjab National Bank and, therefore, the offer of the Appellant which was
accepted was in conformity with the auction reserve price so fixed. The
objection of the Respondent No.1 regarding the property being undervalued
is without merit, since neither Respondent No 3 nor any bidder came with a
substantially higher offer. The difference in the amount offered by the
Appellant, and that offered by Respondent No.3 is not more than 5%. The
Supreme Court in the aforesaid decisions i.e. Valji Khimji and Co (supra)
and Navlakha and Sons (supra) has carved out an exception of fraud for
annulling the bidding process. The Court has observed that if subsequent to
an auction, an offer is made, which is substaintially higher than what has
been finalized, the situation may indicate fraud or some collusion.
However, if the price offered is only little over the auction price, that cannot,
by itself, suggest that fraud has been done. Concededly, in the present case,
the difference between the two bids is only about Rs.1.16 crores which is
not more than 5 % of the bid amount of the Appellant. Hence, the reopening
of the auction bid of the Appellant, was improper and unlawful and the
impugned order deserves to be set aside.
18. Further, we may add that we also do not find anything improper in the
conduct of the Appellant. Much has been said about the fact that after
having been unsuccessful in the first round, the Appellant had by its conduct
waived its objection to the re-bidding of the property. We do not perceive
any waiver on the part of the Appellant. In the appeal proceedings, the Court
found the action to be premature in as much, as, it was observed that the
order impugned in the first appeal had only called upon Respondent No.3 to
make a bid and therefore the matter had not attained finality. In this view of
the matter, the order dated 23.07.2019 passed in Co. APP. 16/2019,
permitted the Appellant to oppose the said sale before the learned Single
Judge. Thereafter, the Appellant categorically refused to join the bidding
process and better his offer. This was apparently for the reason that the
Appellant, conscious of its rights, elected to hold on to his plea that the sale
transaction stood concluded and could not be reopened. Since the Company
Court proceeded to accept the bid of Respondent No.3, he has now
approached this Court. Thus, we do not find any waiver on the part of the
Appellant that would disentitle him to challenge the impugned order. Also,
adverse conclusion can be drawn against the Appellant, founded on the
observations made by learned Single Judge in the impugned order dated
25.07.2019, wherein he observed that the Appellant is not interested in
further bidding. The Appellant did not participate in the bidding, as he was
opposing the call of fresh bidding by learned Single Judge on various legal
and factual grounds. The Appellant has throughout maintained that the sale
in his favour was confirmed by virtue of the orders of this Court.
19. Lastly, we may also note that learned Single Judge has also not taken
into consideration the fact that the additional amount of Rs.1.16 crores,
which could have been realized by way of sale of the property in question to
Respondent No.3, is not substantial. Appellant has already deposited the
entire amount as on 09.04.2019 and if one were to also take into
consideration the interest that would have accrued on the deposits made by
the Appellant with the OL upto the date of passing of impugned order, there
would be hardly any difference in the two bid amounts. Startlingly, the
application filed by Ex-Management, on the basis whereof, the learned
Single Judge proceeded to invite fresh bids, stated that an unnamed
prospective buyer was willing to pay Rs.26 Crores. As it transpired, on
25.07.2019, the bid amount of Respondent No.3 was substantially lower and
was only Rs.23 crores. Yet, the learned Single Judge proceeded to permit
the prospective buyer to make the payments in installments.
20. For the aforegoing reasons, we are inclined to allow the present appeals
and set aside the impugned orders. Accordingly, all the pending applications
are disposed of. We, therefore direct the Official Liquidator to proceed to
handover the vacant and peaceful physical possession of the property No.
539-539A, Sector-37, Udyog Vihar, Phase-IV, Gurgaon, Haryana to the
Appellant within two weeks from today. The Official Liquidator shall
execute the sale transaction in favour of the Appellant within two weeks.
The Appellant shall take necessary steps in this regard so that the sale is
completed within the said period.
CM. APPL. 5145/2020 in CO.APP. 21/2019
21. This application has been moved by Respondent No. 3 to alternatively
seek refund of the amount deposited by it alongwith interest. The application
is allowed. The Official Liquidator is directed to refund the said amount of
Rs. 23 crores along with the interest at the rate of 6% from the fixed deposit
created by the Official Liquidator, within a period of two weeks.
VIPIN SANGHI, J
SANJEEV NARULA, J
FEBRUARY 13, 2020
nk/Pallavi
