M/S. Shree Gouraavi Plastic ... vs Stressed Assets Stabilisation ...
2021 Latest Caselaw 2203 Tel

        THE HON' BLE SRI JUSTICE CHALLA KODANDA RAM

                  I.A.NOs.2,3,4,6 AND 8 OF 2020
                               AND
               COMPANY APPLICATION No. 42 OF 2020

ORDER:

Company Application No. 42 of 2020 has been taken out by

the Official Liquidator on behalf of M/s Shree Gouraavi Plastic Ltd.

(company in liquidation) seeking the following relief:

1) take the report / e-auction proceedings submitted on 11.09.2019 by the e-auctioneer viz. M/s Shriram Automall India Limited on record in the company (in liquidation);

2) take on record the action taken by the Official Liquidator in returning the EMD amount to the unsuccessful bidders as per the directions of the then Hon'ble Company Judge and to give post facto approval for the same;

3) confirm the sale in favour of Sri Y. Sreedhar, Jubilee Hills, Hyderabad, who has offered the highest amount of Rs.5,12,00,000/- (five crore twelve lakhs only) towards the purchase of the land to an extent of Ac.2.04 guntas, buildings / sheds and plant and machinery at Plot No. 140, Miyapur, IDA Bollaram Village, Narsapur Taluk, Sangareddy District (formerly known as Medak District) against the Minimum Upset Price of Rs.5,00,00,000/- and to collect the balance sale consideration amount of Rs.4,77,00,000/- ie. (excluding the EMD amount of Rs.35,00,000/-) from Sri Y. Sreedhar, purchaser within 30 days from the date of receipt of order of this Hon'ble Court as per the terms & conditions of the sale;

4) permit the Official Liquidator to hand over the possession and to execute the necessary sale deed in favour of Sri Y. Sreedhar after receipt of the balance sale consideration;

5) order that the cost of this application and other incidental expenses do come out of the assets of the company.

This Court, in Company Application No. 632 of 2018, taking

into consideration the developments from time to time and also the

prevailing market value, by its order dated 20.12.2018, directed

the Official Liquidator to call for fresh expression of interest for

buying the property of the company in liquidation, stated supra.

Thereafter, M/s Shriram Automall India Limited was engaged as

an Agency to carry out the advertisement and call for expression of

interest and for conducting e-auction. Necessary advertisements

were issued and the intending sale proposals were also widely

circulated in the locality more particularly, with various industrial

concerns situated in and around the property in issue. E-auction

was held on 11.09.2019. Three qualified bidders participated in the

e-auction; they are 1) Sri Yarlagadda Sreedhar, who offered an

amount of Rs.5,12,00,000/-, 2) Nine Home Projects, which offered

Rs.5.7 crores, and 3) Sri Bharat Simha Reddy, who offered Rs.5.2

crores. EMD of unsuccessful bidders Sri Bharat Simha Reddy and

Nine Home Projects was returned. Though this Court directed the

Official Liquidator to seek better offers from the potential bidders,

since no bidder/purchaser has come forward, it is stated, as per

the directions of this Court, the Official Liquidator had negotiated

with the successful bidder but he denied to increase the price

further. Subsequently, the Official Liquidator had returned the

EMD to Sri Y. Sreedhar, however, the same was returned with

postal endorsement "unclaimed". Thereafter, the successful bidder

requested his offer to be accepted, in view of the earlier failed

attempts of the Official Liquidator to return the EMD. While the

things stood thus, an e-mail was received on 27.11.2020 on behalf

of M/s Bajaj Heavy Engineering Limited stating that they were

willing to offer a sum of Rs.5,45,00,000/-. As it was not the

participant pursuant to the auction conducted on 11.09.2019 and

its offer being outside the auction, the Official Liquidator advised

the said party to approach the Court for necessary directions.

It may also be noted that vide order dated 29.09.2020, this

Court, taking note of the offer of Sri Yarlagadda Sreedhar, had

directed the Official Liquidator to negotiate with him so as to fetch

higher amount with respect to the property which was put to

auction. The Official Liquidator vide report dated 17.06.2020, in

OLR No. 15 of 2021 had stated that the applicants in I.A.Nos. 1 to

4, 5 & 6 of 2020 were not participants in the e-auction and they

had also not paid the necessary EMD. He had also stated that the

offers / objections after confirmation of the sale should not

ordinarily be allowed. Reliance was sought to be placed on the

judgment of the Supreme Court in Valji Khimji & Company v.

Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd.1

The Official Liquidator, however, stated that there is a discretion

with the Company Court either to accept or reject the highest bid

before an order of confirmation of sale is made. In support of this

contention, a reference was made to the judgment of the Supreme

Court in Vedica Procon Private Limited v. Balleshwar Greens

P. Ltd.2 which approving the view taken in Navalkha and sons v.

Sri Ramanya Das3, held that "there is a discretion in the Company

Court either to accept or reject the highest bid before an order of

confirmation of sale is made. However, once the Company Court is

satisfied that the price is adequate, the subsequent higher offer

cannot be a ground for refusing the confirmation. The price of

immovable property keeps on varying depending upon the market

conditions and availability of a buyer. Such fluctuations may attract

fresh higher offers but normally such offers cannot be made the

basis for reopening the confirmed sale which was otherwise valid."

(2008) 9 SCC 299

2015(8) SCALE 713

1969(3) SCC 537

The matter was listed on 19.04.2021, 18.06.2021,

24.06.2021, 08.07.2021 during which time, the learned counsel for

implead party petitioners, learned counsel for IDBI as well as

learned counsel appearing for the Official Liquidator were heard at

length.

Keeping in view the discretion vested with the Company

Court and keeping in view the objective of getting best possible

consideration for the property which was proposed to be sold by

the company in liquidation, the respective counsel were asked to

make the best possible price. While the counsel for the implead

petitioners, after taking instructions from their clients, had made

an offer of maximum of Rs.5.75 crores, the initial revised offer of

the successful bidder through Senior Counsel Sri S. Ravi was

Rs.6.25 crores and on further persuasion, a final offer of Rs.6.50

crores was made, however, he requested this Court to consider

granting the facility of paying the money in five installments. To

that effect, the successful bidder also filed an affidavit on

09.07.2021, which came to be made as part of the record under

USR No. 38112 of 2021, through their advocate on record Sri

Pavan Kumar. In the affidavit filed, the successful bidder had

offered to pay the amount in five installments.

The learned Counsel Sri Markandeyulu, on behalf of the

IDBI, beneficiary of the amount and representing the secured

creditor, on instructions, while agreeing that the price offered is

fair and much more than the initial offer of Rs.3.50 crores, prayed,

instead of granting four installments, the offer may be accepted

restricting the final payment to be completed before September

2021 as that month end would be the half-yearly financial closure

of the IDBI.

Having regard to the facts narrated above and taking into

consideration the fact that the affairs of the company in liquidation

are pending since long, the company having been declared as sick

company under Sick Industrial Companies ( Special Provisions)

Act, 1985, the matter having been referred to as 'referred case'

before this Court, it is appropriate to approve the sale of the

subject property on 'as is where is and whatever there is basis'.

IN THE RESULT, the price offered by the successful bidder,

Sri Yarlagadda Sreedhar at Rs.6.50 crores is accepted. The amount

of Rs.35,00,000/- paid towards the Earnest Money Deposit shall

be given credit to. He shall therefore, now pay Rs.6.15 crores, in

four installments as under;

1) Rs.1,65,00,000/- on or before 29.07.2021,

2) Rs.1,50,00,000/- on or before 31.08.2021,

3) Rs.1,50,00,000/- on or before 30.09.2021, and

4) Rs.1,50,00,000/-on or before 31.10.2021.

In default of payment of respective installments by the due

date, the same shall carry interest at 15% per anum. On receipt of

the total consideration, the Official Liquidator shall execute the

sale document in favour of Sri Yarlagadda Sreedhar, who shall

bear the necessary expenditure like stamp duty, registration fee

and any other expenses.

It is made clear that no claims whatsoever in relation to the

subject property of the company in liquidation shall be

entertained.

The Company Application is accordingly, disposed of. No

costs.

Consequently, I.A.No. 8 of 2020 which was filed to confirm

the sale conducted in e-auction dated 11.09.2019 thorough service

provider M/s Shriram Automall India Limited in favour of the

petitioner therein as he is the highest bidder in the e-auction for

the subject land, is allowed.

I.A.Nos. 2, 3, 4 and 6 of 2020 filed by the respective

petitioners therein to 1) permit purchase of the subject property; 2)

direct the Official Liquidator to hand over the physical possession

of the property pursuant to execution of the deed of conveyance; 3)

direct the Official Liquidator to receive the amount of Rs.5.45

crores duly adjusting EMD amount of Rs.35,00,000/-, execute

conveyance deed, etc.; and 4) permit the petitioner to purchase the

property and to direct the Official Liquidator to receive the amount

and execute conveyance deed, are dismissed.

Miscellaneous petitions, if any pending, shall stand closed.

____________________________ CHALLA KODANDA RAM, J 26th July 2021

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