THE HON’BLE Ms. JUSTICE G. ROHINI COMPANY APPLICATION No.716 OF 2010 IN COMPANY PETITION No.83 OF 1997 DATED: 19.04.2011 Between : Uttamchand Sethiya … Applicant And M/s. Commercial Agro Products Pvt. Ltd. (In liqn.) Rep. by the Official Liquidator, High Court of Andhra Pradesh, Hyderabad. .. Respondent THE HON’BLE Ms. JUSTICE G. ROHINI COMPANY APPLICATION No.716 OF 2010 IN COMPANY PETITION No.83 OF 1997 ORDER : This application is filed seeking a direction to the Official Liquidator attached to this Court representing M/s. Commercial Agro Products Private Limited, the company in liquidation to receive the balance sale consideration of Rs.86,80,000/- in respect of Lot No.1 of the immovable properties of the company in liquidation and to execute the registered document in favour of the applicant. The facts, in brief, are as under: By order dated 24.07.1997 made in C.P.No.83 of 1997 this Court appointed the Official Liquidator attached to this Court as the provisional liquidator of M/s. Commercial Agro Products Private Limited. Subsequently, by order dated 1.11.2006 the said company was wound up and the Official Liquidator was appointed as its Liquidator. In the meanwhile, in terms of the orders passed by this Court, dated 13.04.2006 in Company Application No.1416 of 2004 the Official Liquidator divided the immovable properties of the company into 10 lots and put the same to sale by inviting sealed tenders. The sale proceedings were held by the Official Liquidator on 15.7.2006. Subsequently, after notice to all the participants, open auction by way of further negotiations in respect of all the 10 lots was held in this Court on 1.8.2006 and by order dated 4.8.2006 this Court confirmed the sale in favour of the highest bidders of the respective lots. So far as Lot No.1, comprising of Ac.122-78 cents of land situated in Amancharla, Nellore District is concerned, the offer of the applicant herein for a sum of Rs.1,16,00,000/- was accepted by this Court. Accordingly, the Official Liquidator by letter dated 8.8.2006 informed the applicant to remit the sale consideration within 30 days from 4.8.2006 i.e., the date on which the sale was confirmed by this Court. It is not in dispute that by that time the applicant had already remitted Rs.6,00,000/- towards EMD and a further sum of Rs.23,20,000/- towards 20% of the price offered out of the total sale consideration of Rs.1,16,00,000/-. Even before the expiry of the stipulated period of 30 days, the applicant by letter dated 1.9.2006 requested the Official Liquidator to extend the time for remitting the balance sale consideration of Rs.86,80,000/- by two months. In the meanwhile, the Ex. Managing Director of the company in liquidation filed O.S.A.No.30 of 2006 assailing the order dated 13.04.2006 passed by this Court in Company Application No.1416 of 2004 permitting the Official Liquidator to effect the sale of the assets of the company in liquidation. The Ex. Managing Director also filed O.S.A.No.45 of 2006 against the confirmation of sale ordered on 4.8.2006. Two other appeals being O.S.A.Nos.3 & 28 of 2007 were also filed against the winding up order dated 1.11.2006 and the order dated 17.11.2006 directing delivery of property covered by Lot Nos.3 & 8 respectively were also filed by the Ex. Managing Director. Pending O.S.A.No.30 of 2006, the Division Bench by order dated 13.09.2006 ordered stay of confirmation of sale and thereafter by order dated 1.2.2007 Division Bench stayed the operation of the winding up order dated 1.11.2006 pending O.S.A.No.3 of 2007. However by common judgment dated 2.7.2010 all the Appeals were dismissed. The applicant claims that he came to know about the dismissal of the Appeals only on 31.08.2010 when he received the letter of the Official Liquidator dated 24.08.2010 informing the dismissal of O.S.A.Nos.30 of 2006 and etc., filed by the Ex. Managing Director of the company in liquidation. Immediately on 3.9.2010 the present application came to be filed seeking directions to the Official Liquidator to receive the balance sale consideration and to execute the sale deed in his favour. It is pleaded by the applicant that though he wanted to deposit the balance sale consideration in compliance with the order of this Court dated 4.8.2006, in view of the interim orders dated 13.09.2006 and 1.2.2007 granted by the Division Bench in O.S.A.No.30 of 2006 and O.S.A. No.3 of 2007 the office of the Official Liquidator did not receive the same and that even after the dismissal of the said Appeals, the office of the Official Liquidator did not accept the balance sale consideration insisting upon a specific direction by this Court. In the report dated 16.09.2010 filed by the Official Liquidator vide OLR No.419/2010, none of the facts noticed above are disputed. However the Ex. Managing Director of the company in liquidation, who got himself impleaded as respondent No.2, filed a counter-affidavit opposing the directions sought by the applicant. It is contended in the counter-affidavit that as per the Terms and Conditions of the Auction, the applicant had to pay the balance sale consideration of Rs.86,80,000/- on or before 3.9.2006 and since he failed to deposit the said amount within the stipulated time, as per Clause-20 the amount deposited by him towards EMD and 20% of the price offered are liable to be forfeited by the Official Liquidator. It is also contended that the present application filed seeking a direction to the Official Liquidator to receive the balance sale consideration and to register the sale deed in his favour, being contrary to the Terms and Conditions of Sale, is not maintainable and therefore on that ground itself it is liable to be dismissed. It is also contended that since Review Application Nos.892 to 895 of 2010 filed by him to review the common judgement dated 2.7.2010 in O.S.A.No.30 of 2006 and etc., are pending, the direction as sought for cannot be granted at this stage. It is further pleaded that he being the major shareholder of the company in liquidation in the interest of the shareholders and creditors of the company had identified a prospective purchaser, who expressed his willingness and readiness to purchase the properties covered by Lot No.1 for a sum of Rs.2 Crores against the offer of Rs.1,16,00,000/- made by the applicant. M/s. Commercial Agro Products Sheep Unit Holders Welfare Association, represented by its Secretary N.V. Murthy also got itself impleaded as respondent No.3 and filed a counter-affidavit stating that the said association was formed by 44,000 unit holders who had invested the sum of Rs.3,000/- per each unit in the company in liquidation. It is contended that as the applicants failed to comply with the Terms & Conditions of Auction, the applicants cannot be granted any relief. It is also pleaded that as there is steep rice in the present registration value of the lands covered by Lot Nos.7 & 2, if the property is put to auction afresh in view of the default committed by the applicants it would fetch much higher price and that the members of the association who are all the depositors and they deposited their hard earned money would be benefitted if a fresh auction is conducted. I have heard Sri S. Ravi, the learned Senior Counsel appearing for the applicant; as well as Sri B. Adinarayana Rao, the learned counsel appearing for the 2nd respondent – Ex. Managing Director of the company in liquidation, Sri A. Narasimha Rao, the learned counsel appearing for the 3rd respondent. The learned Senior Counsel appearing for the applicant while submitting that the delay in remittance of the balance sale consideration is only on account of the interim orders passed by the Division Bench in O.S.A.No.30 of 2006 and etc., contended that there was no default on the part of the applicant at any stage of the proceedings. Having regard to the admitted fact that the applicant had deposited the EMD of Rs.6,00,000/- on the date of auction itself and a further sum of Rs.23,20,000/- was also paid by him after being declared as the successful bidder, the learned Senior Counsel submitted that there cannot be any objection for execution of the sale deed in favour of the applicant. On the other hand, the learned counsel appearing for the 2nd respondent vehemently contended that having failed to pay the balance sale consideration on or before 3.9.2006 as stipulated under the Terms & Conditions of Sale, the applicant cannot take advantage of the interim stay dated 13.09.2006 granted by the Division Bench. While submitting that the present application is nothing but an attempt to get the inordinate delay in payment of the balance sale consideration condoned, the learned counsel vehemently contended that in view of the steep rise in the value of the lands, the grant of relief as sought by the applicant is unwarranted since it would be against the interest of the creditors and shareholders of the company. In support of his submissions, the learned counsel for the 2nd respondent relied upon the decision of the Supreme Court in LICA (P) LTD. v. OFFICIAL LIQUIDATOR[1] and FCS SOFTWARE SOLUTIONS LIMITED v. LA MEDICAL DEVICES LIMITED[2]. I have also heard Sri M. Anil Kumar, the learned counsel representing the Official Liquidator and perused the material available on record. The applicant having participated in the auction conducted by the Official Liquidator was admittedly declared as the highest bidder in respect of Lot No.1. It is not in dispute that apart from the EMD of Rs.6,00,000/- he had also deposited Rs. 23,20,000/- towards 20% of the amount offered in compliance with the terms and conditions of sale. He had also participated in the negotiations held by this Court on 1.8.2006 and the sale was accepted in his favour in respect of Lot No.1 by this Court by order dated 4.8.2006. It is relevant to note that the Ex. Managing Director of the Company in liquidation represented before this Court on 4.8.2006 that he was ready and willing to deposit more than the amounts offered by the various bidders for various lots. The said request was rejected by this Court and while accepting the highest offers received on 1.8.2006, including the applicant herein, the matter was directed to be listed on 18.08.2006 for reporting payment of the balance amount by the highest bidders. As per Clause-17 of the Terms & Conditions of Sale, the intimation of acceptance of the sale as confirmed by this Court should be given to the successful bidder within one week from the date of sanction of sale and thereafter the successful bidder should pay the balance sale consideration within 30 days or within such time as this Court may grant. Since the sale in favour of the applicant was accepted by this Court on 4.8.2006, it is true that the applicant as per the Terms and Conditions of Sale was required to pay the balance sale consideration on or before 3.9.2006 i.e., within 30 days from the date of acceptance by this Court. However the petitioner made a request before the Official Liquidator on 1.9.2006 for extension of time for payment of the balance sale consideration of Rs.86,80,000/-. It is admitted by the Official Liquidator that such a request was made by the applicant and the same was brought to the notice of this Court vide report dated 6.9.2006 and that this Court by order dated 7.9.2006 in Company Application No.1414 of 2004 directed the purchasers to approach the Court for extension of time. The record discloses that even before the applicant could take such steps before this Court for extension of time, interim stay of winding up order was granted by the Division Bench on 13.09.2006 in O.S.A.No.30 of 2006. Ultimately the said Appeal was dismissed on 2.7.2010. It is not disputed before this Court that the said fact was informed to the applicant by the Official Liquidator by letter dated 24.08.2010 in response to the applicant’s letter dated 18.08.2010 seeking status of the stay granted in O.S.A.NO.30 of 2006. It is also not disputed before this court that during the pendency of the said Appeal before the Division Bench, the office of the Official Liquidator did not accept the balance sale consideration from any of the successful bidders. As noticed above, the present application has been filed on 6.9.2010 seeking a direction to the Official Liquidator since the office of the Official Liquidator was insisting upon a specific direction by this Court in view of the long lapse of four years from the date of confirmation of sale. There can be no dispute about the well-settled principle of law that the approach of the Company Judge should be to get the highest price so as to satisfy the maximum claims against the company in liquidation. It may also be true that, due to long lapse of time from the date of the sale proceedings held in the year 2006, the lands in question are likely to fetch much higher amounts if they are put to sale afresh. However this is a case where the sale in favour of the applicant was confirmed by this Court after holding open negotiations with all the participants. This Court was satisfied that the price fetched was reasonable. There is absolutely no allegation of irregularity or fraud in the conduct of sale. By the date of acceptance of sale the applicant had admittedly paid 20% of the price offered as required under the terms and conditions of sale. Even with regard to the balance sale consideration, the applicant made a request before the Official Liquidator on 1.9.2006 for extension of time, well within the expiry of the stipulated period of 30 days from the date of confirmation of sale. The report of the Official Liquidator reveals that the request of the applicant was brought to the notice of this court and on 7.9.2006 this court directed the applicant to file an application for extension of time. However, interim stay of the operation of the winding up order was ordered by the Division Bench on 13.09.2006 and thereafter the office of the Official Liquidator was not inclined to receive the balance sale consideration from the successful bidders. From the undisputed facts noticed above, I am unable to hold that there was any default on the part of the applicant in payment of the balance sale consideration. Having regard to the fact that he had already deposited substantial amounts in compliance with the terms and conditions of sale and he was diligent in taking steps for extension of time before the expiry of the stipulated period of 30 days for payment of balance sale consideration, it cannot be held that there were any lapses on the part of the applicant to perform his part of contract. Hence the question of forfeiture under Clause-20 does not arise. Even as per Clause-17 of the Terms & Conditions of Sale, the successful bidder is entitled to pay the balance sale consideration within 30 days or within such time as this Court may stipulate. For proper appreciation, Clause-17 may be extracted hereunder: “17. The final offers so received will be placed before the Hon’ble High Court of A.P. for sanction or otherwise and the intimation of acceptance, if sanctioned by the Hon’ble Court shall be given to the offerers within one week from the date of sanction of sale of the assets/properties. The offerers shall pay balance purchase consideration within 30 days or within such time as the Hon’ble High Court may stipulate, from the date of final acceptance of the particular offer by the Hon’ble Court.” It is clear from the above provision that in appropriate cases it is always open to this Court to grant extension of the stipulated period of 30 days for payment of the balance sale consideration. Even otherwise Rule 7 of the Companies (Court) Rules, 1959 confers wide powers on this Court for enlarging the time fixed by these Rules or by an order of this court for doing any act or taking any proceedings upon such terms as the justice of the case may require. Rule 7 further empowers this Court to grant such enlargement although the application for the same is not made until after the expiration of the time appointed or allowed. It is also relevant to note that the winding up of the company in liquidation was ordered in C.P.No.83 of 1997 pursuant to the voluntary winding up proceedings at the instance of the Ex. Managing Director – the 2nd respondent herein. Strangely, the Ex. Managing Director himself filed O.S.A.No.30 of 2006 and etc., assailing the winding up order and got the proceedings stayed pending the said Appeals. The said Appeals were ultimately dismissed holding that there was no illegality or irregularity in the proceedings. Even the plea of the applicant therein (the 2nd respondent herein) that he was prepared to deposit amounts higher than the highest offers received was not accepted by the Division Bench. Hence the contention now advanced by the 2nd respondent that the land in question would fetch much higher price and that a third party is ready and willing to pay Rs.2 Crores does not appear to be bona fide. As expressed above, the applicant is a genuine bidder whose offer being the highest was accepted by this Court after holding negotiations in the open Court and there is also no default on his part in performing his part of contract. Hence I am of the opinion that the sale confirmed in his favour cannot be unsettled at this stage merely on the ground that the fresh sale may fetch a better price. Accordingly, the Application is allowed as prayed for and the Applicant is permitted to remit the balance sale consideration within four weeks from today. On such payment, the Official Liquidator shall execute the registered document in favour of the applicant or his nominees and deliver possession of the properties covered by Lot No.1 following due process of law. The Company Application is accordingly allowed. No costs. ______________ G. ROHINI, J. Dt. 19.04.2011 gbs [1] (1996) 85 Company Cases 792 (SC) [2] (2008) 10 SCC 440