NAVALKHA AND SONS Vs. RAMANYA DAS

JUDGEMENT

(1.) These appeals are brought by certificate from the judgment of the Andhra Pradesh High Court dated September 24, 1965 in O. S. A. Nos. 3 and 4 of 1965.

(2.) In the winding up proceedings of Hyderabad Vegetable Products Co., Ltd. (in liquidation) the 5th respondent (Official Liquidator) sought permission of the Court for the sale of immovable and movable properties and actionable claims of the Company. This application was Company Application No. 67 of 1963. A shareholder of the Company one Sirajuddin Babu Khan also made an application C. A. No. 93 of 1964 to a similar effect. On these applications an order was passed by Jagan Mohan Reddi J., on April 17, 1964 appointing respondents 2, 3 and 4 as Joint Commissioners for the purpose of selling immovable and movable properties and actionable claims of the aforesaid Company in accordance with the terms and conditions mentioned in the order. Accordingly a sale proclamation August 1, 1964 was drawn and issued by the respondents 2 to 4 inviting offers for the purchase of movable and immovable properties and actionable claims of the Company as a single unit. According to the terms and conditions of sale the commissioners were not bound to accept the highest offer and were at liberty to reject any offer without assigning any reason. Immediately after the offer was accepted by the commissioners the offeror had to deposit 15 per cent. of the offer amount as initial deposit and the balance of the amount together with the amount required on non-judicial stamp paper within 15 days from the date of acceptance. Acceptance of the offer by the Commissioners was subject to the condition of confirmation by the High Court and the offeror was entitled to take delivery of possession of the properties only after such confirmation. It was made abundantly clear in clause 16 that in all matters relating to the sale of the properties the decision of the Commissioners shall be final and shall be binding subject to the control of the High Court. One of the conditions also was that the proclamation of sale was to be advertised twice in each of the five leading dailies The Statesman, The Times of India, The Hindu, Indian Express and the Hindustan Times to ensure wide publicity and the Commissioners were also required to get the proclamation printed and distributed among the likely purchasers. The Commissioners got published the proclamation in four leading dailies only; The Hindu, Indian Express, The Statesman and the Hindustan Times. No publication was made in the Times of India nor was the advertisement made twice in any of the said newspapers. In two of them there were two insertions but in the remaining papers there was only one insertion. In addition to the advertisement the Commissioners got printed 300 copies and posted them to various industrial concerns. The last date fixed for the receipt of the offers was September 8, 1964. Not even a single offer was received by that time. The time for receipt of offers was extended by the Court to the end of November, 1964 at the instance of the Commissioners. The appellant Navalkha and Sons happened to be the sole offeror. It has offered a sum of Rupees 7, 91,001/- which was made of Rupees 2,50,000/- for the immovable property and Rs. 5,41,001/- for the machinery. It made no offer for the actionable claims. The appellant made deposit of Rs. 50,000 in the shape of demand draft drawn on the State Bank of Hyderabad. The offer was accepted by the Commissioners on December 2, 1964. The appellant was called upon to deposit 15 per cent. of the amount of the offer as initial deposit immediately and the balance together with the amount required for non-judicial stamp paper within 15 days from the date of acceptance. The appellant did make the initial deposit. The Commissioners then made an application on December 3, 1964 to the High Court for confirmation of the sale. On December 11, 1964 the High Court extended time for payment of the balance amount for two weeks. On December 24, 1964 one Gopaldas Darak made an offer of Rs. 8,50,000/- saying that he could not offer in time because he came to know of the sale only two days prior to that date and it was due to the fact that there was no adequate publicity. To show his bona fides he gave a demand draft for a sum of Rs. 1,00,015/-. The learned Judge decided that the property did not fetch its proper price and there was possibility of higher bids. Instead of directing a fresh auction or calling for fresh offers the learned Judge thought it proper to arrange an open bid in the Court itself on that very day, as between the appellant and Gopaladas Darak. Before starting the bid the learned Judge gave time to the appellant to think over and say whether it was willing to accept the course decided upon and to participate in the auction bids. The appellant consented and volunteered to take part in the bid and became the highest bidder at Rs. 8,82,009/-. The learned Judge accepted the said bid as final bid and concluded the sale in favour of the appellant directing it to pay the balance of the money together with the amount required for non-judicial stamp on or (before) 31-1-1965 making it clear that in case of default the deposit already made would be forfeited. The appellant paid the balance of the amount on January 30, 1965. On the same day one Padam Chand Agarwal made an application (C. A. 44 of 1965) offering Rs. 10,00,000. He complained that publicity of the sale of the property was not adequately made and he came to know of the advertisement very late. He was prepared to enhance the offer to Rs. 10,00,000/- and was also willing to participate in open bid if the Court so decided with Rs. 10,00,000/- as initial bid. The learned Judge rejected his request and by his order dated February 19, 1965 held that the sale should be confirmed in favour of the appellant. Aggrieved by this Order Padam Chand Agarwal filed appeal No. 4 of 1965. One Ramnuja Das, a contributory also chose to prefer an appeal (appeal No. 3 of 1965) against the order of confirmation. According to him, the publicity given was inadequate and the first offer given by the appellant was too low and the Court has rightly refused to confirm the acceptance of the offer. His grievance was that the learned Judge should have held the auction only after due publicity but has not done so and the same course followed did not achieve the object of getting adequate price of the property.

(3.) Both appeals 3 and 4 are, therefore, directed against the confirmation of the auction sale held in Court on December 24, 1964. These appeals were allowed by Letters Patent Bench consisting of the Chief Justice and Kumarayya J., and the order of the learned single Judge dated February 19, 1965 read with his previous order dated December 24, 1965 was set aside. It was directed that the learned Judge should take fresh steps for the sale of the property either by calling sealed tenders or by auction in accordance with law. The tenders would be called or the auction would take place with the requisite condition of minimum offer or starting bid of Rs. 10,00,000/-.