ELSON COLLTON MILLS LTD Vs. STATE

JUDGEMENT

(1.) M/s. Elson Cotton Mills Ltd. is in liquidation. The Official Liquidator, in consonance with the mandate of the provisions of the Companies Act, took possession of the assets of the Company. Sinha various creditors, secured as well as unsecured, and also workers are to be paid their dues which the company (in liquidation) owes, steps are taken by the Official Liquidator to dispose of the assets so that proceeds thereof are utilised for payment to the persons falling in the aforesaid categories.

(2.) It was in furtherance of these steps that two plots of the company were auctioned on 29th M , 2003 for Rs.7 crores and the bid was confirmed. M/s. JCB India Ltd. was the successful bidder and it has paid the entire consideration. However, the auction purchaser has not taken the possession of the assets so far. It may be noted that the auction purchaser have filed 'CA No. 721/2003 wherein it was stated that there were certain trespassers who have encroached upon the premises in question and prayer made was that the amount of Rs.1.75 crores which was deposited by the auction purchaser by that time be invested in fixed deposit, which prayer was granted. On July 23, 2003 direction was given to the auction purchaser to deposit the balance amount and the order was passed that the said amount be also invented in a fixed deposit. The auction purchaser deposited balance amount of Rs.5.25 crores and the entire amount, in this manner, is kept jn fixed deposit. In the meantime, another issue cropped up, namely, whether the property auctioned to the auction purchaser was subject matter of acquisition proceedings by the Government as doubt was raised by the auction purchaser that the portion of the land sold to the juction purchaser was acquired by the government for Haryana Urban Development Authority. It took some time to ascertain this position and ultimately it turned out that the land in question sold to the auction purchaser was not acquired.

(3.) However, before the possession could be given to the auction purchaser, after the aforesaid clarification obtained in the matter, few application came to be filed by certain parties offering higher amount. CA No. 1012/ 2004 was filed by M/s. Pivot Buildcon Pvt. Ltd. for an offer of Rs.7.52 crores. M/s. ACJ Finance and Leasing Pvt. Ltd. submitted an offer of Rs.8 crores and M/s. Deepak Fabrications Pvt. Ltd. was willing to offer Rs.8.10 crores. Issue, therefore, has arisen as to whether this Court can allowce-bidding because the auction purchaser is opposing this move. While arguments were addressed on this issue from time to time, another bidder M/s. Starwire India Ltd. came forward with an offer of Rs.8.25 crores which he increased to Rs. 9 crores on November 4, 2004. M/s. Sunder Steels Ltd. and M/s. Tank Bund Properties Pvt. Ltd. also submitted their offers for Rs.9 crores and Rs.8 crores respectively. As on November 4, 2004 as these three parties remained in the fray, in order to test their bona fides it was directed that these three bidders shall deposit the earnest money of Rs. 2 crores (which represents 25% of Rs. 8 crores, the bid submitted by one of the parties) by 17th November, 2004. M/s. Tank Bund Properties Pvt. Ltd. also moved formal application for setting aside the earlier sale in favour of the auction purchaser being CA No. 1405/2004. On 25th November, 2004 it was decided to invite fresh bids so that any other interested is also able to participate in bidding process in case confirmation of sale in favour of the auction purchaser is set aside and the Court decides to re-auction the property. Advertisement was directed to be issued for this purpose in two leading daily newspapers. It is in this background it is required to be decided as to whether auction of the plots which was confirmed on 29th May, 2003 for a sum of Rs.7 crores needs to be set aside and fresh bidding allowed.