Court Remands Case for Fresh Adjudication, Considers Higher Offer for Industrial Land Sale
In a significant development, the Madhya Pradesh High Court has intervened in the liquidation proceedings of Bharat Commerce and Industries Ltd., directing a fresh adjudication of the auction process concerning the sale of the company's valuable immovable assets. The Division Bench comprising Justices Vijay Kumar Shukla and Alok Awasthi has remanded the matter back to the Single Judge, emphasizing the need to consider a higher post-auction offer that surfaced after the formal conclusion of the auction process.
The case revolves around the liquidation of Bharat Commerce and Industries Ltd., which involved the auctioning of industrial land in Rajpura, Punjab, conducted under the supervision of the Official Liquidator. The auction, held on January 29, 2025, concluded with Kalindi Associates emerging as the highest bidder with an offer of Rs. 31 crores. However, subsequent to the auction, M/s Maa Sharda Oils submitted a higher offer of Rs. 35 crores, highlighting the potential for a more lucrative sale of the assets.
The Official Liquidator, acknowledging the higher offer, sought directions from the court, indicating the auction process had not reached finality. The court, while upholding the sanctity of the auction process, recognized the inadequacy of the auction price and devised a mechanism to enhance it, considering the valuation of the property at approximately Rs. 36.31 crores.
In the appeal filed by Dilip Kumar Agrawal, the appellant argued that the Company Judge erred in dismissing the application on the grounds of bid finality. The appellant also referenced the Supreme Court's judgment in Divya Manufacturing Company (P) Ltd. v. Union of India, which allows for the consideration of higher offers even after the issuance of a sale certificate, provided possession transfer or sale deed execution has not occurred.
The Division Bench noted that certain contentions raised by the appellant were not adequately addressed by the Company Judge and directed a remand for fresh adjudication. The court also instructed the Official Liquidator to refrain from executing the sale deed until the matter is resolved. Furthermore, the appellant has been directed to deposit a cheque of Rs. 5 crores with the Official Liquidator, underscoring their bona fides in the proceedings.
This decision underscores the court's role as the custodian of the company's and creditors' interests, ensuring that the liquidation process fetches the best possible price for the assets, thereby safeguarding public interest and the interests of the stakeholders involved.
Bottom line:-
Liquidation proceedings - Higher post-auction offer by a third party - Court has the discretion to consider such higher offers in the interest of the company and its creditors, even after the auction process is formally concluded, provided the sale has not attained finality through possession transfer or execution of the sale deed.
Statutory provision(s): Companies Act, 1956 Section 483
