In Re: Kanoria Wisconsin Centrifugal Ltd.

Sanjib Banerjee, J.—These two applications are taken up and disposed of by this common order.

By an order of 16-2-2007, sale of the assets of the company (in liquidation) was confirmed in favour of Chaudhary and Sons Forging (P.) Ltd., the applicant in C.A. No. 307 of 2007, at a price of Rs. 1.46 crores. The successful bidder was required to put in the balance earnest deposit by 19-2-2007. The operative portion of the order provided, inter alia, as follows:

The successful bidder has sought time till Monday to put in the balance earnest deposit of Rs. 27.50 lakhs (Rs. 36.50 lakhs less Rs. 9 lakhs).

The successful bidder is given time till Monday to put in the balance earnest deposit. In the event the balance earnest money is not put in by 19-2-2007, the earnest deposit already made is liable to be forfeited. The balance price will be paid within 30 days from date. In default of the balance price being put in within the stipulated date, the earnest money then deposited may be forfeited.

Upon full consideration being paid by Chaudhary and Sons Forging (P.) Ltd., the assets of the company in liquidation should be made over to the successful purchaser. It is clarified that the successful purchaser will have no right over the assets of the company in liquidation prior to making payment of the entire consideration.

The matter will appear marked to be mentioned on 20-2-2007. This is necessary as in the event the balance earnest money is not deposited by the successful purchaser the other bidders will get a chance to take the assets at the highest price offered.

The successful bidder put in the earnest money of Rs. 36.50 lakhs by 19-2-2007, failed to put in the balance consideration within the 30 days that it was given time. Accordingly, by a letter dated 22-3-2007, the Official Liquidator informed the successful bidder that its earnest deposit stood forfeited. It is against such decision of forfeiture that the successful bidder has come to court.

The applicant in C.A. No. 307 of 2007, has offered to pay the entire balance sum in court today. Such applicant has also offered to pay reasonable interest on the unpaid sum for the duration of the delay.

Before the successful bidder applied for setting aside the Official Liquidator''s decision to forfeit the earnest deposit, the applicant in C.A. No. 308 of 2007, who had participated in the sale, sought an order of sale of the assets in its favour. In court today an offer of Rs. 1.5 crores was made to start with and subsequently bettered to Rs. 1.55 crores on behalf of the applicant in C.A. No. 308 of 2007.

The original successful bidder was permitted to match the bid of the Appellant in C.A. No. 308 of 2007, or stand to lose all or substantial part of its earnest deposit. The original bidder matched the first offer made in court today by the applicant in C.A. No. 308 of 2007, but is unable to match the subsequent offer of Rs. 1.55 crores made by the applicant in C.A. No. 308 of 2007.

It is always the court''s endeavour to ensure that the assets of the company (in liquidation) fetch the highest price. The court sale concluded on 16-2-2007, was after a number of adjournments had been granted to enable a better price to be received for the assets of the company (in liquidation). The sale was confirmed at the price upon all the secured creditors represented insisting that the assets be sold at the price then available lest the value thereof diminish in course of further adjournments.

True, there ought to be finality of orders and a sale confirmed in favour of one should not be reopened merely for extra rupees being offered by another. In this case, however, the successful bidder left the door ajar upon his failing to put in the balance consideration within the time stipulated. Fortunately there was another to step into the shoes of the purchaser and to better the bid originally received. The bid made by the applicant in C.A. No. 308 of 2007 is accepted. The sale is confirmed in favour of Tensile Elastomers Ltd., at a price of Rs. 1.55 crores subject, however, to the demand draft for Rs. 80 lakhs made over in court today to the Official Liquidator being encashed and subject to the balance of Rs. 35 lakhs being paid to the Official Liquidator by 2-5-2007. It is recorded that an earlier deposit of Rs. 40 lakhs made by the new purchaser has been retained by the Official Liquidator pursuant to earlier orders of court.

As far as the prayer made by the original successful bidder for refund of the earnest deposit is concerned, the same may be refunded upon retaining a sum of Rs. 5 lakhs in principal therefrom and the entirety of the interest that has accrued on the deposit. Thus, the applicant in C.A. No. 307 of 2007 will be entitled to a refund of Rs. 31,50,000 which should be made by the Official Liquidator to Chaudhary and Sons Forging (P.) Ltd., by tendering a cheque covering such amount upon premature encashment of the deposit, if necessary, by April 23,2007. It is necessary that bidders who walk into court and show some money should be penalised for ultimately not keeping the bargain. More often than not such bargains are not kept for commercial reasons rather than any difficulty faced in the matter of arranging funds. There is but a single, perfunctory explanation preferred in C.A. No. 307 of 2007, to justify why the payment could not be made within the time stipulated.

Both the applications are disposed of without any order as to costs. The Official Liquidator will return the deposits if retained from other bidders by 23-4-2007. In the event, the new purchaser is unable to meet the deadline as set on its request, it is likely to suffer the same fate as the original successful bidder.

Upon payment of the entire sum by Tensile Elastomers Ltd., within 2-5-2007, the Official Liquidator shall hand over possession of all assets sold within a period seven days from payment or encashment of the instrument of payment whichever is later.

Liberty is also given to the new purchaser to post its guards at the place where the assets presently lie, in addition to the guards that may have been posted by the Official Liquidator. Needless to say, neither the guards of the new purchaser nor its officers will be allowed access to the assets till such time that the entire payment is completed.