In Re: Akola Oil Industries Limited

R.K. Deshpande, J.—These reports are filed by the Official Liquidator appointed over M/s. Akola Oil Industries Ltd. for confirmation of auction sale held on 9-11-2012, as per the notice issued pursuant to an order dated 13-4-2012 passed by this Court. The advertisement contained invitation of bids for 39 properties on "as is where is basis" and "as is whatever basis". In the auction conducted on 9-11-2012, the highest bids in respect of all the properties are accepted, subject to confirmation of sale by this Court in terms of the order dated 13-4-2012.

On 15-2-2013, this Court passed an order as under :

"For the reasons stated in the report the highest bidders are required to deposit the balance amount of the bid price. The O.L.R., therefore, to issue the communication to each of the bidder on the address given by him specifying the exact amount which is required to be deposited.

Upon receipt of such notice/intimation in writing, the bidders shall deposit the amount to specified in the notice, within a period of 15 days with the official liquidator.

After receipt of the amount, the official liquidator to submit his report before this Court for further orders."

The Official Liquidator was required to issue communication to each of the bidders on the address given by them specifying the exact amount, which was required to be deposited, and upon receipt of such communication, the bidders were required to deposit the amount so specified in the notice, within a period of fifteen days with the Official Liquidator.

On 8-3-2013, when this matter was listed before this Court, the attention of this Court was invited to Condition Nos.9 and 21 of the terms and conditions of sale, which required the deposit of the entire balance amount of consideration within a period of six months from the date of passing of the order of confirmation of sale by this Court. This Court, therefore, modified the earlier order dated 15-2-2013 and directed that in the meantime, all the bidders should file the pursis stating as to how much amount they are prepared to deposit with the Official Liquidator, pursuant to the demand raised by the Official Liquidator.

On 5-4-2013, the attention of this Court was invited to the pursis filed by the bidders stating therein the exact amount, which they were prepared to deposit with the Official Liquidator. This Court, therefore, permitted the bidders to deposit the said amount with the Official Liquidator within a period of one week, without prejudice to their contentions. Subsequently, CAO Nos.637 and 585 of 2013 were moved by some of the bidders for extension of time to deposit the amount up to 30-4-2013. These applications were allowed by this Court, without prejudice to the rights of the parties, by an order dated 26-4-2013. Lastly, on 5-12-2014, this Court passed an order as under :

"Heard the learned counsels appearing for the parties. None of the parties have any objection for permitting the auction purchasers desirous of getting the sale confirmed to deposit the balance amount of consideration with the Official Liquidator. In view of this, the auction purchasers whose bids are accepted by the Official Liquidator shall deposit the balance amount of consideration with the Official Liquidator within a period of 15 days from today. If within this period any of the auction purchasers fails to deposit the amount of balance consideration then the question with regard to cancellation of their bids shall be considered.

Put up this matter on 20.12.2014 for arguments on confirmation of sale."

Pursuant to the aforesaid order, about fourteen bidders have deposited the balance amount of consideration with the Official Liquidator within a period of fifteen days.

Except one Shri Lalitkumar Himmatlal Shah, who had submitted his bid in respect of plot No.11, admeasuring 216 square meters, beside Radheya Apartment, Akola, all other bidders had deposited the amount as per orders dated 15.02.2013, 08.03.2013 and 05.04.2013. Similarly, the order dated 5-12-2014 has been complied with by the fourteen bidders, viz. S/Shri Jaswantsingh Oberoi (OLR No.14 of 2012), Ranjeetsingh Oberoi (OLR No.18 of 2012), Bajranglal Balmukund Agrawal (OLR 19 of 2012), Bajranglal Balmukund Agrawal (OLR No.20 of 2012), Bajranglal Balmukund Agrawal (OLR No.22 of 2012), Bajranglal Balmukund Agrawal (OLR No.28 of 2012), Subhash Bhattad (OLR No.29 of 2012), Radheshyam Gokulchand Bagadia (OLR No.33 of 2012), Ramesh Kashiram Wankhade (OLR No.35 of 2012), Kishor Ramdhan Paldiwal (OLR No.38 of 2012), Ramesh Bhagwandas Kalantri (OLR No.39 of 2012), Vivek Prabhakarrao Bijwe (OLR No.45 of 2012), Prashant Dinesh Bhartiya (OLR No.50 of 2012) and Pravin Gangadhar Dhone (OLR No.51 of 2012). The other bidders have urged that in terms of clause Nos.9, 10 and 21, they are required to deposit the balance amount of consideration only after the order of confirmation of auction sale is passed by this Court.

The Union of workers has raised an objection for confirmation of auction. The State Bank of India, who is undisputedly an unsecured creditor, has also raised an objection. Separate applications are filed by the Akola Zilla Kamgar Sangh (INTUC), a registered Trade Union, through its President, Shri Pradipkumar Vakharia, in all these Official Liquidator''s Reports. The objections are common. The interveners have also filed applications for cancellation of the tenders opened on 9-11-2012. The objections by the Union are that there is a cartel formed by the bidders to submit their bids in auction. The dispute regarding valuation of the property is also raised along with the dispute regarding its ownership. According to the objectors, the property belongs to the State Government and not to M/s. Akola Oil Industries Ltd. S/Shri A.M. Ghare and C.A. Joshi, the learned counsels appearing for the Union and the workers, have invited my attention to the provision of Rule 6 of the Companies (Court) Rules, 1959 to urge that the procedure, as prescribed under Rules 84 and 85 of Order XXI of the Civil Procedure Code, is applicable, and that procedure has not been complied with either by stipulating the condition in the notice inviting tender or asking the parties to deposit the amount in the manner specified under Rules 84 and 85 of Order XXI of the Code. It is their submission that the provision is mandatory and failure to comply, vitiates the entire process of auction. It is also their submission that the period of two years has lapsed after the date of the auction. The process has gone up and, therefore, in the public interest, the property should be put to re-auction by following the procedure prescribed under Rules 84 and 85 of Order XXI of the Code.

The response of the learned counsels appearing for the auction purchasers is that the procedure for auction is governed by Rules 272 and 273 of the Companies (Court) Rules, 1959, which has been complied with. According to them, this Court accorded the sanction for issuance of notice inviting the tenders, pursuant to which the auction was held and the bidders have complied with the requirement of clause 9 of the terms and conditions of sale, and, therefore, the sale need to be confirmed. This position is not disputed by the Official Liquidator, who has supported the claim of the auction purchasers, who have deposited the amount within the time stipulated by this Court in the orders dated 5-4-2013 and 5-12-2014. According to the learned counsels, the requirement of Rules 84 and 85 of Order XXI of the Civil Procedure Code is not at all applicable in view of the specific provision of Rule 6 of the Companies (Court) Rules, which states that the provision of the Code so far as applicable, shall apply to all proceedings under the Act and the Rules. According to them, the procedure is prescribed under the Rules, and, therefore, the applicability of Rules 84 and 85 of Order XXI of the Code, is excluded.

The dispute regarding valuation of properties, supply of copy of the valuation report to the Union of workers, fixation of reserve price and the earnest money to be deposited along with the bid is governed by the provisions of Section 457(2-A) and (2-F) of the Companies Act, 1956, and it was resolved by an order passed by this Court on 9 th March, 2012 in OLR No. 10 of 2011. This was the subject matter of challenge in Company Appeal No. 2 of 2012 filed by the Union, which was dismissed by the Division Bench on 18th September, 2012. The order has attained the finality and therefore, I need not delve on the aspect any further.

Rule 6 of the Company Court Rules, 1956, relied upon by Shri Ghare, the learned counsel for the Union reads as under;

"6. Practice and procedure of the Court and provisions of the Code to apply. --Save as provided by the Act or by these Rules, the practice and procedure of the Court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these Rules, The Registrar may decline to accept any document which is presented otherwise than in accordance with these Rules or the practice and procedure of the Court"

In terms of the aforesaid provision, if the practice and procedure of the Court is prescribed under the Act and the Rules, the same is saved and to the extent there is no provision under the Act and the Rules, the provisions of the Civil Procedure Code shall apply to all the proceedings under the Act and the Rules.

Rules 272 and 273 of the Company Court Rules dealing with the Sales by the Official Liquidator, run as under;

Sale to be subject to sanction and to confirmation by Court.--Unless the Court otherwise orders, no property belonging to a company which is being wound-up by the Court shall be sold by the Official Liquidator without the previous sanction of the Court, and every sale shall be subject to confirmation by the Court.

Procedure at sale.-- Every sale shall be held by the Official Liquidator, or, if the Judge shall so direct, by an agent or an auctioneer approved by the Court, and subject to such terms and conditions, if any, as may be approved by the Court. All sales shall be made by public auction or by inviting sealed tenders or in such manner as the Judge may direct."

Rule 272 requires the Official Liquidator to obtain previous sanction of the Court before putting the property to auction and every such sale is to be made subject to confirmation by the Court. As per Rule 273, every sale has to be made subject to such terms and conditions as may be approved by the Court and all sales shall be made by public auction or by inviting sealed tenders or in such manner as the Judge may direct.

The matter of Sales by the Official Liquidator is, therefore, completely governed by Rules 272 and 273 of the Company (Court) Rules and the applicability of the provisions of Civil Procedure Code is excluded by virtue of Rule 6 of the Companies (Court) Rules. The objection raised in respect of applicability of the provisions of the Civil Procedure Code is, therefore, rejected and it is held that the sales by the Official Liquidator are governed by Rules 272 and 273 of the Companies (Court) Rules.

This Court has by an order dated 13.04.2012 approved or sanctioned the draft public notice incorporating the terms and conditions of sales in respect of 39 properties and fixed the reserve price or the earnest money to be deposited separately in respect of each such properties. Clause (9) of the terms and conditions of sales incorporated in the public notice is reproduced below;

"9. The highest bidder whose bid is accepted by the Official Liquidator shall deposit the amount within such time/date as may be fixed by the Hon''ble High Court of the date of sanction by way of cheque/pay order/Demand Draft with the Official Liquidator and he will have to pay balance purchase price within such time/date as may be fixed by the Hon''ble High Court from the date of confirmation of the sale by the Hon''ble High Court Nagpur."

The fixation of reserve price and the earnest money to be deposited by the bidders are not the requirements of Order XXI, Rule 84 and 85 of Civil Procedure Code. In terms of the public notice issued inviting bids, every bidder has to deposit the earnest amount specified to be 10% of the valuation of each of the 39 properties so as to become eligible to participate in the auction. The highest bidder whose bid is accepted by the Official Liquidator is required to deposit the amount within such time/date as may be fixed by this Court. Upon acceptance of bid by the Official Liquidator, the bidder is required to pay the balance purchase price within such time/date as may be fixed by the Court from the date of confirmation of the sale.

The Official Liquidator has accepted the highest bids received from the eligible bidders and has filed the report for confirmation of the sale. As per order dated 5th April, 2013, all the bidders whose bids are accepted by the Official Liquidator were permitted to deposit the amount which they had agreed to deposit in terms of pursis filed by them before this Court. Accordingly, the bidders who have complied with the order dated 5th April, 2013 are entitled to have their sales confirmed. The same are now confirmed by this order.

It is informed that some of the bidders have deposited the balance amount of consideration with the Official Liquidator in terms of the order dated 5th December, 2014. The other bidders have agreed to deposit the balance amount of consideration with the Official Liquidator within such period as may be directed by this Court after confirmation of the auction in terms of clause (9) of the public notice. In view of this, all other bidders who have not deposited the balance amount of consideration are permitted to deposit the same within a period of three months from today with the Official Liquidator, failing which the sales to them shall stand cancelled and the Official Liquidator shall accordingly submit the report to this Court proposing therein the action to be taken.

The other objection regarding the title of the Government in respect of the suit properties is concerned, it is not understood as to how the Union of workers is benefited by taking such a stand. If it is to be held that the property belongs to the Government and M/s. Akola Oil Industries Limited, Akola, is not owner of the property in question, then it would be the Union of workers which shall be at loss. As a matter of fact, the objector Union had filed Writ Petition No. 1161/2013 before this Hon''ble Court, challenging the decision of the Government that the property belongs to M/s. Akola Oil Industries, Akola. This petition was dismissed by this Court on 21st December, 2013, holding that the Union has no locus standi in the matter to raise such an objection. This order has attained the finality. The objection is, therefore, rejected.

It is not in dispute that the interest of the workers is also protected by the order dated 11-7-2013 passed by the Division Bench of this Court in Writ Petition No.822 of 2013 filed at the instance of the Akola Zilla Kamgar Sangh (INTUC) and another. Undisputedly, the total dues of the workers are to the extent of Rs.12,09,26,150/-, which are protected. I am, therefore, unable to understand any such objection on the part of the Union for disbursal of such amount. The State Bank of India is an unsecured creditor and has, therefore, no locus to raise any such objection to the auction sale conducted by the Official Liquidator.

No doubt that the period of two years has expired after the date of conducting the auction. It is the Union which is responsible for the delay caused in confirmation of auction. The matter remained pending and could not be decided because the Union sought time in the matter to reply to the various applications filed by the bidders and the reports filed by the Official Liquidator. The auction purchasers who have deposited not only the earnest money but the substantial portion of the amount which is between 20 and 30 percent of the bid amount within the period stipulated by this Court, cannot be non-suited solely on the ground of delay in conformation of sale. The objections are, therefore, rejected.

In the result, the following order is passed.

[i] C.A.O. No. 428 of 2013 in OLR No. 17 of 2012 and C.A.O. St. No. 5306 of 2014 in OLR No. 13 of 2012, along with all connected civil applications for intervention, objections and cancellation of sale are dismissed.

[ii] All civil applications filed in different OLRs seeking confirmation of sale and permission to deposit the amount are allowed to the extent permitted by this Court in the body of this order.

[iii] OLR NO. 13 of 2012 along with all other OLRs seeking conformation of sale in respect of 29 properties are allowed to the extent stated in the body of this order.

OLR Nos. 13/12, 14/12, 15/12, 16/12, 17/12, 18/12, 19/12, 20/12, 21/12, 22/12, 23/12, 24/12, 25/12, 26/12, 27/12, 28/12, 29/12, 30/12, 31/12, 32/12, 33/12, 34/12, 35/12, 36/12, 37/12, 38/12, 39/12, 40/12, 41/12, 42/12, 43/12, 44/12/, 45/12, 46/12, 47/12, 48/12, 49/12, 50/12 and 51/12 are accordingly disposed of.

All civil applications i.e. CAO Nos. 312/2013, 424/2013, 391/2014, 1629/2014, 1657/2014, 425/2013, 1374/2014, 356/2013, 430/2013, 1630/2014, 357/2013, 431/2013, 1634/2014, 351/2013, 432/2013, 1659/2014, 358/2013, 433/2013, 1633/2014, 1636/2014, 386/2013, 435/2013, 1616/2014, 350/2013, 436/2013, 1656/2014, 364/2013, 437/2013, 1637/2014, 388/2013, 438/2013, 1617/2014, 359/2013, 439/2013, 1635/2014, 342/2013, 441/2013, 389/2013, 442/2013, 1618/2014, 443/2013, 360/2013, 444/2013, 1631/2014, 345/2013, 448/2013, 478/2013, 1655/2014, 382/2013, 449/2013, 390/2013, 451/2013, 1615/2014, 452/2013, 1375/2014, 391/2013, 453/2013, 1620/2014, 392/2013, 454/2013, 1619/2014, 393/2013, 458/2013, 1661/2014, 459/2013, 1632/2014, 261/2013 and 461/2013 also stand disposed of.

If due to inadvertence, certain applications which are not required to be disposed of are disposed of by this Order or certain applications which are disposed of were not required to be disposed of, the Official Liquidator or the concerned applicant shall be at liberty to approach this Court.