JUDGMENT
P.R. Gokulakrishnan, C.J.
1. This O. J. appeal is against the order passed by the learned single judge of this court in Company Application No. 29 of 1988 inasmuch as by the said order, the learned single judge has given certain directions, which are as follows :
(1) It is directed that fresh advertisement in the Times of India and Gujarat Samachar, Ahmedabad edition, should be given inviting members of the public to offer their bids on the same terms and conditions on which the offers were invited earlier.
(2) In the fresh advertisement, it shall be stated that offer should not be for an amount less than Rs. 13,25,000.
(3) After the offers are received, the provisional liquidator will open the sealed covers in the court and seek further directions with respect to confirmation of sale. It is made clear that it will be open to this court to accept that offer which this court finds to be most advantageous and it will not be open to anyone to claim that because his offer is the highest, it must be accepted by this court.
(4) The official liquidator shall return to the two offerers their demand draft of Rs. 50,000 each.
(5) Dena Bank has agreed to bear the expenses of fresh advertisement and, therefore, the provisional liquidator is directed to give the advertisement through Dena Bank so that he is not to incur expenses for the same.
2. The appellant herein, who is one of the highest bidders, has come forward with the present O. J. appeal, stating that his highest bid ought
to have been accepted by the company court and the direction given by the court is not correct. The company court in Company Application No. 89 of 1986 passed an order dated December 11, 1987, directing the provisional liquidator to sell all those items on an ” as and where is ” basis after inviting offers from the intending purchasers and accepting the highest offer. For this purpose, the court also directed as to how the advertisement has to be made and the procedure that has to be followed by the provisional liquidator. In pursuance of this direction, the advertisement was made and the appellant herein originally offered Rs. 3,25,000 but later increased the offer to Rs. 13,25,000. In the same way, the next highest bidder who originally offered Rs. 2,00,000 increased his offer to Rs. 13,00,000. Thereafter, the provisional liquidator made a report to the company court and sought further direction. When the court took up this matter for consideration, two other companies came forward to offer higher prices. Those companies contended before the court that they had never an opportunity of inspection and after inspection, they are convinced that the price for the articles involved in this case will be much higher than the one offered by the appellant before the provisional liquidator. The learned judge, after elaborating all the facts and also the cases cited by Mr. Shah, learned counsel appearing for the appellant, gave the aforesaid directions, which we have extracted above. Incidentaly, it has to be noted that the officer of the Dena Bank has also valued the 31 items of the properties at Rs. 31.21 lakhs. Against the order passed by the company judge in Company Application No. 29 of 1988, this O. J. appeal has been filed.
3. Mr. Shah, learned counsel appearing for the appellant, mainly contended that the direction dated December II, 1987, has specifically given power to the provisional liquidator to sell all the articles on an ” as and where is ” basis after inviting offers from the intending purchasers and accepting the highest offer. Thus, from the order itself, it is clear that the court has impliedly given confirmation of the provisional liquidator accepting the highest offer for the articles in question. Mr. Shah further submits that there is automatic confirmation of the offer of the highest bidder. In support of his contention, Mr. Shah invited our attention to the decision in the case of Taj Clay Works Ltd. v. Official Liquidator [1960] 30 Comp Cas 432 ; AIR 1960 AP 429. This decision has followed the rulings in Brindaban Agarwala v. Official Liquidator, Saraswati Soap and Oil Mills Ltd. [1952] 22 Comp Cas 75 ; AIR 1952 All 113 and Soundarajan v. Khaka Mahomed Ismail Saheb, AIR 1940 Mad 42. In this Andhra Pradesh judgment, it has been specifically held in paragraph 8 as under (at page 435 of 30 Comp Cas):
” The observations of the learned judges in that case are pertinent in the present context:
‘ It is only right and proper that the sale should be subject to the confirmation of the court. The condition is a safeguard against irregularity or fraud in connection with the sale and against property being sold at an inadequate price ‘ “.
4. This principle has been strictly followed in the present case also. The observation and the principles enunciated in this decision and other decisions referred to above clearly support the order passed by the learned judge. It is clear from the facts of the present case that one of the highest bidders, who is the appellant herein, has raised his bid from Rs. 3,25,000 to Rs. 13,25,000 and yet another bidder has raised his bid from Rs. 2,00,000 to Rs. 13,00,000. When the matter was subsequently referred to the company court by the provisional liquidator, two other offerers came forward for the purpose of giving still higher offers. Considering these glaring facts, which were before the court, the learned judge thought it fit to give the directions which we have quoted above. It is a clear case where inadequate price has been offered by the appellant at the intial stage, when he in response to the advertisement offered his price for the 31 items in question at Rs. 3,25,000.
5. Mr. Shah also contended that the upset price is fixed by the learned judge at Rs. 13,25,000 and, therefore, the direction given by the learned judge cannot be sustained. We are not able to appreciate this argument inasmuch as the learned judge fixed the upset price, which was the highest amount offered by the appellant himself. Since it is going to be an open competition, the reserve price was fixed at Rs. 13,25,000, taking into consideration the highest offer made by the appellant herein and also taking note of the fact that Dena Bank has valued this property at Rs. 31.27 lakhs. We do not find any infirmity in fixing the upset price as stated above.
6. Mr. Shah, learned counsel appearing for the appellant, except repeating the abovesaid grounds, is not able to put forth any other contentions. We are not able to appreciate the contention of Mr. Shah to the effect that the court has impliedly given confirmation if the provisional liquidator accepts the highest offer for the articles in question.
7. Section 457 of the Companies Act, 1956, deals with the powers of the liquidator. This section clearly enumerates the power of the liquidator in winding up proceedings ordered by the court. Section 457(3) provides that ” the exercise by the liquidator in a winding up by the court of the powers conferred by this section shall be subject to the control of the court; and any creditor or contributory may apply to the court with
respect to the exercise or proposed exercise of any of the powers conferred by this section “. Rule 272 Of the Companies (Court) Rules, 1959, reads as follows:
” 272. Sale to be subject to sanction and to confirmation by court.–Unless the court otherwise orders, no property belonging to 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.”
8. Thus, reading both the section and the rule, it is clear that the control of the court for the purpose of deciding as to the genuineness of sale and confirming the same is paramount and it cannot be said that the court has abdicated its po”wer by simply asking the provisional liquidator to sell the property to the highest bidder. At the stage of confirmation, as stated in the decision referred to above, the inadequacy of the price can be a relevant ground for the court to interfere in such sales and that in the interest of the company, the court can make such direction for the purpose of getting an adequate price for the properties belonging to the company in liquidation. Correctly in this case, the court after appreciating the glaring discrepancy that occurred while the appellant offered the price at the first instance and also taking into consideration the subsequent offers, thought it fit to pass the order now questioned by the appellant. Such an order, in our view, is within the powers conferred upon the company court both under the Companies Act and also under the Companies (Court) Rules. 1959. We are in complete agreement with the reasoning and direction given by the learned judge of this court and accordingly this O. J. appeal is dismissed.
9. Mr. Shah prayed for stay of this order. We do not think that this is a fit case in which we can grant a stay. It is always open to the appellant to bid at the auction and compete with the other bidders. Hence, the stay prayed for is refused.
10. No orders on C. A. No. 5 of 1988.