JUDGMENT
N.P. Singh, C.J.
1. This appeal has been filed on behalf of the United Bank of India against an order dated December 11, 1989, passed by a learned judge of this court, directing sale of the assets of the Bharat Electrical Industries Limited (in liquidation } ( hereinafter referred to as ” the company ” ) to the State of West Bengal, on payment of Rs. 1 crore.
2. The appellant, who is admittedly a secured creditor, has made a grievance in this appeal that, when, in the sale notice, Rs. 2.50 crores was fixed as the reserve price for the sale of the assets of the company, the learned judge should not have accepted the offer of the State of West Bengal of Rs. 1 crore only.
3. Counsel appearing for the State of West Bengal and the official liquidator pointed out that, from the different orders passed by the learned judge, it would appear that the official liquidator was directed several times to publish the sale notice in different newspapers inviting sealed tenders for sale of the assets of the company ” as a going concern “, but the offer of Rs. 1 crore made by the State of West Bengal being the highest, the learned judge directed the sale of the assets of the company to the State of West Bengal. On behalf of the official liquidator, our attention was drawn to clauses (c), (d), (f), (g), (h) and (i) of paragraph 3 of the affidavit-in-opposition filed in this appeal, where details of the different orders passed by the learned judge directing the publication of the sale notice from time to time in different newspapers and offers received pursuant to such advertisements have been stated.
4. From the affidavit in opposition filed on behalf of the official liquidator referred to above, it appears that, as per direction of the coxirt, first, the sale notice was duly published once in the Statesman, once in Ananda Bazar Patriha and once in Viswamitra on May 24, 1987, inviting sealed tenders for sale of the assets of the company ” as a going concern ” by June 12, 1987. A notice of the said sale was also given to all the secured creditors of the company. Pursuant to the said notice, three offers were
received by the joint receivers. The highest offer was for Rs. 61,31,111. The joint receivers did not accept the highest offer.
5. After perusing the report of the official liquidator, the company court passed an order dated November 13, 1987, directing the official liquidator and the joint receivers to invite sealed tenders afresh for the sale of the assets of the company by advertisement once in Statesman, once in Ananda Bazar Patrika and once in Viswamitra fixing January 8, 1988 for sale. The sale notice was published as directed above in different issues of*the newspapers. The highest offer pursuant to the aforesaid notice received was for Rs. 42 lakhs from the Maruti (India) International, which Was not accepted by the court.
6. Again, on February 19, 1988, the company court directed the official liquidator to invite sealed tenders and to publish the notice in Statesman, Aajkal and Viswamitra fixing April 22, 1988, as the date for sale. As per the direction, the sale notice was published but the highest offer received was for Rs. 40 lakhs only from the Bhagat Refineries Chemicals Ltd. which was not accepted. Thereafter, the company court on May 6, 1988, passed another order directing the official liquidator to invite fresh offers by publishing the sale notice in the Statesman, Ananda Bazar Patrika and Viswamitra fixing July 1, 1988, as the date for sale. The notice was published in the papers aforesaid on the dates mentioned in the affidavit-in-opposition: Only one offer for Rs. 62 lakhs was received and as such the sale was again adjourned to August 12, 1988. On that date, another offer for Rs. 66 lakhs was received from one R. R. Saraf. The learned judge again adjourned the matter to October 7, 1988, saying that the intending purchasers should file their respective affidavits. Two affidavits offering Rs. 41.11,111 and Rs. 66,00,000 were filed on behalf of the Naistoco India and.R. R. Saraf, respectively.
7. It has been stated that, on October 7, 1988, the workers’ union of the company made a prayer for adjournment of the sale for two months saying that the State of West Bengal might be taking over the company. On that prayer, the court passed an order saying that an opportunity should be given as prayed for. Ultimately, the matter was taken up on May 18, 1989, when the company court directed the official liquidator to sell the assets of the company by public auction. The court directed the advertisements to be published on an all India basis, viz., once in the Tim,es of India (Bombay and Delhi), once in the Statesman (Calcutta), once in the Hindu (Madras) and once in the Dainik Viswamitra (Calcutta). In the sale notice, Rs. 2.50 crores was inserted as the reserve price. Pursuant
to the aforesaid order, the official liquidator published the sale notice in all the newspapers as directed by the court. But no offer higher than Rs. 1 crore made by the State of West Bengal was received. Ultimately, the impugned order dated December 11, 1989. was passed accepting the offer of Rs. 1 crore made on behalf of the State of West Bengal.
8. It is not the case of the appellant bank that any one else had offered an amount higher than Rs. 1 crore on any date pursuant to any of the advertisements in different newspapers throughout India. The official liquidator lias stated in the aforesaid affidavH-in-opposition that Rs. 70 lakhs had been paid by the State of West Bengal within the period fixed by court, but the balance amount of Rs. 30 lakhs which had been directed to be paid within six months has riot yet been paid because of which possession has not been delivered and the official liquidator is in possession of the assets of the company.
9. It was also pointed out on behalf of the official liquidator that the advocate of the appellant-bank was present throughout and, in spite of sale notice having been published on five occasions, the secured creditors of the company including the appellant-bank could not bring any better offer. As such, the offer made on behalf of the Slate of West Bengal had to be accepted.
10. Rules 272.and 273 of the Companies (Court) Rules, 1959, vest power in the company court to order sale of property belonging to the company (in liquidation) and the confirmation of such sale. This power of directing sale and confirmation thereof is no doubt discretionary in nature but the company court is expected to exercise such discretion in respect of the sale of the assets of the company, keeping in view the dues of the workmen and the creditors including the secured creditors. It was pointed out by the Supreme Court in the case of Xavalkha and Sons v. Kamaniija Das, , that it is the duty of the court to satisfy itself, having regard to the market value of the property, that the price is reasonable. Unless the court is satisfied about the adequacy of the price, the act of confirmation of the sale would not be a proper exercise of judicial discretion.
11. In Gordha-n Das Chwri lal v. Kanthimathinatha PiVai AIR 1921 Mad 286, it was observed that, where the property is authorised to be sold by private contract or otherwise, it is the duty of the court to satisfy itself that the price fixed is the best that could be expected to be offered ; this is because the court is the custodian of the interests of the company and its creditors. The sanction of the court required under the Companies Act has to be granted having regard to the interests of the company and its creditors. This was reiterated in Rathnasami Pillai v. Sabapathi Pillai , and S. Soundararajan v. Mahomed Ismail Sahib of Roshan and Co. , and in A. Subbaraya Mudaliar v. K. Sundararajan, , it was pointed out that the condition for confirmation of sale by the court being a safeguard against the property being sold at an inadequate price, it will be not only proper but necessary that the court, in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its order, should see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud. It was further impressed that once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or the offer already received.
12. From the facts of the present case, it appears that even after repeated advertisement of the sale notice in different newspapers throughout the country, no better offer than the one made on behalf of the State of West Bengal was received in respect of the sale of the assets of the company. Then, can it be said that the learned judge, while directing sale of the assets of the company at the price of Rs. 1 crore offered by the State of West Bengal has not properly exercised the discretion vested in the court by rule 273 of the Companies (Court) Rules, 1959. Before the company judge or before this court, it was not urged on behalf of the appellant-bank that the proceeding for sale of the assets of the company were conducted in a manner not sanctioned by law or that there was no proper advertisement or due publicity because of which an adequate price could not be fetched.
13. It is well known that, while exercising the power under rule 273, if the sale is held by the company court, the appellate court should not interfere with the sale unless prejudice has been caused or prejudice was inherent in the method adopted by the court while selling the assets of the company. In the instant case, no irregularity or illegality has been pointed out on behalf of the appellant-bank in respect of the different orders passed by the company judge regarding advertisement of the sale notice and the steps taken by the official liquidator on the basis of offers received pursuant to such advertisements, except that, when, in the sale notice, Rs. 2.50 crores had been fixed as the reserve price, it should not
have been sold at Rs. 1 crore only. I have already pointed out that the sale notice was published five times and the sale was postponed for about two years and a half, in the absence of a proper offer. In this background, according to me, no option was left to the company judge except to accept the highest offer of Rs. 1 crore made on behalf of the State of West Bengal.
14. On behalf of the appellant-bank, reference was made to a judgment of the Bombay High Court in the case of Amba Tannin and Pharma-ceuticals Ltd. v. Official Liquidator [1975] 45 Comp Cas 457, where it was observed that, while directing the sale of the assets of the company, the court is primarily concerned with the interests of the creditors and contributories who are persons vitally interested in the assets of the company in liquidation. In the facts and circumstances of the present case, in my view, it is difficult to hold that the company judge was not conscious of his duty enjoined by law while exercising his power under rule 273 aforesaid.
15. Accordingly, the appeal is dismissed. But, in the circumstances of the case, there will be no order as to costs.
16. Before parting with the judgment, I may observe that it is not very clear as to why the State of West Bengal did not deposit the balance amount of Rs. 30 lakhs within the time fixed and as to what steps have been taken by the company judge. As such, I make it clear that this judgment shall not be treated as a bar on the part of the learned company judge in taking any further steps in accordance with law.
Altamas Kabir,J.
17.I agree.
