P.S. Narayana, J.
1. The unsuccessful 1st respondent in C.A. No. 1035/2002 in C.A. No. 886/2002 in C.P. No. 14/87, aggrieved by the order dated 13-6-2003 made by the Company Court disposing of the Company Application with certain directions, had preferred the present Original Suit Appeal under Clause 15 of the Letters Patent read with Section 483 of the Companies Act, 1956, hereinafter referred to as 'Act' in short.
2. The 1st respondent in the present Appeal filed C.A.No. 1035/2002 in C.P. No. 14/87 in the matter of M/s. Krishi Engines Limited (in liquidation) praying for setting aside of the order dated 9-12-2002 passed in C.A. No. 886/2002 in C.P. No. 14/ 87 and for such other suitable orders. The Company Court by the order dated 13-6-2003 had disposed of the said application and the operative portion of the said order reads as hereunder:
'In view of the fact that the Company was ordered to be wound-up in 1999 and the value of the property put in auction will be diminished due to natural decay and to secure highest possible amount, the company application is disposed of directing the applicant to deposit entire amount of Rs. 52 lakhs (Rs. fifty two lakhs) as offered by it within two (2) weeks from today and on such deposit, the Official Liquidator can negotiate with the applicant as well as the Respondent No. 1 for securing highest possible amount than that of the amount offered by them earlier. If the applicant offers highest amount for which the sale was confirmed, the same can be knocked down in its favour and if the first respondent is successful in making highest offer, time extended will be confirmed subject to depositing balance amount within three (3) weeks thereafter. If the applicant makes highest offer, extension of the time granted in favour of the first respondent will be deemed to have been set aside and the Official Liquidator can move the Court with proper application for confirmation of sale in its favour. If the applicant fails to deposit the amount, as directed, the application shall stand dismissed.'
The 1st respondent in the said application, as stated earlier, aggrieved by the same, had preferred the present Original Suit Appeal.
3. Sri S.R. Ashok, the learned Senior Counsel representing the appellant with all vehemence had submitted that the impugned order of the Company Court cannot be sustained for the reason that when once the delay in payment of the amount was condoned by the Court, another learned Judge cannot sit over the order of extension made in C.A.No.886/2002 which will amount to reviewing the order. The learned Counsel also submitted that while getting an order of extention of time for making payment of the amount, the Company Court was apprised of all the facts and circumstances except the offer made by the 1st respondent/applicant dated 12-12-2002. The learned Counsel also had pointed out that the 1st respondent also had withdrawn the EMD on 13-9-2002 and in the light of the order made in CA No. 886/2002, the subsequent directions issued by the Company Court in CA No. 1035/2002 cannot be sustained. The learned Senior Counsel had taken us through the order passed by the learned Judge in CA No. 886/2002 and also the impugned order passed by another learned Judge in CA.No. 1035/2002. The learned Counsel while further elaborating his submissions maintained that even if the said offer subsequently made by the 1st respondent has to be taken into consideration and such increased bid is to be reckoned which in fact is negligible increase, there would be no finality at all in public auctions. The learned Counsel also had submitted that in the absence of any illegality or impropriety, much less, irregularity in the conduct of auction by the Official Liquidator, the public auction held in accordance with law cannot be set at naught on such a flimsy ground. The learned Counsel also pointed out when one learned Judge after due application of mind had confirmed the auction, nullification of such sale by another learned Judge would amount to sitting in judgment over the judgment of another learned Judge. The learned Counsel also had placed strong reliance on Harjeet Singh v. State of Punjab, : 2002CriLJ571 , in this regard. The learned Senior Counsel would further maintain that the secured creditor himself had no objection to the bid made by the appellant and in such a case, the mere offer of 2% more by the rival participant after a lapse of one month cannot be sustained. The learned Counsel also had pointed out that the decisions cited had not been properly appreciated by the Company Court while making the impugned order.
4. Per contra, Sri Prakash Reddy, the learned Additional Advocate-General, made the following submissions. The learned Counsel would contend that when once the appellant - the highest bidder, failed to deposit, the 1st respondent - the second highest bidder, would automatically come into the picture and by virtue of lapse of time, a right accrues in favour of such a party for consideration of the offer made by him. The learned Counsel also contended that the 1st respondent made an offer of Rs. 1 lakh more than the appellant through his letter dated 12-11-2002 and the Official Liquidator who was in know of this aspect had not brought this crucial fact to the notice of the Company Court when the appellant prayed for extension of time in C.A. No. 886/2002. The learned Counsel also would contend that even the 20% of the amount deposited through cheque was dishonoured and filing C.A. No. 993/2002 by the appellant to substitute the name of M/s. Venkata Sai Traders in the place of the appellant in whose favour the bid was confirmed would itself show that the sale conducted on 13-10-2002 had not fetched adequate price. The learned Counsel also submitted that M/s. Venkata Sai Traders had not participated in the auction and by mere production of drafts dated 9-12-2002 obtained by the said M/s. Venkata Sai Traders, the sale cannot be confirmed in favour of the appellant. It was also farther contended that at any rate, confirmation of sale does not confer any right on the successful bidder and the Company Court took into consideration the crucial aspect of non-bringing of the higher offer made by the 1st respondent to the notice of the Company Court while making the order of extension in C.A.No. 886/2002.
5. Sri Anil Kumar, Counsel representing the Official Liquidator had drawn our attention to the report of the Official Liquidator and the circumstances which led to the passing of the order of extension and had submitted that if the Company Court lightly interferes with the confirmed sales in a routine manner, it will be very difficult to conduct such sales. The learned Counsel also had brought to our notice the report of the Official Liquidator in this regard.
6. Heard the Counsel on record and also perused the material available on record.
7. This Court on 10-7-2003 made the following order:
'We have elaborately heard the learned Senior Counsel appearing on behalf of the appellant as well as the learned Additional Advocate-General appearing on behalf of the respondents.
Having regard to the facts and circumstances of the case, we consider it appropriate to direct the Official Liquidator not to proceed with the negotiations scheduled to be held at 3 p.m., today'.
The directions issued by the Company Court in the impugned order are self-explanatory and the operative portion of the same already had been referred to supra.
8. The facts in brief, for better appreciation of the matter are as narrated hereunder:
The 1st respondent filed an application C.A. No. 1035/2002 in C.A. No. 886/2002 in C.P. No. 14/87 with a prayer to set aside the order dated 9-12-2002 passed in C.A. No. 886/2002 in C.P. No. 14/87 and pass such other suitable orders. The Company Court by the order dated 16-11-1991 made in C.P. No. 14/87 was pleased to order winding up of M/s. Krishi Engines Limited. By the order dated 3-9-2001, the Company Court directed the Official Liquidator to take steps for disposing of movable assets lying in the sheds of the above said Company and handover the same to A.P. Industrial Infrastructure Corporation. Subsequent thereto, the Official Liquidator in C.A. No. 579/2002 requested the Company Court for passing an appropriate order enabling the disposal of the movable assets of the Company. The Company Court was pleased to pass order dated 6-8-2002 in C.A. No. 579/ 2002 permitting the Official Liquidator to sell the properties of M/s. Krishi Engines Limited inviting sealed tenders. Accordingly on 3-9-2002, notice was issued in Eenadu and Deccan Chronicle inviting sealed tenders and minimum upset price was fixed for the plant and machinery at Rs. 48,00,000/-. Fifteen different Companies had participated in the open auction and quoted their respective bids. The appellant herein initially quoted Rs. 40,76,786/- and increased its bid to Rs. 51,00,000/- and next to the appellant was the 1st respondent who had increased its bid to Rs. 50,75,000/- and thus, the sale was confirmed in favour of the appellant for Rs. 51,00,000/- and a cheque was issued for Rs. 10,00,000/-towards 20% of the offer. Time was also fixed for payment of the balance of sale consideration. On 10-10-2002, the Company Court had passed an order confirming the sale of movables in favour of the appellant for a sale consideration of Rs. 51,00,000/-and on 14-10-2002 a letter was issued by the Official Liquidator to the appellant communicating the confirmation of sale in their favour and further directed them to remit the balance of sale consideration of Rs. 39,80,000/- within a period of four weeks on or before 8-11-2002 after adjusting an amount of Rs. 1,00,000/- as E.M.D. and 20% of the bid amount of Rs. 10,20,000/- given by the appellant by way of a cheque at the time of auction as per the terms and conditions of the auction. Since the balance of sale consideration could not be paid by the appellant, an application C.A. No. 886/ 2002 in C.P. No. 14/87 was filed seeking extension of time by further four weeks. On 14-11-2002, the Official Liquidator filed a report before the Company Court bringing it to the notice of the Court that the cheque issued by the appellant on presentation on 14-10-2002 was returned with endorsement 'Funds not available'. Subsequent thereto the Official Liquidator on 31-10-2002 addressed a letter to the appellant asking them to remit an amount of Rs. 50,00,000/-towards sale consideration along with Rs. 1,815/- towards collection charges, which were charged by the Bank for return of the cheque and these amounts were asked to be paid on or before 8-11-2002. It is further stated that the application for extension of time was filed by the appellant on 11-11-2002 and prior to the report filed by the Official Liquidator on 14-11-2002. The 1st respondent made an application on 12-10-2002 to the Official Liquidator informing that the appellant failed to deposit the balance sale consideration within the time fixed by the Company Court and requested not to accept 20% of the amount after the lapse of the due date which is against the tender conditions and further had offered their bid for Rs. 52,00,000/- for the plant and machinery. The above said letter was received and acknowledged by the office of the Official Liquidator on 13-11-2002, but the said letter was not brought to the notice of the Company Court though the report was filed on the next day on 14-11-2002. On 22-11-2002, the Company Court was pleased to direct the appellant to pay balance of sale consideration of Rs. 50,00,000/- along with interest on or before 28-11-2002. On 5-12-2002, the Official Liquidator filed report before the Company Court stating that even by 4-12-2002, they have not paid the balance of sale consideration as directed by the Company Court vide its orders dated 28-11-2002. Subsequent thereto, C.A. No. 88672002 came up before the Company Court on 9-12-2002 and on considering the explanation given by the Counsel appearing on behalf of the applicant in C.A. No. 8867 2002 that the demand draft for the balance of sale consideration of Rs. 39,80,000/- and Rs. 10,20,000/- and another Rs. 10,20,000/-for which already cheques were issued and dishonoured are ready and having satisfied with the explanation offered, the Company Court was pleased to condone the delay on the ground that the demand drafts for Rs. 10,30,000/- and Rs. 39,80,000/-were obtained prior to 22-8-2002 and 9-12-2002 respectively. However, the request made by the Counsel for the appellant to confirm the sale in favour of M/s. Venkata Sai Traders was rejected leaving it open to the appellant to make a fresh application for modification of the order dated 10-10-2002.
9. It is further stated that before 5-12-2002, when the Official Liquidator filed his report, the letter addressed by the 1st respondent was already available in the office of the Official Liquidator. It was further stated that in view of the delay caused by the appellant, a right accrues in favour of the 1st respondent, being the second highest bidder.
10. The appellant/1st respondent in the said application, filed a counter-affidavit and also additional counter-affidavit explaining the circumstances in detail by virtue of which the delay was caused. It was specifically pleaded that the respondent was not able to arrange the amount immediately and hence a request was made to M/s. Venkata Sai Traders to help him out in the deal and that is how M/s. Venkata Sai Traders came into the picture and an application was made to modify the name of M/s. Venkata Sai Traders in the sale order. In the additional counter-affidavit also, a specific stand was taken that the appellant had no design or plan to effect transfer of the right in favour of M/s. Venkata Sai Traders and the attempt to nominate M/s. Venkata Sai Traders was only to enable it to act as the nominee/trustee of the appellant as the case may be. The events had been narrated in detail in the counter-affidavit and also the additional counter-affidavit filed by the appellant in this regard.
11. The Official Liquidator also had narrated the events.
12. The crucial aspect of non-bringing of the higher offer made by the 1st. respondent to the Company Court while the Company Court made an order of extension passed in C.A. No. 88672002 was taken serious note of by the Company Court and the learned Company Judge while exercising the discretion had taken into consideration all the facts and circumstances and had made the directions with certain conditions which had been referred to supra. The appellant had given an explanation for introducing M/s. Venkata Sai Traders. On 9-12-2002 in C.A. No. 88672002 in C.P. No. 14787, extension was given. The relevant portion of the order reads as hereunder:
'This Court by an order dated 10-10-2002 confirmed the sale and directed the Official Liquidator to inform the highest bidder accordingly. It is not denied that the applicant was informed by the Official Liquidator on 14-10-2002. The applicant obtained various demand drafts during the period from 24-10-2002 to 12-11-2002 for an amount of Rs. 20.00 lakhs and also during the period from 19-11-2002 to 9-12-2002. Therefore, the prayer made in this application is bona fide. As the demand drafts for Rs. 10,30,000/-were obtained even prior to 28-11-2002 and the remaining demand drafts prior to 9-12-2002, there is no much delay. Further Mr. V.S. Raju, the learned Counsel appearing for the second respondent submits that the delay, if any, may be condoned as it would be difficult to conduct fresh auction cancelling the sale.
Having regard to the facts and circumstances of the case and having regard to the fact that there is no much delay on the part of the applicant in depositing the amount, the delay in paying the amount is condoned and the Official Liquidator undertakes to accept the payment to proceed further. Smt. Annapurna requests that sale may be confirmed in favour of M/s. Venkata Sai Trader. As this Court already confirmed the sale by its order dated 10-10-2002 in favour of the applicant, her oral request cannot be accepted. It is, however, open to the applicant to seek appropriate modification of the order by filing an appropriate application as is permissible in law.
The petition is accordingly ordered.'
It is no doubt true that the learned Company Judge having been satisfied with the reasons submitted by the appellant was pleased to extend time. It is also not in controversy that the fact of 1st respondent making higher offer during the interregnum prior to this order was not brought to the notice of the Company Court at that point of time. An independent application C.A. No. 1035/2002 was moved in C.A. No. 886/2002 praying for setting aside of the order dated 9-12-2002 made in C.A. No. 886/2002 in C.P.No. 14/87.
13. The facts of the case, for our present purpose, in the decision referred in Harjeet Singh v. State of Punjab (supra), are that the accused-appellant therein was released on bail by a Single Judge of the High Court. On a subsequent application moved by the State, bail of the appellant therein was cancelled by the other Single Judge of the same High Court and the appellant therein challenged the said interference with the decision of a co-ordinate Bench by the other Judge of the High Court. The Apex Court, in the said facts and circumstances, while dealing with the orders made by a co-ordinate Bench and the judicial discipline, observed:
'It was not open to the other Judge of the High Court to sit in appeal against the order passed by another co-ordinate Bench of the same Court. If the accused had obtained the bail order by misrepresentation or by suppression of facts, it was open for the State Government either to approach the appropriate higher forum or to place the matter before the same Judge.
The long-standing convention and judicial discipline require mat subsequent application for grant or rejection of bail should be placed before the same Judge who had passed earlier orders. Placing of such matter before the same Judge has its roots in principle as it prevents abuse of process of Court inasmuch as an impression is not created that a litigant is shunning or selecting a Court depending on whether the Court is to his liking or not. Said practice also prevents the filing of subsequent applications without any new factor having been cropped up. Disposal of successive bail applications on the same subject by different Judges, if permitted, would lead to conflicting orders.'
14. We have carefully gone through the impugned order of the Company Court. The. learned Judge had taking into consideration all the facts and circumstances and had arrived at a conclusion that suitable directions are to be given in this regard. The directions issued by the learned Company Judge also are only conditional directions. The 1st respondent made an independent application raising the ground that when default was committed by the highest bidder, a right accrues to the second highest bidder automatically since the offer of the second highest bidder has to be considered and in the light of the same, though the increase of the offer in the interregnum cannot be said to be very substantial, the Company Court thought it fit to exercise the discretion by issuing suitable directions. In Divya . v. Union of India, : AIR2000SC2346 , it was held that the Court is the custodian of the interests of the Company and its creditors and hence it is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud and that confirmation of sale by the Court at grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale could be set aside on the ground that it was not just and proper exercise of judicial discretion.
15. It is no doubt true that when an order passed by a sitting learned Judge has to be reviewed, judicial discipline requires that the same learned Judge has to pass an order either by way of modification or by way of review, as the case may be. As can be seen from the facts of the case, C.A. No. 1035/2002 is an independent application moved raising several grounds and hence the learned Company Judge at the relevant point of time thought it fit to dispose of the application with certain directions. Apart from this aspect of the matter, when the Company Court had exercised the discretion in a particular way, unless the exercise of such discretion is not exercised judicially, the Appellate Court should be slow in interfering with such orders of the Company Court made in exercise of such judicial discretion. Having satisfied with the reasons recorded by the Company Court while disposing of the application with certain directions, we do not see any compelling reasons to interfere with such directions or to disturb the findings recorded by the learned Company Judge in this regard.
16. Hence, we do not see any merit in the appeal and accordingly the Original Suit Appeal is dismissed. No costs.