Allowed

G.v.Subba Reddy v. M/S Commercial Agro Products Pvt. Ltd. Hyd. and Another

Telangana HC5 Nov 2013OSA/37/2013

Case brief

AI extract

What is this about?

This court considered an appeal by a successful bidder in an auction of liquidation assets of a private company, who had deposited 20% of the bid amount but failed to pay the balance due to litigation pendency. The court allowed the appeal, setting aside the lower court's rejection, and permitted the appellant to deposit the balance consideration along with an additional sum of Rs. 5,00,000/- with

What did the court decide?

Permitting the appellant to deposit the balance of consideration and a sum of Rs. 5,00,000/- within four weeks from the date of the judgment.

G.v.Subba Reddy Vs M/S Commercial Agro Products Pvt… — Company and Corporate | Telangana HC (2013)

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THE HON’BLE SRI JUSTICE L. NARASIMHA REDDY

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AND

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THE HON’BLE SRI JUSTICE M.S.K.JAISWAL

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O.S.A.No.37 of 2013

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JUDGMENT: (per the Hon’ble Sri Justice L.Narasimha Reddy)

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M/s. Commercial Agro Products Private Limited, the 1^st respondent herein, was ordered for liquidation in Company Application No.83 of 1997 by this Court. The Official Liquidator initiated steps for sale of the properties. The land held by the company was divided into various lots and put to auction. The appellant emerged as the highest bidder for lot No.9, comprising of Acs.60.00 of land in Vadlapudi Village, Nellore District by offering bid for a sum of Rs.31,00,000/-. As required under the conditions of the auction, he deposited a sum of Rs.9,00,000/- on 04.08.2006. However, further steps could not be taken on account of filing of O.S.A.No.30 of 2006 and batch by the Ex-Managing Director and other persons assailing the sale of the property. The batch of OSAs., was dismissed on 02.07.2010. The appellant sought to deposit the balance of consideration. However, the 1^st respondent refused to receive the same on the ground that the time stipulated under the terms of auction had expired. Thereupon, the appellant filed Company Application No.653 of 2011 with a prayer to direct the 1^st respondent to receive the balance of consideration. The application was opposed by the 1^st respondent. The learned Single Judge dismissed the application through order, dated 26.08.2011. Hence, this O.S.A.

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Sri S.Satyam Reddy, learned Senior Counsel for the appellant, submits that the delay in payment of the balance of consideration was not on account of any default on the part of the appellant, but on account of the pendency of the appeals. He contends that soon after the appellant came to know about the dismissal of the appeals, he initiated steps for payment of the balance of consideration. Learned Senior Counsel submits that in respect of another lot

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for which bid of Rs.1,10,00,000/- was offered, not even 20% of the amount was paid and when such bidder approached this Court by filing Company Application No.650 of 2010, this Court extended the facility of payment of balance of consideration by imposing condition that the unpaid portion of 20% of the bid amount shall carry interest at 9%. He contends that the present case stands on a better footing, inasmuch as 20% bid amount was paid within time.

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Sri M.Anil Kumar, learned Standing Counsel for the 1^st respondent, submits that the bid was confirmed way back in the year 2006 and though notices were issued by the 1^st respondent to all the bidders, the appellant did not turn up. He contends that the appellant was waiting even while other bidders were taking steps to deposit the balance of consideration and that the learned Single Judge has taken the correct view of the matter.

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The auction was conducted in respect of vast extent of land owned by the 1^st respondent way back in the year 2006. While some successful bidders paid 20% of the bid amount forthwith, others did not. On his part, the appellant paid 20% of the bid amount and in fact more, being Rs.9,00,000/-. The Ex-Managing Director of the Company under liquidation and certain others filed a batch of O.S.As. On account of the pendency of the same, further steps could not be taken to receive the balance of consideration or to finalise the sale. The hiatus in this regard ended only in the year 2010 when the O.S.As. were dismissed.

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The record is not clear as to whether any intimation was sent to the appellant for payment of the balance of consideration. There is no uniformity of steps in this behalf. While some, who are keeping track of the O.S.As., swung into the action soon after the appeals were dismissed, others were waiting for proper intimation from the Official Liquidator. Company Application No.716 of 2010 provides an example in this regard. The petitioner therein emerged as the highest bidder for substantially vast extent of land by offering a sum of Rs.1,10,00,000/-. However, he deposited only a sum of Rs.5,00,000/- which is substantially short of 20% of the bid amount. When he

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offered to pay the balance of consideration, the 1^st respondent refused to receive the same. This Court took the view that the applicant can be extended the benefit of depositing the amount, but by subjecting him to pay the interest at 9% on the balance of the amount representing 20%. In comparison, the present case certainly stands on a better footing.

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The appellant has already deposited not only 20%, but also much more than that. When a person, who did not even comply with the basic condition of the deposit of 20%, was permitted to pay the balance of consideration at a belated stage, there is no reason why the appellant herein be not extended similar facility. In dealing with the application filed by the petitioner, the learned Single Judge sought to differentiate the case on the ground that the appellant approached the Court, a bit late. It was not even mentioned that any intimation was given to the appellant and that he did not respond despite the same. We are of the view that the appellant can be permitted to pay the balance of consideration and the delay in this behalf can be compensated by requiring him to deposit a further sum of Rs.5,00,000/-.

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Therefore, the appeal is allowed and the order, dated 26.08.2011, passed by the learned Single Judge is set aside. Company Application No.653 of 2011 is allowed, subject to the condition that the appellant shall deposit the balance of consideration and a sum of Rs.5,00,000/- (Rupees five lakhs only), within four (4) weeks from today. There shall be no order as to costs.

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The miscellaneous petitions filed in this appeal shall also stand disposed of.

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L. NARASIMHA REDDY,J

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M.S.K.JAISWAL,J

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Dt:05.11.2013

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kdl

G.v.Subba Reddy v. M/S Commercial Agro Products Pvt. Ltd. Hyd. and Another

Case brief

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G.v.Subba Reddy v. M/S Commercial Agro Products Pvt. Ltd. Hyd. and Another

Case brief

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