K S THANGAL Vs. STATE OF KERALA
LAWS(KER)-1967-4-5
HIGH COURT OF KERALA
Decided on April 06,1967

K.S.THANGAL Appellant
VERSUS
STATE OF KERALA Respondents

JUDGEMENT

- (1.) This is an appeal from an order dismissing an application filed by the petitioner before the court below stating that he is prepared to pay a price of Rs. 30,000 for a building sold by the Official Liquidator appointed in Company Petition No. 1 of 1964 of the Quilon District Court, for winding up of a company called "Kundara Enamel Industries". The Official Liquidator was directed by an order of the court to sell certain items of properties and the property with which we are concerned is a building situate in a land on which the company has a kuthakapattom. The court authorized the Official Liquidator to sell the building fixing an upset price of Rs. 50,000. On 14-11-1966 the petitioner had filed a petition stating that he was prepared to purchase the building if it is offered for a reasonable sum. When the property came up for sale, the Government Pleader on behalf of Government, the major creditor, stated that the building can easily be sold for a higher amount but as there were no persons to make the bid at a higher figure the sale was adjourned. The court thereafter reduced the upset price to Rs. 20,000 and this was duly notified and the building was actually sold on 10-2-1967 for Rs. 20,000/- and was purchased by the 3rd respondent here. On 14-2-1967 the petitioner appellant filed an application in court stating that he is prepared to purchase the building for Rs. 30,000 and that the sale of the building is vitiated by irregularities. The court dismissed that application stating that the sale has already been confirmed and nothing further can be done.
(2.) The appellant contended that when allegations have been made against the Official Liquidator in respect of the conduct of sale of the property at a low figure, the court which has to confirm the sale was bound to enquire into the allegations, even if they are made by a stranger to the proceedings, and come to a conclusion whether the sale has been properly conducted, and as in this case no enquiry was conducted into the truth or otherwise of the allegations in the petition, the order must be set aside. The appellant referred to a petition filed by one Ismail making certain allegations against the Official Liquidator in the conduct of the sale and offering to purchase the property for Rs 25,000. The appellant submitted that the allegations in that petition also should have been enquired into. We do not think that the court below was bound to conduct an enquiry into the conduct of sale in this case. There was no allegation in the petition filed by the appellant on 14-2-1967 against the Official Liquidator. No particulars of the irregularities alleged to have been committed by the Official Liquidator in the conduct of the sale were given in the petition. The only allegation, if we may say so, in that petition was that the petitioner had made an offer to purchase the building and if that offer had been accepted, the sale would not have been made for this amount. It is not a fact that the petitioner had made any definite offer to purchase the building for any specified amount before the sale of the building on 10-2-1967. What he said in his petition dated 14-11-1966 was that he was prepared to purchase the building for a reasonable sum. That cannot be construed as an offer by him to purchase the building for any definite amount. Therefore, it has to be taken that there was no allegation in the petition filed by the appellant against the Official Liquidator nor was any irregularity pointed out which would vitiate the sale. The ruling in Augustine v. Mathai 1953 KLT 544 has no application to the facts here. There, it was held that if allegations are made against an Official Liquidator in the conduct of a sale, the court which is to confirm the sale is bound to enquire into the allegations, as he is an officer of the court. In this case, as there were no allegations against the Official Liquidator we do not think that the court below went wrong in declining to enquire into them. In Soundararajan v. Mahomed Ismail, AIR 1940 Mad. 42 , it was held that even if a person were to make an offer, after confirmation of the sale, to purchase the property at a higher amount, the court is not bound to conduct an enquiry or set aside the sale. This is what the court said: "The fact that the sale is subject to the confirmation of the court does not mean that the court shall refuse to accept the highest bid because at a later stage some one on second thought says that he is willing to pay more. 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 connexion with the sale and against property being sold at an inadequate price. No such consideration applies here. No complaint is made of any irregularity or fraud, and it is not suggested that the respondent's final bid was inadequate. Having exceeded the reserve price agreed upon by the parties, it could not be said to be inadequate. The respondent having made an adequate bid and having complied with all the requirements of the court and there being no irregularity he was entitled to have the sale confirmed. To the same effect are the rulings reported in Rowthmall Neopani v. Nagarmall Madan Gopal, IX (1939) Company Cases 33, Brindaben Agarwalla v. Official Liquidator, Saraswathi Soap and Oil Mills Ltd., XXII (1952) Company Cases 75 and also in Naoshir J. Dadabhoy v. Official Liquidator XXX (1960) Company Cases 432. In XXII Company Cases 75 at 77 it is observed: 'We think, however, it is desirable to say that, in our opinion, when property is sold by an official liquidator subject to confirmation by the court, the subsequent offer of a higher bid should not be a ground for refusing confirmation of the sale provided the price is adequate for otherwise, as Stodart J. pointed out in Rowthmall v. Nagarmall, "Offers for the purchase of the property will be merely tentative. A prospective purchaser will not disclose to the liquidator the final figure to which he is prepared to go if his offer is liable to be outbid by someone else when the sale comes up before the court for approval." It is also in our opinion desirable that, in the case of sales effected by an Official Liquidator, a reserve price should, if possible, be fixed; and in that event the purchaser at the sale, provided his price exceeds the reserve and there has been no fraud or irregularity, would be entitled to have the sale confirmed notwithstanding the subsequent receipt of a higher offer: Soundararajan v. Mahomed Ismail." The Travancore High Court had occasion to consider the question in Kochappl Vasudevan v. Habeeb Asanaru Pillai and others 1944 TLR 665. There, the Liquidator of a Company sold a property in public auction with the previous sanction of the court. There was no irregularity or fraud in the conduct of the sale. On the application of two strangers, at a later stage offering to pay a higher price, the court cancelled the sale and directed a resale. It was held that the court acted without jurisdiction in setting aside the sale and directing the resale of the property, and the condition that the sale is subject to confirmation of court is only a safeguard against irregularity or fraud in connection with the sale and against property being sold at an inadequate price. We think that the court below did not err in not enquiring into the petition filed by the appellant, and dismissing it in limine. We dismiss the appeal with costs.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.