DIVYA MANUFACTURING CO PRIVATE LIMITED Vs. UNION BANK OF INDIA

JUDGEMENT

(1.) These appeals are filed against the judgment and order dated 11-8-1998 passed by the Division Bench of the High Court of Calcutta in G.A. No. 344 of 1988 in Appeal (ACO) No. 16 of 1998 whereby the sale of the assets and properties of the Tirupati Woollen Mills Limited ("Tirupati Mills" for short) (under liquidation) confirmed on July 2, 1998 in favour of the appellant-Divya Manufacturing Co. ("Divya" for short) had been recalled and set aside on the application of respondent No. 7, Sharma Chemical Works (For short "Sharma") and respondent No. 8, Jay Prestressed Products Ltd. ("Jay" for short) herein.

(2.) In 1972, 'Tirupati Mills' was incorporated to manufacture Carpet yarn at Sonepat (Haryana). On 30-5-88, a financial institution filed a reference to the BIFR and it was declared as sick industrial company. On 27-1-1994, BIFR proposed winding up of the Company. On 21-4-95, the High Court of Calcutta ordered winding up of the company and directed official liquidator to take charge of the company. On 5-7-1997, Tirupati Woollen Mills Shramik Sangharsha Samity ("Samity" for short)-respondent No. 3 entered into an agreement with appellant-Divya whereby 'Divya' agreed to run 'Tirupati Mills' and to provide re-employment to the workmen of the said Company upon purchase of the assets and properties of the said Company under liquidation. On 17-12-1997, the 'Samity' made an application No. 741 of 1997 before the High Court of Calcutta inter alia praying that (i) the assets and properties of the company be sold to 'Divya' at the price valued by the Official Liquidator and/or valuer appointed by him or at such price as the Court may deem fit and proper; (ii) 'Divya' be directed to re-employ all the workers as agreed by agreement dated 5-7-1997 and (iii) the Official Liquidator be restrained from taking further steps with regard to the sale of their assets and properties. The learned Company Judge by order dated 22-12-1997 directed the Official Liquidator to indicate the valuation of the properties to all concerned. On 24-12-1997, the learned Company Judge directed the Official Liquidator to publish the Notice for Sale specifying that the factory of the Company (in liquidation) would be sold as a going concern with a reserved price fixed at Rs. 37 lakhs on the basis of valuation report. However, respondent No. 1 (Union Bank of India) pleaded that the approximate value of the company in liquidation was about one crore and if the same is to be sold after advertisement, they will have no grievance. The Official Liquidator was directed to publish sale notice specifying the Company to be sold as a going concern in the Hindustan Times, Statesman and Hindi newspapers in circulation in the State of Haryana. The learned Judge also noticed that appellant-'Divya' was agreeable to purchase the factory of the Company (in liquidation) as a going concern and to provide employment to the existing workers who were out of employment since the last 12 years. Being aggrieved by the order dated 24-12-1997, respondent No. 1-Bank filed an appeal, being CA No. 22 of 1998 before the Division Bench for setting aside that order. The same was dismissed on 12-1-1998 with liberty to the Bank to agitate the same before the learned single Judge at the time of hearing of the matter.

(3.) In the meantime, notice for sale was issued and the Official Liquidator published an advertisement inviting offers for the sale of the assets and properties of the Company (in liquidation) in newspapers. On 31-12-1997, the Union Bank of India valued the immovable properties of 'Tirupati Mills' at Rs. 1,21,00,000/-. Inspection of the assets of the Company was allowed and 12 intending purchasers took inspection of its assets on 2-1-1998. On 16-1-1998, about 14 parties made their offers to purchase the company. 'Divya' enhanced its offer to Rs. 85 lakhs from 37 lakhs and it was declared as the highest bidder. In addition to its offer of Rs. 85 lakhs, 'Divya' also agreed to re-employ the workmen of 'Tirupati Mills'. In spite of being the highest offeror the sale was not confirmed in favour of the 'Divya' as the Bank pleaded that they should be given further opportunity to bring a higher offer. The High Court agreed to give a further opportunity to the offerors to match the offer of the appellant. On 17-1-1998, the Bank made application before the Company Court being C.A. 41 of 1998 for re-advertisement of the sale. On 6-2-1998 when the matter was heard, as no one turned up to make any higher offer, the offer of the 'Divya' was conditionally accepted by the learned single Judge with liberty to the secured creditors to find higher offer within 30 days. The appellant was directed to deposit the balance sum of Rs. 77 lakhs as per the notice for sale.