1. This appeal was admitted by us on December 6, .1968. At that time we had granted interim stay of the further proceedings and now the notice of motion comes before us for final hearing.
2. Originally in the notice of motion stay of the entire proceedings before the respondent was asked for, but now it is confined only to the matter of sale to the sugar company.
3. It is firstly argued by Mr. Thakkar, for the appellant, that the rejection of the motion at this stage will frustrate the appeal and the motion, therefore, must be granted. This argument is very often made and is very convenient for the appellant who is usually interested in delaying the proceedings. The fundamental principles of the Civil Procedure 'Code as laid in Order XLII, Rule 5 are that mere admission of an appeal would not amount to a stay and granting of stay of the proceedings under the decree or of execution proceedings depends upon the discretion of the Court which discretion must, of course, be exercised judiciously, and having regard to all the circumstances of the case. There is authority for the proposition that the provisions of the Civil Procedure Code apply to the Original Side appeals. (See Sabitri Thakurain v. Savi 23 Bom. L.R. 681 and Section 129, Civil Procedure Code). Even apart from it nothing has been shown to us to lead to the inference that Original Side appeals stand on a different footing and the Court must in every case grant stay merely because an appeal has been admitted. The stay may even frustrate the order itself, and reduce it to waste paper. Except some appeals such as those against interlocutory orders, on the Original Side appeals stand automatically admitted. This is an additional reason why the Court must scrutinize the matter carefully before granting stay.
4. We may also point out as a preamble to this order that if all the facts stated in the affidavit of the respondent the liquidator and of the officer of the Industrial Finance Corporation of India were before us, we could not have been persuaded to admit the appeal. At the time of admission, we had no information that the Industrial Finance Corporation of India whose debt today almost amounts to Rs. 30,00,000, was not prepared to vouch for any delay nor was it in favour of the scheme propounded by the appellant. We also did not know and there was nothing to show in the appeal memo or in the petition and in the affidavit of the appellant, that counsel for the Industrial Finance Corporation of India had appeared before Nathwani J. and had opposed the scheme. There was no statement in the affidavit of the appellant that representatives of 350 creditors had appeared before the learned Judge and had also opposed the scheme. We also did not know that the Industrial Finance Corporation had already filed an application under Section 30 of the Industrial Finance Corporation of India Act for sale of the properties of the Company in liquidation. It was only because the properties were in possession of the liquidator that the Industrial Finance Corporation agreed that the liquidator should effect the sale and pay the amount due to it first out of the sale proceeds. It is under these circumstances that the sale is being held by the liquidator.
5. Mr. Thakkar argued that the scheme is feasible and in any event the sale is proposed for an highly inadequate price and the Court should not conscientiously permit such a sale. Now, the success of the scheme must depend on several factors. Most of them are in the region of chance because of fluctuating prices both of the sugarcane and also of jaggery which is intended to be produced under the scheme. What is objectionable, however, in the scheme is the fact that, the first condition of M/s. Harbanslal Gupta & Co., which is prepared to advance an amount of Rs. 10,00,000 for the running of the scheme is that the order of liquidation must be set aside both regarding this Company and the primary Company of the Agricultural Products Ltd. The work is to be carried on under the supervision of an advisory board but the management is to continue in the same inefficient hands which have brought the Company to this pass. This is something which a large body of creditors would not certainly like. Even assuming, therefore, that the objections raised on behalf of the Industrial Finance Corporation of India in its affidavit and what is stated by the respondent are not sufficiently weighty and that the scheme is feasible, the question is whether in order that the scheme should be placed before the meeting the sale should be stayed.
6. Now, wide publicity was given for the proposed sale and tenders were invited. Twenty persons applied for tender forms but it was only Shankar Sahakari Sakhar Karkhana Ltd., which ultimately submitted the tender and it has offered a price of Rs. 37,50,000 for the entire assets of the Company in the condition in which they are. It appeared through its counsel before Nathwani J. and intimated to the Court that, if there was going to be delay in the completion of the sale it would not be interested in taking the properties of the said Company, Before us also it has appeared and stated so. If the matter is adjourned there is bound to be delay and the sugarcane season has practically started. If the purchaser is able to take the properties today it can make some effective use of the properties for earning some money for the amount that it is paying towards the price. If the sale is to be delayed and the season is advanced it would be impossible for it to keep its capital locked up and lose the income. There is, therefore, justification for the purchaser to say that if there is delay in the sale, the sale is off.
7. Even if ultimately the creditors accept the scheme there are many hypothetical factors which have been assumed viz. that the machinery will be ready within a certain time and that business can commence in October 1969. In the meantime the claims would be mounting. There is also no substance in the contention that the liquidator did not obtain a valuation report before advertising the properties for sale and, therefore, it was a jump in the dark. The appellant's valuer has apparently valued the assets of the Company at Us. 1,25,00,000. The liquidator as also the officer for the Industrial Finance Corporation of India have pointed out that this valuation is exaggerated. Even the appellant's affidavit very clearly indicates in para. 21 that in the open market it is not possible to realise more than Rs. 40,00,000 for this estate. If that is so, it is impossible for the 'Court to hold that there is likelihood of larger offer being received and that the sale proposed is at an inadequate price.
8. Having carefully read and considered all the matters a general impression to the effect that this is one more attempt to delay the proceedings, probably by the directors, cannot be resisted. During the liquidation proceedings on the said report of the same expert as stated in the affidavit of the respondent, the directors themselves had mooted the scheme which was considered by Madon J. and rejected. In March 1968 also Mr. Bhide had mooted the scheme. From time to time, adjournments were taken for considering the value of the scheme and later in August 1968 it was given up and withdrawn. The appellant is a teacher doing tuitions in foreign languages and, as he says, has apparently no practical experience of business and it is difficult to imagine how he came to moot the scheme. He does not say that at his back there are a substantial number of creditors who agree with him. On the other band, at least 350 creditors, whose claim amount to Rs. 3,50,000, were present at the meeting before the liquidator and expressed the opinion that in the circumstances obtaining the price offered was fair enough. Moreover the Finance Corporation whose stakes are the largest does not agree to the proposal.
9. Having regard to all these facts no case for stay of sale is made out. The notice of motion will, therefore, stand dismissed with costs.