Satyanarayana Raju, J.
1. This is an application, under Section 457 of the Companies Act, to issue directions to the Official Liquidator to consider the applicant's offer dated 23rd September, 1959 and to accept the same if it is found to be higher than the previous offers.
2. The facts necessary for the purpose of appreciating the contentions raised in this application have been exhaustively and clearly set out in the report submitted by the Official Liquidator. The Taj Clay Works Ltd., has been directed to he compulsorily wound up by an order of this Court dated 18-7-1958. This court made an order on the 10th July. 1939 permitting the Official Liquidator to sell the assets of the Company by inviting offers from intending purchasers. The Official Liquidator duly advertised the sale in eight leading daily newspapers in English, Telugu and Urdu.
The conditions of sale were approved by an order of this court (in Application No. 446 of 1959) dated the 7th August, 1959 in and by which the Official Liquidator was authorised to receive offers from intending purchasers up to 4 p.m., on the 30th August, 1959 and he was empowered to accept any offer which he considered adequate, subject to the confirmation of this court. It appears that pursuant fo the advertisement, 43 persons made enquiries and eventually six of them submitted their offers within the period stipulated and all of them made deposits of 5 per cent of the amounts offered.
3. The Official Liquidator not being satisfied with the adequacy of the offers received, which according to him, fell short of the expected price, moved this court to permit him to negotiate with the offerers to realise a better and adequate price and this court permitted him to do so. Subsequently he requested the offerers to intimate him whether they were willing to purchase the assets for a higher amount subject to all the conditions of sale previously approved by the Court.
It is stated that four of the offerers sent higher offers within the stipulated time i.e., before the 23rd September, 1959. On the 24th September, 1959, the Official Liquidator accepted the highest offer and intimated to the offerer accordingly on the 24th September, 1959.
4. The applicant is a resident of Secunderabad and he went to the Official Liquidator on the morning of the 23rd September, 1959 and made an offer to purchase the assets of the Company at Es. 2,51,000/-. Two letters have been filed by him -- the one addressed by the applicant to the Official Liquidator containing this offer and the other a letter of the same date written by an advocate on behalf of the applicant reiterating the offer and expressing his preparedness to deposit any earnest money that the Official Liquidator might decide and to accept any terms that he might impose.
5. It is submitted by Mr. Narasimha Iyengar on behalf of the applicant that this Court can accept any higher offer before the sale is actually confirmed and that his client's offer being the highest, it should be accepted.
6. Now, it may be stated at the outset that the applicant wrote to the Official Liquidator On the 23rd March, 1959 in the following terms :
'For all the above mentioned items, I offer Es. 2,00,000 (Two lakhs only) subject to title being clear and no legal impediments whatsoever and I shall be in no way liable to pay any Government and public liabilities in share of arrears of taxes and other claims whatsoever.'
What followed is more important and it is necessary to set it out;
'My above offer stands good for thirty days from to-day and may be renewed if required.'
This was long before the Official Liquidator adver-lised the sale of the assets of the Company. It was stated in the letter written by the advocate 0:1 behalf of the applicant on the 23rd September, 1959 that 'unfortunately he did not follow up the offer made by him on the 3rd March, 1959 as he was under a mis-apprehension'' that the offer that he had made previously was sufficient. It is rightly conceded by the learned counsel for the applicant that this does not represent the true position.
It will be seen from the report of the Official Liquidator that pursuant to the advertisement made by him, the applicant himself asked the Official Liquidator on the 25th Ju3y, 1959 for particulars regarding the land, buildings, machinery and conditions of sale etc., and that the Official Liquidator furnished him with all the details on the 10th August, 1959 and that the applicant had occasion to inspect the factory premises. But for some reason or other, he made no offer or deposit within the time stipulated i.e., 30th August, 1959.
The averment in the letter dated 23rd September, 1959 that the 'applicant was under a misapprehension that the offer that he had made earlier was sufficient' cannot at all be true because he knew from the conditions of sale supplied to him by the Official Liquidator that he should make a deposit of 5 per cent of the price offered within the time fixed. Admittedly he made no deposit of this 5 per cent as required. Furthermore, as is seen from his letter dated 3rd March 1959 his earlier offer lapsed after 30 days and it was not renewed. Therefore his statement that his 'misapprehension' was responsible for his not making a fresh-offer, is a pure afterthought.
7. Section 457 of the Companies Act (Act I of 1956) corresponding to Section 179 of the now. repealed Companies Act, defines the powers of the Liquidator, and they are in identical terms. Under Section 457(1)(c), the Liquidator, in a winding up by the court, shall have power with the sanction of the Court to sell the immovable and movable property and actionable claims of the company by public auction or private contract with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels.
As pointed out by a Division Bench of the Madras High Court in Rowthmall Neopani v. Nagar-mall Madan Gopal, 1940-1 Mad LJ 107 : (AIR 1940 Mad 179), the section can only mean that the liquidator can finally dispose of the property once he has got the sanction of the court, and it does not mean that he has power merely to invite offers and to submit them to the court for approval. Jt was pointed out by Leach, C. J. and Kunhi Raman J., in Soundararajan v. Mohomed Ismail, AIR 1940 Mad 42 that 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 someone on second thought says that he is willing to pay more.
8. The observations of the learned Judges in that case are pertinent in the present context:
'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 condition applies here. No complaint has been made of any irregularity or fraud, and it is not suggested that the offer accepted by the Official Liquidator was inadequate.
9. When properties of the Company are sold by the Official Liquidator after his having obtained the sanction of the Court and subject to the confirmation of the court, he should be free to dispose of the property provided he observes the conditions previously imposed by the Court and the price is adequate. As observed by Stodard, J. in 1940-1 Mad LJ 107 at p, 114 : (AIR 1940 Mad 179 at p. 183) :
'(otherwise) 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.'
In the present case, the offer of the applicant, whatever its bona fides, was received long after the time fixed for receiving offers. Even when it was finally made on the 23rd September, 1959, nearly three weeks after the expiry of the stipulated date, the applicant has not adduced any proper or justifiable reasons for his earlier inaction. In fact, the only reason which he has given, namely, that he was under a misapprehension has been shown to , be devoid of truth. If the applicant was willing to go up to the amount now offered by him, he would have done so much earlier.
It is evident that he put forward his offer only when he came to know that the property was going to be sold to somebody else. On analogous facts, the same conclusion was reached by a Division Bench of the Allahabad High Court consisting of Mootham and Sapru, |J. in Brindra Ban Agar-wala v. Official Liquidator, Saraswati Soap and Oil Mills Ltd., : AIR1952All113 . There the learned Judges stated that when property is sold by an Official Liquidator subject to confirmation by the court, the subsequent offer of a higher hid should not be a ground for refusing confirmation of the sale provided the price is adequate.
In this case, it is not suggested by the applicant, -- and in fact Mr. Narasimha Iyengar has fairly conceded that he is not suggesting that there has been any irregularity or fraud or that the price is inadequate. All that is stated now is that as the applicant is prepared to make an offer of a higher sum, the matter should he reopened and his offer should be accepted.
10. Mr. Narasimha Iyengar has not been able to place before me any decision which has taken a view contrary to the one taken by the Madras High Court in the two Bench decisions referred to above (which are binding on me) and by the Allahabad High Court in : AIR1952All113 . For all the above reasons, the applicant is not entitled to have his offer considered or accepted.
11. This application is therefore dismissed with, costs.