The Supreme Court last week set aside the judgment of the Gujarat high court and directed the sale of a wound-up company in Veraval at a higher price so that creditors will get their dues. The company judge had first ordered the sale at a one price, but recalled its order when a higher offer was made by another party. However, when one of the losing bidders moved the division bench of the high court, it confirmed the sale at the earlier price on the ground that a confirmed auction sale cannot be set aside merely because subsequently a higher price was offered by one of the bidders.
Now the bidder offering higher price appealed to the Supreme Court. It set aside the division bench order asserting that the offer of a higher price should be welcomed as it would benefit all the creditors. “If the order of the division bench is sustained, the creditors are bound to suffer because the amount available for repayment of the dues of the creditors would be a paltry sum of Rs.127 lakhs. As against this, if the new offer is accepted, the official liquidator will get an additional amount of more than Rs.4.25 crores. The availability of such huge amount will certainly be in the interest of the creditors including Gujarat S Industrial Investment Corporation,” the Supreme Court said in the judgment, Shradhha Aromatics Ltd vs Official Liquidator of Global Arya Industries Ltd. The court clarified that this decision would not be a precedent for similar cases. “Ordinarily, this court is loathe to accept an offer made by any bidder or a third party after acceptance of the highest bid/offer,” the judgment said.
Full text of the Supreme Court Judgment is as follows
