DILIP KUMAR AGRAWAL v. MS BHARAT COMMERCE AND INDUSTRIES LTD

What happened

In the liquidation of Bharat Commerce and Industries Ltd., industrial land at the Rajpura industrial area, Punjab, of about 2,40,500 sq. ft., was put up for sale under the Official Liquidator, and in an e-auction on 29 January 2025 Kalindi Associates was the highest bidder at ₹31,00,00,000 against a reserve of ₹29,00,00,000. After the auction closed, a non-participant, Maa Sharda Oils, offered ₹35 crore and deposited earnest money, and the Liquidator asked Kalindi to raise its bid to ₹35 crore and reported to the Court. By an order of 27 September 2025 the Court disapproved direct acceptance of the third-party offer but did not treat the auction as final, noting a valuation of about ₹36.31 crore and the inadequacy of the price. The appellant's offer was ₹42.25 crore. The appeal under section 483 of the Companies Act, 1956 challenged the order of 16 March 2026 rejecting I.A. No. 170/2026. The respondent said Company Appeal No. 10/2026 by a residents' welfare association had been dismissed.

Questions before the court

• Should the company court consider a post-auction higher offer, and was the earlier order wrong not to examine the appellant's contentions based on Divya Manufacturing and Vedica Procon?

Why the court ruled this way

The appellant said that his appeal was not the one dismissed and that the Court had not considered the grounds now raised. He relied on Lakhani Footcare Private Limited v. Official Liquidator and on Divya Manufacturing Company (P) Ltd. v. Union of India (Supreme Court, 2000), where it was held that the court is the custodian of the interests of the company and its creditors, must see that the price at the auction is adequate, and may set aside even a confirmed sale where a much higher offer is made. He said that the Company Judge had treated Divya Manufacturing as overruled by Vedica Procon Private Limited v. Balleshwar Greens, whereas Vedica considered but did not overrule it, and the two decisions were of equal strength (paragraphs 4 and 5). The Division Bench found that these contentions were not considered by the Company Judge (paragraph 6). The appellant offered to deposit ₹5 crore to prove his bona fides (paragraph 7).

Controlling point

The Company Judge had not considered the appellant's contentions on Divya Manufacturing and Vedica, so the application must be decided afresh.

Order and next steps

The matter was remanded to the Single Judge to decide the application afresh after considering the contentions, uninfluenced by the earlier order, and listed before the Company Judge in the week of 4 May 2026. Until then the Official Liquidator was not to execute the sale deed. The appellant was to deposit a cheque of ₹5,00,00,000 with the Official Liquidator before the next date, subject to the final outcome. The appeal was partly allowed and disposed of.

Practical implications

A bidder who offers materially more after a court-supervised liquidation auction should raise the offer with a security deposit and argue the court's duty to secure an adequate price, citing both Divya Manufacturing and Vedica Procon.

Limits of this ruling

• The order only remands; it does not decide whether the sale should be set aside or the higher bid accepted, and it does not resolve the relationship between the Supreme Court decisions.