' NAIMUDDIN, J.--This High Court Appeal is from the order dated 27-11-1984, passed by the learned Chief Justice sitting as Company Judge, whereby he accepted the bid of the appellants of Rs.3,75,00,000 (Rupees Thirty-seven and half Millions only) for purchase of a paper board mill situated at Gharo and owned by the Allied Industries Limited (in Liquidation) in the following circumstances.
2. The order of winding-up of the Allied Industries Limited was passed on 25-3-1984. Thereafter, on 13-5-1984, permission under section 179 of the Companies Act, 1913, to sell the assets of the company was granted, subject to the approval of offers by the Court.
3. The sale of the mill was advertised. The advertisement stated the approximately the value of the mill as Rs. 40 million and it inter alia provided that the highest bid or any other bid was subject to the approval and confirmation by the Court. Right to accept or reject all bids or any bid without assigning any reason was reserved. The advertisement further provided that no time of acceptance or rejection of bids was guaranteed and no claim could be entertained in this respect in case of delay in the disposal of the matter by the Court.
4. Only one offer of Rs.
7.5 millions was received from Messrs Coastal Industries Limited as against the breakdown value which according to the balance-sheet in 1981, was Rs. 40 million. The bid of Rs.7.5 million was rejected and the amount of Rs.
2.5 million deposited by the bidder was ordered to be refunded.
5. The Court therefore, directed the Official Assignee/Official Liaquidator by the order dated 13-8- 1984, to once again advertise the sale of the mill. It was left open to the petitioners or any other creditors to bring offers better than the offer made then. The order further directed that when all the offers were received, the case should be laid before the Court for orders. Again there was also only one bid of Rs.7.5 million by the same party i.e. Messrs Coastal Industries Limited.
6. The matter came up in Court on 14-10-1984. One Arif Hakim who claimed to be the Consultant to M.F. Khan, the President of EFKAY COMMERCE INTERNATIONAL appeared and made an offer of Rs. 10 million. He was directed to deposit a sum of Rs.2.5 million with the Official Assignee on or before 16- 10-1984. At this hearing Mr. Aziz A.Munshi, Attorney-General for P.I.C.1.C., Mr. N.A.Farooqui and Mr. Saleemuddin Advocates were also present.
' Mr. Aziz A.Munshi on behalf of P.I.C.I.C., the major creditor of the company in liquidation, stated that P.I.C.I.C. might be able to find better offers. Mr. N.A.Farooqui and Mr. Saleemuddin Advocates stated that they have been instructed by their clients to watch because their clients might be prepared to give offers exceeding Rs. 10 million. However, Mr. Mansoor Ahmad Khan, Advocate objected to the rejection of his client's offer once again. His main ground of objection was that in proceedings of this nature, there should be a finality but this objection was not accepted on the ground that the primary object of the proceedings, as observed in the order, was to obtain highest amount for the creditors. Accordingly, the Court directed that the sale would be publicized office again at the cost of P.I.C.I.C. It was however, made clear to two persons who had already made bids namely, Messrs COASTAL INDUSTRIES LIMITED and Messrs EFKAY COMMERCE INTERNATIONAL that, if other bids were received, they would be provided opportunity for making bids in excess of such offers and that would be restricted only to them or only to Messrs Coastal Industries Limited, if Messrs Efkay Commerce International failed to deposit Rs.
2.5 million as directed. It may be useful, if we may quote here a part of the order dated 14-10-1984, which reads as follows: "At least four weeks time from the date of publication should be given to the prospective buyers to make their bids. It is made clear to the two persons, who have already made bids, namely, Messrs Coastal Industries Limited and Messrs Efkay Commerce International that, after fresh bids are received, they shall be given a first offer of making bids in excess of such amount, and that will be restricted only to these two parties, or, only to Messrs Coastal Industries Limited, if Messrs Efkay Commerce International fail to deposit Rs.2.5 million, as directed. Such bids in excess shall be restricted only between the two bidders, who have, by now, submitted bids."
Accordingly the sale was advertised for the third time.
7. Thereafter, it appears from the original record that on 21-11-1984, on C.M.A. No.1198 of 1984, the Court passed order that the bids should be submitted on or before 26-11-1984, and the same would be opened in the presence of the Court on 27-11-1984.
' Accordingly 6 sealed covers were received upto 26-11-1984, from the following parties, which were opened in Court on 27-11-1984.
(1) Naqvi Enterprises Limited.
(2) Tariq Khalid Mian.
(3) Haji Hasham and others.
(4) Dawood Limited.
(5) Rafaqat Iqbal.
(6) Coastal Industries Limited. ' The offers made were:- {{TABLE}} Rafaqat Iqbal Rs. 1,27,09,313 M/s. Dawood Ltd. Rs.1,60,00,000 Naqvi Enterprises Rs. 1,51,00,000 M/s. Coastal Industries Ltd. Rs. 75,00,000 Muhammad Aslam Khan ... Rs.1,57,00,000 Haji Hashim Rs. 1,31,00,000 {{TABLE}}
8. When the offers. were being considered, the persons who had made bids, started raising the bids as noted in the impugned order and ultimately Ahmed Dawood who was present in person representing the appellants raised his bid to Rs.37.5 million. The original bidder was given and opportunity to match his bid but he declined. Accordingly, the offer of the appellants was approved by the Court. The appellants had deposited a bank draft of Rs.
2.5 million and Ahmed Dawood, at his request was allowed time upto 28-11-1984, to deposit the balance amount when the possession of the mill was to be delivered to the appellants.
Accordingly, the appellants under the cover of their letter dated 28-11-1984, sent two Pay Orders bearing Nos. OAO/B 040209, and OAO/B 269574 for the total of Rs.
35.00 million being the balance amount and accordingly, the possession of the mill was handed over to them.
9. However, after almost a month of the payment and taking over the possession of the mill on 30- 12-1984, the appellants filed the present appeal claiming that the mills stood disposed of in their favour after the highest bid of Rs. 16 million was recorded and praying that the balance amount of Rs. 21 million should be directed to be refunded to them. It may be indeed convenient, if we reproduce here the entire prayer:- "The appellants accordingly pray that on the foregoing grounds and such other grounds as may be raised at the time of the hearing of the appeal the impugned order to the extent of the grievance be set aside alongwith all related consequential orders so that the value of the sale beyond Rs.1.60 crore be struck down and direct that the Mills stands disposed of in favour of the appellants at the highest bid of Rs.1.60 crore and all payments made in excess thereof continue to remain for the exclusive benefit/account of the appellants and that they are the sole beneficiaries thereof and full refund of Rs.2.15 crore alongwith accretions be affected in their favour alongwith such order and 'direction as be deemed fit and proper in the circumstances of the case alongwith cost."
10. We have heard Mr. Nasim Farooqui Advocate for the appellants. and Mr. Aziz A. Munshi the Attorney-General, who appreared on behalf of P.I.C.I.C., without notice to them.
11. Mr. Nasim Frooqui submitted that the procedure of taking bids in Court adopted by the learned Company Judge was irregular and the appellants' offer of Rs. 16 million, being the highest offer, the mills in terms of the order dated 14-10-1984, should be deemed to have been accepted and the mills stood sold to them for that price. In support of the proposition he relied on Navin Chandra v.
Ram Devi and others AIR 1933 All.
161.
12. On the other hand, Mr. Aziz A. Munshi submitted that the appellants having participated in the proceedings and having offered to purchase the mill at Rs.
37.5 million, are estopped from challenging the sale and that being the buyers have no locus standi to challenge the sale.
13. In reply Mr. Farooqui submitted that under rule 844 of the Original Side Rules of this Court framed under the Companies Act: 1913, the provisions of Order XXI, rules 89 and 90 have been made applicable and, therefore, the appellants can object to the sale. In support he relied on Ravi Nandan Prasad v. Jagar Nath and others AIR 1925 All.
459.
14. Examining the respective contentions and the case law cited, we may state that according to the terms of the advertisement the Court was not bound to approve the offer of Rs. 16 million made by the A appellants or for that matter any offer as it was made very clear by the terms of the advertisement that the offers had no binding nature and the sale was subject to the approval of the Court. Learned counsel for the appellants had not been able to show from the terms of sale advertised or from any law that the Court was bound to accept such offer. Reliance was however, placed by Mr.Farooqui on the order dated 14-10-1984, but this order directs for inviting fresh offers and does not provide that the highest offer should or would be accepted. On the contrary it leaves room for Messrs Coastal Industries Limited and Messrs Efkay Commerce International to make offer higher than made by any party pursuant to fresh advertisement, which also goes to show that the offers unless accepted and approved had no binding force.
'Further, on 27-11-1984, when the matter came up before the learned Chief Justice the appellants themselves started raising bids in Court. We cannot in the circumstances of the case hold that the Court acted irregularly in recording the bids and ultimately accepting the bid of the appellants although we should not hesitate in saying that the procedure adopted may not be desirable.
15. As regards the Allahabad's case cited by Mr. Nasim Farooqui, it may be stated that in this case the sale was conducted without notice to the public and it was held that under the Code of Civil Procedure the public sale implies the sale after notice to the public and, therefore, on that ground the sale was held to be irregular unde,r Order XXI, rule 90, C.P.C., and the sale was set aside on the application of decree-holder but in the case on hand neither any creditor nor company nor any share-holder of the company in liquidation has objected to the sale which took place after publication of the advertisement and thus public notice.
16. Even the appellants have not asked for setting aside the sale on the ground of any material irregularity. We did ask from Mr.Nasim Farooqui whether he wanted the sale to be set aside but he replied in negative. Indeed, from the frame of the prayer, it is clear that the appellants do not want the sale to be set aside on the ground or alleged irregularity but want that the mills should be sold to them for Rs. 16 million and the balance amount should be refunded, as is clear from the frame of the prayer in the appeal which we have already reproduced in extenso hereinbefore for the sake of convenience.
17. Since the Court was not bound to accept or approve any bid under the terms, as advertised, and even otherwise, we fail to understand on what principle or authority, the appellants can press that the mill should be sold to them at the first offered price and we must state that no principle or authority is cited by Mr.Nasim Farooqui in support of such a plea. Indeed, the appellants after paying the full price immediately took the possession of the mills, and have remained in possession thereof for about a month before filing this appeal. We are of the view that after having participated in the bidding with open eyes, without any protest or objection the appellants are now estopped from questioning the sale of the mill to them at Rs.
37.5 million and we reply on Mian Muhammad Saeed and another v. The Province of West Pakistan and others PLD 1969 SC 572.
18. However, Mr. Nasim Farooqui submitted that the appellants were not estopped from questioning the sale and he relied on a Single Bench decision of Lahore High Court in Punjab National Bank Ltd., Rawalpindi v. Sundar Singh and others AIR 1929 Lah. 673, wherein the auction sale was held on a Sunday and in such sale, the decree-holder had taken part and it was held that the Bank could not be held to be estopped from pleading the irregularity merely because it bid at the sale. It was observed that 'a person may be willing and indeed be obliged to bid at an irregular sale because he may be doubtful whether the sale will be held to be regular and secondly whether the price will fall short because of the irregularity.
In this very case, the principle of estoppel was applied in the following circumstances. The decree passed by the Court directed sale of the mortgaged property subject to the prior charge of a Bank but the sale proclamation did not mention the charge and the property was sold in execution and when the Bank which was a party to the suit objected to the legality of the sale on the ground of the omission to specify the charge in the proclamation it was held that as the proceedings on the record showed that the Bank was aware of the application of the decree-holder and had applied for permission to bid, knowing presumably what it was applying to be allowed to bid for and had at all times during the first and the adjourned auction sales offered bids, it was estopped from challenging the legality of the sale on the ground of omission to specify the prior charge in its favour in the proclamation for sale.
14. Assuming for the sake of argument without of course, conceding that the appellants were entitled to purchase the mill for the amount they first offered but they knowingly waived that right, by bidding and enhancing their bid.
20. It may be worth mentioning that the other competitor on that date had subsequently made an application for review of that order and had offered to purchase the mill for Rs. 40 million but the application was rejected.
21. As regards the objection of Mr. Aziz A. Munshi that the appellants have no locus standi to object to the same, it may be stated that in view of Ravi Nandan Prasad v. Jagar Nath Sahu and others AIR 1925 All. 459, the appellants as auction-purchasers could object to the sale under the provisions of rule 90 of Order XXI, C.P.C., if they could show that their interest was affected by the sale due to any material irregularity or fraud in publishing or in conducting the sale and they have sustained substantial injury. But in the present case the sale could not be set aside because firstly, the appellants have failed to prove that there was any material irregularity or fraud in publishing or conducting the sale secondly, no substantial injury had been sustained by them by the reasons of any irregularity.
22. Looking from any angle, the appellants have no case before us and we accordingly, dismiss this appeal in limine.