MAMOON KAZI, J.--1. The present appeal, which has been filed by Sarbaz Cement Limited, has arisen out of winding up proceedings which are pending in respect of Sarela Cement Limited (respondent No. 9) before the learned Company Judge in the High Court of Baluchistan.
2. Respondent No. 9, which was incorporated as a public limited company in Quetta, owned a cement plant for the 'manufacture of portland grey cement at Kolpur Darwaza, District Kalat, Baluchistan. Soon after its inception the company ran into financial difficulties and consequently respondents Nos. 1 to 8, referred to as 'Syndicate', formed a consortium to provide financial assistance to the said Company. On 30-6-1993 a total sums of Rs' 984,644,922.85 had become due and payable to the Syndicate by respondent No. 9 under various Investment and Credit Agreements entered info from the to time.
2-A. As there were no prospects of the revival of the said respondent the Syndicate filed winding up petition under section 305 of the Companies Ordinance before the learned Company Judge in the High Court. Thereafter, vide order dated 1-4-1994 passed by the learned Judge the Company was ordered to be wound up and Mr. H. Shakil Ahmad, Advocate and Mr. Birjis Iqbal, Manager, Bankers Equity Ltd. Were appointed as joint liquidators.
3. On 6-11-1994 the official liquidators filed an application before the learned Company Judge seeking permission to sell the assets of respondent No. 9 which was accordingly granted vide order dated 8-11-1994. In pursuance of the said order, the official liquidators invited bids for sale of the assets of the said respondent by notice published in different newspapers. According to one of the conditions incorporated in the said notice, the bid of the successful bidder was subject to confirmation by the High Court of Baluchistan. Thereafter, seven bids were received by the official liquidators out of which the appellant's bid of Rs. 120.300 million was found to be the highest. In the meanwhile a higher bid of Rs. 140.00 million was also received from R.B Avari Enterprises (Pvt.) Ltd.
Which was also placed for approval before the learned Company Judge alongwith the offers received from other parties.
4. In pursuance of another order dated 25-4-1995 passed by the Learned Judge the creditors of the said Company held a meeting to consider the different offers made by the bidders and the following report was submitted by them to the learned Company Judge:- "As regards Report No. 3, the participants were in agreement that the bids received so far for the project assets are extremely low as compared to their outstanding dues as well as the present market value of the assets. The participants were also informed of the evaluation of assets recently carried out through NESPAK who have valued the assets at Rs. 290.00 million approximately. A copy of the extract of the NESPAK Report is attached as Annexure 1. The condition of plant and machinery and other facilities available in the project is satisfactory. Market potential of the product is also very attractive for the reason that there is no other cement plant nearby. The price of cement is relatively higher in Quetta and other adjoining areas as compared to other parts of the country.
There is a room for further expansion in the production capacity of the project as the raw material is abundantly available at site and the large area of land is also attached to the project.
In view of the NESPAK Report the creditors declined the bids so far received by the liquidators including the latest bid of Rs. 140.00 million from M/s. R.B. Avari Enterprises (Pvt.) Ltd. They insisted for the rebidding through a vigorous publication effort in the media also covering northern parts of the country as well as Baluchistan."
In view of the said report the matter was disposed of by the learned Judge thus:-- "Mr. Tariq Mehmood learned counsel appeared on behalf of Bidder, Sarbaz Cement Limited and objected upon the non-agreement of the creditors on the ground that no scheme has been given by them for the sale of the assets of the company on the higher rate. Mr. Faysal Arab counsel for the petitioner stated that besides Sarbaz Cement Limited, M/s. R.B. Avari Enterprises (Pvt.) Limited have given the latest bid of Rs. 140.00 million which to has not been accepted, as such, Sarbaz Cement has no locus standi to raise objection.
I have heard the parties' counsel and also perused the report submitted by the Chairman which is supported by the report of NESPAK who have recently evaluated the assets of the Company at Rs.
290.00 million approximately besides submitting that the condition of the plant/machinery and other facilities available in the project are satisfactory. As such in view of the report of NESPAK I see no substance in the objection of Mr. Tariq Mehmood thus the same is repelled, and Report No. 3, is accordingly rejected.
Since the report of the Chairman indicates that there are fair chances to dispose of the project at the higher rates, therefore, I allow the official liquidators for re-bidding the same by making the vast publication in the media covering Northern parts of the country as well as Baluchistan as it has been suggested by the Chairman.
In the meanwhile the creditors will also cooperate with the official liquidators for fetching higher price of the project. Official liquidator shall take all necessary steps to re-auction the project, and they would submit their report within 60 days."
5. The main contention of Mr. Tariq Mehmood learned counsel for the appellant before us has been that powers of official liquidators during winding up proceedings were not confined merely to inviting of offers and submitting the same to the Court for approval. According to the learned counsel, the fact that sale was subject to confirmation by the Court did not mean that the Court could refuse to accept the highest offer by the appellant because at a later stage another party had made a better offer. Similarly, according to the learned counsel, the report of NESPAK should not have been taken into consideration by the Court to come to conclusion that the bids received were extremely low. Support has been sought by the learned counsel from the judgment of Andhra Pradesh High Court in the case of Taj Clay Works Ltd. v. Official Liquidator (AIR 1960 A.P. 429). in this case the learned Company Judge while interpreting the provisions of section 457 of the Indian Companies Act of 1956 which corresponds to section 333 of the Companies Ordinance, 1984 as applicable in Pakistan observed:-- "The fact that the sale is subject to confirmation of the Court does not mean that the Court can refuse to accept the highest bid because at a later stage someone on second thought says that he is willing to pay more. The subsequent offer of a higher bid should not be a ground for refusing confirmation of the sale provided the price is adequate."
6. We however find no force in any of the above contentions. No doubt, section 333 of the Companies Ordinance, 1984 defines powers of the official liquidator. According to clause (f) thereof the official liquidator has been vested with powers: "to sell the movable and immovable property and things in action of the company by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels". But such powers of the official liquidator are subject to the sanction either of the Court or of the Committee of inspection (as the case may be), as is further indicated by the said section. In the present case, no doubt, the offer of the appellant was the highest among the seven offers initially received by the official liquidators but admittedly the offers were subject to acceptance by the Court as was clearly indicated in the terms and conditions published in different newspapers whereby offers for sale of the assets etc. Of respondent No. 9 had been invited. Since the offer of the appellant was yet to be accepted, no right can be said to have vested in the appellant to enforce the sale in its favour.
Further, in the present case, as indicated by section 333(1) of the Companies Ordinance, the powers vesting in the official liquidator could not be exercised by him independently without sanction by the Court under the said section the Court has been vested with complete discretion to sanction the sale or not. Such discretion must be exercised judiciously having regard to the interest of the Company and its creditors. As was clearly indicated by the report of the creditors, earlier reproduced in this judgment, the assets of respondent No. 9 had been approximately valued at Rs.
290.00 million. Evidently the offer of Rs. 120.300 million was much lower and therefore, keeping in view the total liabilities of the Company and the interest of the creditors, the same was rejected by the learned Company Judge. No doubt, reference was made to the offer of R.B. Avari Enterprises (Pvt.) Ltd. Which admittedly was higher than that of the appellant but, as it indicated by the order dated 11-6-1995, even the same was not found sufficient to serve die interest of either the Company or its creditors. Consequently, directions for fresh offers were issued. The procedure adopted by the learned Company Judge by taking into account the wishes of the creditors of respondent No. 9 appears to be in consonance with correct judicial approach because the creditors had a vital interest in the fate of the said respondent. In our opinion, the discretion thus exercised by the learned Judge is not open to exception. The learned Judge has acted within the powers conferred upon him by the Companies Ordinance and the judgment of the High Court of Andhra Pradesh relied upon by the learned counsel for the appellant is therefore not applicable in view of the distinguishable circumstances of the present case.
7. In the result, the appeal is dismissed.