ORDER : K. HARILAL, J. 1. In CA No. 57/14 the applicant is the auction purchaser of Lot No. 1, the landed property extending 3 Acres in Re-survey No. 325, Block No. 32, Industrial Development Area, Erumathala, Aluva, Ernakulam, with old buildings standing thereon and the compound rails, in the auction held by the Official Liquidator in the above Company Petition. The applicant was the highest bidder and his bid amount is Rs.4,05,00,000/- (Rupees Four crores and five lakhs only). There were four participants, including the applicant. The second highest bid was for Rs.3,13,00,000/- (Rupees three crores and thirteen lakhs only). The applicant deposited Rs.50,00,000/- (Rupees fifty lakhs only) by Demand Draft for the said amount in favour of the Official Liquidator drawn on the Federal Bank, Perumbavoor, vide Annexures-A1 and A2. The said amount is lying with the Office of the Official Liquidator from 30/01/2014 onwards. 2. However, though the amount offered by the applicant was highest and there was no illegality or irregularity in the proceedings, the applicant’s tender has not been accepted or confirmed so far, at the instance of certain persons who have not even participated in the tender. The applicant has been suffering heavy loss every day, due to the delay,it confirming his highest bid, which is far more than a reasonable amount, by any stretch of imagination. The confirmation is being delayed at the intervention of third parties with the deliberate intention of preventing the applicant from getting the aforesaid property. Hence it is prayed that the applicant’s bid be accepted and confirmed in his favour, in the interest of justice. 3. In Report No. 49 filed by the Official Liquidator, the Official Liquidator admitted that the applicant in CA No. 57/14 is the highest bidder of Lot No. 1 and the highest value offered by him is Rs.4,05,00,000/- (Rupees four crores and five lakhs only). But the Official Liquidator further submitted that the amount offered for the purchase of Lot No. 1 is very low comparing with the total value of the property i.e., Rs.7,84,00,000/- (Rupees seven crores and eighty four lakhs only) assessed by the Chartered Engineer/Approved Valuer. In respect of Lot Nos. II and III, the amount quoted by the highest tenderer is higher than the amount valued by the valuer. In respect of Lot Nos. II and III, the amount quoted by the highest tenderer is higher than the amount valued by the valuer. But, regarding Lot No. I, the value offered is much lesser than amount valued for the assets and hence the Official Liquidator is of the opinion that the for Lot No. I be cancelled and the same is to be put for re-sale. The Official Liquidator, inti alia, prayed for the permission to cancel the sale regarding Lot No. I which was held 30/01/2014 and to put it for re-sale. 4. The Kerala State Industrial Development Corporation (KSIDC), a secured creditor of the Company, also entered appearance and filed a counter-affidavit objecting confirmation of the sale in favour of the applicant. It is submitted that the KSIDC had granted a term loan of Rs.340 lakhs to the Company. At present, the amount due from the Company to the KSIDC as on 31/12/2013 is Rs.18,74,04,846/-. The funds of KSIDC are public funds and the amount can be realised only through the sale of mortgaged properties. The price quoted by the applicant is grossly inadequate and much below the market rate as well as the value assessed by the Valuer. Hence the KSIDC also prayed for rejection of confirmation. 5. The applicant in CA No. 57/14 filed an objection to the report of the Official Liquidor. In the objection, he challenged the valuation of the Approved Registered Valuer, contending that the same is not correct. According to him, the valuation report appears to have been made only for helping the rivals of the applicant. The building in the property is a very old and aged more than 15 years. The building therefore, by no stretch of imagination, would fetch Rs.3,34,00,000/- (Rupees Three crores and thirty four lakhs only), as fixed by the Valuer. The land value is highly exaggerated. The land is not free hold. The right in the land is highly restricted and the land could be used only for the given purpose. The title of the land can be transferred in his name under the provisions of the Kerala Land Assignment Rules for industrial purpose in force. In that circumstance, the amount offered by the applies is reasonable. The valuation of the land is without any basis. The title of the land can be transferred in his name under the provisions of the Kerala Land Assignment Rules for industrial purpose in force. In that circumstance, the amount offered by the applies is reasonable. The valuation of the land is without any basis. It is also contended that the General Manager, District Industries Centre, Ernakulam, has informed the applicant as letter dated 05/02/2014 that the present land value of DA Aluva is Rs. 15,160/- per cent as Land Allotment Rules. Thus, the amount offered by the applicant is far more than reasonable amount, for Lot No. I. There is no illegality or irregularity or any kind of fraud in the auction proceedings. Therefore, the applicant’s bid is liable to be confirmed by the Court and in the absence of illegality or fraud and no kind of intervention can be made by the Court. Hence he prayed for rejecting Report No. 49 and to direct the Official Liquidator to confirm the applicant’s tender, in the interest of justice. 6. Sri. P. Chandrasekhar, the learned counsel for the applicant advanced arguments vindicating the applicant’s right to get the sale confirmed in his favour. The learned counsel drew my attention to Annexure-A4 letter issued by the District Industries Centre to the applicant and submitted that according to that letter, the present land value of DA Aluva as per the Land Allotment Rules is Rs.15,160/- per cent; whereas the highest bid amount that he quoted is Rs.4,05,00,000/- (Rupees Four crores and five lakhs only). The learned counsel drew my attention to the terms and conditions of the sale and pointed out that the property is not a free hold property and the absolute title can be transferred under the provisions of the Kerala Land Assignment Rules only. In that circumstance, the amount quoted by the applicant is just and reasonable. According to the learned counsel, the valuation made by the expert Valuer has no basis at all. The applicant has been suffering from heavy loss as the Earnest Money is pending with the Official Liquidator. The sum and substance of the legal argument is that in the absence of illegality, irregularity or any kind of fraud in the auction proceedings, the Court is liable to confirm the sale in his favour as he is the highest bidder. The applicant has been suffering from heavy loss as the Earnest Money is pending with the Official Liquidator. The sum and substance of the legal argument is that in the absence of illegality, irregularity or any kind of fraud in the auction proceedings, the Court is liable to confirm the sale in his favour as he is the highest bidder. After opening the bid, inadequacy of highest bid amount cannot be a ground to decline confirmation. The Court has no way, other than granting confirmation, where the applicant’s bid was accepted as highest bid. 7. Sri. K. Moni, the learned counsel for the Official Liquidator, advanced arguments in support of the averments in Report No. 49. The thrust of his argument was based on the value assessed by the expert Valuer. He highlighted the difference between the value assessed by the Expert Valuer and the amount quoted by the applicant and submitted that I if the bid is confirmed in favour of the applicant, the Company and its creditors would be put to heavy financial loss. If the Official Liquidator is allowed to conduct re-sale of the property, certainly, the sale would fetch much higher amount. According to him, confirmation is not a mehanical process and it is the discretion of the Court, that has to be exercised for the interest of the Company. 8. Sri. Saji Varghese, learned counsel for the secured creditor, the Kerala State Industrial Development Corporation, submitted that merely on the reason that the applicant is the highest bidder, the sale is not liable to be confirmed in his name. The learned counsel cited the land mark decision in Navalkha & Sons v. Ramanya Das, 1969 KHC 289 : 1969 (3) SCC 537 : 1969 KLT SN 78 : AIR 1970 SC 2037 and submitted that even in the absence of illegality, irregularity or fraud in the auction proceedings, the Court is not liable to grant confirmation; whereas the paramount consideration must be given to the interest of creditors and adequacy of price. According to him, as the custodian of the interest of the company, if the Court finds that the highest bid amount quoted is not adequate, the Court has the discretion to cancel the sale and put it for resale. The sum and substance of his argument is that the Court is not liable to confirm the sale, notwithstanding the highest bid amount. 9. The sum and substance of his argument is that the Court is not liable to confirm the sale, notwithstanding the highest bid amount. 9. I have bestowed my anxious consideration to the rival submissions advanced at the Bar. In view of the rival contentions, the questions that emerge for consideration are: (1) Whether the right to get the sale confirmed would be accrued to the highest bidder on acceptance of his bid, where sale is subject to the confirmation of the Court? (2) Is the Court liable to give confirmation merely on acceptance of the highest bid, where the sale is subject to confirmation of the Court? (3) Whether the Court can cancel the sale, where the highest bid amount is : inadequate, notwithstanding the absence of illegalities, irregularities or fraud in the auction proceedings? 10. Admittedly, the applicant is the highest bidder who quoted Rs.4,05,00,000/- for Lot No. I and the second highest bid was for Rs.3,13,00,000/-. Similarly, either the Official Liquidator or KSIDC has no case that the applicant has committed any kind of laches in complying with the auction formalities. But in Report No. 49, seeking permission to cancel the sale in favour of the applicant and put it for resale, the prime reason stated by the Official I Liquidator is that the value of Lot No. I assessed by the Chartered Engineer/Approved Value is Rs.7,84,00,000/-, whereas, though highest, the amount offered by the applicant is Rs.4,05,00,000/- which is very low comparing to valuation of the Approved Valuer. In short, the value offered is much lesser than the amount valued for the assets by the Approved Valuer. 11. Coming to Question Nos. 1 and 2 together, the argument advanced by the learned counsel for the applicant is that the right to get the sale confirmed would be accrued to the highest bidder on acceptance of his bid. So after the acceptance of the highest bid, the Court has no way, other than confirming the highest bid, where any illegality, irregularity or fraud is absent. The learned counsel cited the decision in Valji Khimji and Company Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. and Others, 2008 KHC 4951 : 2008 (9) SCC 299 : 2008 (11) SCALE 287 : 2008 (145) Comp Cas 36 : AIR 2009SC Supp 776. But, in my opinion, the facts of the said case is prima facie distinguishable from the instance case. But, in my opinion, the facts of the said case is prima facie distinguishable from the instance case. There, sale was set aside one year after confirmation, at the instance of a third party, who never participated in the auction and that order was challenged before the Apex Court. In that backdrop, the Apex Court set aside the order cancelling the confirmation and held that after the confirmation, the sale cannot be set aside, except on fraud. But in the instance case, the Official Liquidator sought for cancellation of the bid before confirmation. So, the decision would not render any help to the applicant. The learned counsel further cited the decision in Dr. K. S. Thangal v. State of Kerala, 1968 KHC 75: 1968 KLT 520 : AIR 1968 Kerala 197. Going by the said decision also it could be seen that the facts of that case are also distinguishable as the challenge was after confirmation of the sale. There, the sale was challenged after confirmation, on the basis of a fresh offer and the Court held that even if offers are made after confirmation of the sale, the Court is not bound to make an enquiry or set aside, in the absence of fraud. Therefore, that decision also will not render any aid or help to the applicant. 12. Though the decision in Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Limited and Others, 2008 KHC 4951 : 2008 (9) SCC 299 : 2008 (11) SCALE 287 : 2008 (145) Comp Cas 36 : AIR 2009SC Supp 776 does not render any help to the applicant, I find that the said decision itself is also helpful to this Court for arriving at a right decision on the question whether a right to get the sale confirmed would be accrued to the highest bidder on acceptance of the highest bid amount, where sale is subject to the confirmation of the Court. Paragraphs - 34 and 35 of the decision in Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. and Others, 2008 KHC 4951 : 2008 (9) SCC 299 : 2008 (11) SCALE 287 : 2008 (145) Comp Cas 36 : AIR 2009SC Supp 776 are very relevant and given below: I "34. In the present case we are satisfied that there is no fraud in the auction sale. In the present case we are satisfied that there is no fraud in the auction sale. It I may be mentioned that auctions are of two types— (1) where the auction is not subject to subsequent confirmation and (2) where the auction is subject to subsequent confirmation by some authority after the auction is held. 35. In the first case mentioned above, i.e. where the auction is not subject to confirmation by any authority, the auction is complete on the fall of the hammer, and certain rights accrue in favour of the auction purchaser. However, where the auction is subject to subsequent confirmation by some authority (under a Statute or terms of the auction) the auction is not complete and no rights accrue until the sale is confirmed by the said authority. Once, however, the sale is confirmed by that authority, certain rights accrue in favour of the auction purchaser, and these rights cannot be extinguished except in exceptional cases such as fraud." 13. The crux of the above decision is that where the auction is subject to confirmation of some authority under the Statute, the auction is not complete and no right would be accrued until the sale is confirmed by the said authority. It follows that the Court is not able to confirm sale merely on acceptance of highest bid, where sale is subject to confirmation. In this context, Rule 273 of the Companies (Court) Rules, 1959 is very relevant. Rule 273 of the Companies (Court) Rules reads as follows: "273. Procedure at sale.— Every sale shall be held by the Official Liquidator, or, if the Judge shall so direct, by an agent or an auctioneer approved by the Court, and subject to such terms and conditions, if any, as may be approved by the Court. All sales shall be made by public auction or by inviting seated tenders or in such manner as the Judge may direct." 14. Going by the above Rule, it is seen that every sale held by the Official Liquidator shall be subject to the confirmation of the Company Court. Thus, sale is not complete unless confirmation is granted by the Company Court. Consequently, no right would be accrued to the highest bidder whose tender got accepted, until confirmation is granted by the Company Court. It follows that the Court can cancel the bid notwithstanding the acceptance of highest bid on sufficient reasons. Thus, sale is not complete unless confirmation is granted by the Company Court. Consequently, no right would be accrued to the highest bidder whose tender got accepted, until confirmation is granted by the Company Court. It follows that the Court can cancel the bid notwithstanding the acceptance of highest bid on sufficient reasons. 15. Coming to the third question, in Allahabad Bank and Others v. Bengal Paper Mills Co. Ltd., and Others, 1999 KHC 1167 : 1999 (4) SCC 383 : AIR 1999 SC 1715 : 1999 (96) Comp Cas 804 the Supreme Court held as follows: "21. Upon liquidation, the assets and properties of the Company in liquidation vest in the Official Liquidator for the benefit of its creditors. It is only from out of the sale proceeds of these assets and properties that the creditors of the Company can hope to recoup their dues. To ensure that the best possible price is realised upon the sale of these assets and properties, the sale thereof by the Liquidator is required to be confirmed by the High Court. It is the obligation of the High Court to the creditors of the Company in liquidation to make sure that the best possible price has been realised." 16. Subsequently, in Union Bank of India v. Official Liquidator, High Court of Calcutta and Others, 2000 KHC 1190 : 2000 (5) SCC 274 : AIR 2000 SC 3642 the Supreme Court held as follows" "10. At the outset, we would state that in proceedings for winding up of the company under liquidation, the Court acts as a custodian for the interest of the company and the creditors. Therefore, before sanctioning the sale of its assets, the Court is required to exercise judicial discretion to see that properties are sold at a reasonable price. For deciding what would be a reasonable price, valuation report of an expert is must. Not only that, it is the duty of the Court to disclose the said valuation report to the secured creditors and other interested persons including the offerers. Further, it is the duty of the Court to apply its mind to the valuation report for verifying whether the report indicates reasonable market value of the property to be auctioned, even if objections are not raised." 17. Further, it is the duty of the Court to apply its mind to the valuation report for verifying whether the report indicates reasonable market value of the property to be auctioned, even if objections are not raised." 17. In Divya Manufacturing Company (P) Ltd., Tirupati Woollen Mills Shramik Sagharsha Samity and Another v. Union Bank of India and Others, 2000 KHC 1231 : 2000 (6) SCC 69 : AIR 2000 SC 2346 the Apex Court held as follows: "13. From the aforesaid observation, it is abundantly clear that the Court is the custodian of the interests of the company and its creditors. Hence, it is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud." 18. In Navalkha & Sons v. Ramanya Das, 1969 KHC 289 : 1969 (3) SCC 537 : 1969 KLT SN 78 : AIR 1970 SC 2037 the Supreme Court held that; "6. The principles which should govern confirmation of sales are well established. Where the acceptance of the offer by the Commissioners is subject to confirmation of the Court the Court the offer or does not by mere acceptance get any vested right in the property so that the may demand automatic confirmation of his offer. The condition of confirmation by the Court operates as a safeguard against the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. In every case it is the duty of the Court to satisfy itself that having regard to the market value of the property the price offered is reasonable. Unless the Court is satisfied about the adequacy of price the act of confirmation of the sale would not be a proper exercise of judicial discretion. In Gordhan Das Chuni Lai Dakuwala v. T. Simian Kanthimathinatha Pillai, AIR 1921 Mad 286: 24 MLW 35 it was observed that where the property is authorised to be sold by private contract or otherwise it is the duty of the Court to satisfy itself that the price fixed is the best that could be expected to be offered. In Gordhan Das Chuni Lai Dakuwala v. T. Simian Kanthimathinatha Pillai, AIR 1921 Mad 286: 24 MLW 35 it was observed that where the property is authorised to be sold by private contract or otherwise it is the duty of the Court to satisfy itself that the price fixed is the best that could be expected to be offered. That is because the Court is the custodian of the interests of the company and its creditors and the sanction of the Court required under the Companies Act has to be exercised with judicial discretion regard being had to the interests of the company and its creditors as well. This principle was followed in Ratnasami Pillai v. Sabapathy Pillai, AIR 1925 Mad. 318 and S. Soundararajan v. Khaka Mahomed Ismail Saheb of Roshan & Co., AIR 1940 Mad. 42 : 1939 (2) MLJ 778 . In A. Subbaraya Mudaliar v. K. Sundararajan, AIR 1951 Mad. 986 : 1951 (2) MLJ 353 it was pointed out that the condition of confirmation by the Court being a safeguard against the property being sold at an inadequate price, it will be not only proper but necessary that the Court in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its orders, should see that the price fetched at the auction is a: adequate price even though there is no suggestion of irregularity or fraud." 19. In the light of the above discussions, it can be held that no kind of right would be accrued to the highest bidder, on acceptance of his highest bid, unless and until sale; confirmed by the Court, where sale is subject to confirmation of the Court and sale can be cancelled on the ground of the inadequacy of the highest bid amount, notwithstanding the absence of illegalities, irregularities or fraud in the sale proceedings. 20. In the instance case the highest bid amount quoted by the petitioner Rs.4,05,00,000/-, but the value of the property assessed by the Chartered Engineer/Approval Valuer is Rs.7,84,00,000/-. There is a difference of Rs.3,34,00,000/-. I have already found that the paramount consideration of the Court is the interest of the company as well its creditors. As the custodian of the interest of the company and its creditors, I am inclined to exercise my judicial discretion in favour of the company and its creditors. There is a difference of Rs.3,34,00,000/-. I have already found that the paramount consideration of the Court is the interest of the company as well its creditors. As the custodian of the interest of the company and its creditors, I am inclined to exercise my judicial discretion in favour of the company and its creditors. In A. Subbaraj Mudaliar v. K. Sundararajan, AIR 1940 Madras 42 the Court held that "the condition of confirmation by the Coil being a safeguard against the property being sold at an inadequate price, it will not o proper but necessary that the Court in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its orders should see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud". 21. It is also alleged in the application that confirmation is being delayed at the intervention of third parties with the deliberate intention of preventing the applicant from getting the property. But, neither any materials nor any possible circumstances had been brought out before this Court to substantiate the said contention. Similarly, thought applicant challenged the valuation of the property made by the Approved Expert Valuers and contended that the report appears to have been made only for helping the rival applicants, he miserably failed to substantiate the said contention also. So also contended that the land is not a free hold land and as such, it would not fetch the market value as that of other properties. In my view, even if that aspect of the matter is also taken into consideration, the amount quoted by the applicant is very low and inadequate, when comparing with the valuation of the expert Valuer. The learned counsel for the applicant advanced arguments relying on the land value stated in Annexure-A4 letter. In my view, if the land was available for Rs.15,160/- per cent as shown in Annexure-A4 letter, the applicant would not have offered Rs.4,05,00,000/- for the land and building when according to the applicant, the building is more than 15 years old and not in good condition. Hence no credence or value can be given to Annexure-A4. It is also to be remembered that it may be a valuation as per the Land Assignment Rules. Hence no credence or value can be given to Annexure-A4. It is also to be remembered that it may be a valuation as per the Land Assignment Rules. But in so far as an open public bid, the amount shown in Annexure-A5 has no relevancy at all, as the bid amount depends upon the need, requirement and desire of each prospective bidder. 22. Thus, it is the obligation of this Court to its creditors of the company in liquidation to make sure that possible price has been realised. In view of the value of the property assessed by the approved valuer, I find that the bid amount quoted by the applicant is inadequate and if the same is approved, it will adversely affect the interest of the company and its creditors. 23. In the light of the above discussions, the Official Liquidator is permitted to cancel the auction held on 30/01/2014 for Lot No. I and directed to conduct re-sale of the same in accordance with Rules. Needless to say, at that event, the Official Liquidator is liable to refund the deposit to the applicant, at the earliest. Thus, CA No. 57/2014 will stand dismissed and Report No. 49 in CP No. 22/06 will stand allowed.