2019 (6) TMI 1421 - Tri - Insolvency and Bankruptcy

Liquidation process - sale of property of Corporate Debtor - Whether the Liquidator has followed the prescribed procedure in disposing of the property of the Corporate Debtor under liquidation in compliance with IBC Code the Companies Act and the relevant Rules and Regulations or not? Per Harish Chander Suri Hon ble Member (Technical) HELD THAT - It would be noticed from the records that the Liquidator had obtained Valuation Report from Two different and independent Valuers and the asset in question was put to public auction after numerous announcements/e-auction for sale - The Liquidator has complied with all the requirements of the provisions of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 whereby he had to prepare an asset memorandum and also to obtain valuation at least from two Valuers and by using an average thereof he had to decide the reserve price. The Liquidator has filed the 5th Progress Report which includes the asset memorandum and the Valuation Reports and the reserve price has also been correctly ascertained. We do not notice any irregularity in the sale process. If at all the applicants wanted to participate in the sale process or had any willingness or capability to purchase or had been claiming any right as a tenant or any pre-emptory right in relation thereto under any law they could have approached the appropriate forum of Court immediately on the publication of first expression of interest. They are delayed again at this stage when the sale has already been finalized by the Liquidator as per the Rules and Regulations applicable thereto and particularly when this Tribunal does not find any infirmity therein - The whole process of sale adopted by the Liquidator is correctly followed and cannot be allowed to be undone. The applications of the applicants need no consideration and they do not have any locus standi. The next question raised by the applicant is to the effect that there is no sanctioned building plan of the building under sale and that the whole building should be demolished as it cannot be stalled as per the law - HELD THAT - This question is again untenable - The present building is stated to have been constructed in the year 1890 and must have been constructed with some approval or sanction from the then Nominated/Competent Authority. Till now no question had ever been raised as regards its construction being without any sanctioned plan. The applicants have no right to raise this issue particularly in their capacity as a tenant/occupants because they are having their offices in the same premises for a long time which presently they say is an unauthorized construction that needs to be demolished. Per Jinan K.R. Member (Judicial) The property has been sold by way of competitive e-auction process in accordance with the invitation called for in compliance of the provisions of the code and regulations. Upon the alleged ground the process already initiated by the liquidator cannot be upset. Appeal dismissed.

Summary

Issues Involved:
1. Legality of the sale process of Nicco House.
2. Compliance with the Insolvency and Bankruptcy Code (IBC) and relevant regulations.
3. Allegations of undervaluation and private arrangements in the sale.
4. Claims of unauthorized construction and lack of building plans.
5. Rights and interests of the tenants/occupants in the property.

Detailed Analysis:

1. Legality of the Sale Process of Nicco House:
The applications M.A. (IB) Nos. 585/KB/2019 and 586/KB/2019 challenged the sale of Nicco House, arguing that the sale was conducted without public notice or prior information to the tenants. The Tribunal found that the Liquidator had followed the prescribed procedure, including obtaining valuation reports from two independent valuers and conducting multiple public announcements/e-auctions. The highest bid received was ?28.25 crores, and the sale was finalized accordingly. The Tribunal concluded that the sale process was transparent and complied with the relevant regulations.

2. Compliance with the Insolvency and Bankruptcy Code (IBC) and Relevant Regulations:
The Tribunal examined whether the Liquidator followed the prescribed procedure under the IBC and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. It was found that the Liquidator had prepared an asset memorandum, obtained valuations from two registered valuers, and conducted the sale through public auction. The Tribunal noted that the Liquidator had complied with all necessary regulations, including filing progress reports and obtaining approval from the monitoring committee.

3. Allegations of Undervaluation and Private Arrangements in the Sale:
The applicants alleged that the property was sold at a significantly lower price than its market value and that private arrangements were made without following due process. The Tribunal found no merit in these allegations, noting that the valuations were conducted transparently, and the sale price was determined based on competitive bidding. The Tribunal also dismissed claims of collusion between the Liquidator and the buyers, stating that the sale process was supervised by the monitoring committee and adhered to the regulations.

4. Claims of Unauthorized Construction and Lack of Building Plans:
The applicant in Inv. A. (IB) No. 604/KB/2019 raised concerns about the unauthorized construction of Nicco House and the lack of building plans. The Tribunal dismissed these claims, stating that the building was constructed in 1890 and must have had some approval from the competent authority at that time. The Tribunal emphasized that the applicants, as tenants, had no right to challenge the building's construction, especially since they had been occupying the premises for a long time.

5. Rights and Interests of the Tenants/Occupants in the Property:
The Tribunal addressed the concerns of the tenants/occupants, who argued that their rights were affected by the sale. The Tribunal clarified that the sale was conducted on an "as is where is" basis and did not interfere with the tenants' right of occupation. The Tribunal also noted that the applicants had not participated in the sale process despite multiple public announcements and opportunities to do so. The Tribunal concluded that the applicants had no locus standi to challenge the sale and that their attempts to stall the process were motivated and unauthorized.

Conclusion:
The Tribunal dismissed all three applications, finding no irregularity or illegality in the sale process of Nicco House. The Liquidator was found to have complied with all relevant regulations and conducted the sale transparently and fairly. The Tribunal also dismissed the claims of unauthorized construction and lack of building plans, stating that the applicants had no right to challenge the building's status. The applications were dismissed with the parties directed to bear their respective costs.