2022 (5) TMI 1501 - Tri - Insolvency and Bankruptcy

E-auction - Seeking approval of Acquisition Plan submitted by a consortium in the liquidation proceedings with respect of the Corporate Debtor and declare that the same to be binding on the Corporate Debtor and its stakeholders - HELD THAT - The first issue was with reference to order dated 05.05.2021, where the earlier Bench has flagged the issue of high CIRP cost. To rebut this argument, Mr. Vashisth, Ld. Sr. Counsel was able to point out, from pg. 212 and 213 of the additional affidavit dated 29.05.2021, by way of a detail chart showing the CIRP cost. It primarily was in relation to payment of wages, salary etc. When this was pointed out, Shri Gopal Jain, Sr. Counsel fairly conceded that this issue now has become irrelevant. The next issue that was raised by Mr. Gopal Jain, Ld. Sr. Counsel was that they have made an offer by way of settlement proposal dated 03.04.2022, which was submitted before the stakeholders. Hence, the same should be considered first. The said contention was rebutted by Mr. Abhinav Vashisht, Ld. Sr. Counsel, stating that the stakeholders have already rejected that proposal, so that proposal has become academic - the ex-promoter has no locus standi to participate or agitate in this proceeding or submit a settlement proposal at this stage, in view of the finding of this Adjudicating Authority, Hon'ble NCLAT and Hon'ble Supreme Court, wherein it was held that, the ex-promoter has become ineligible in terms of Section 29A(h) of the Code as well as proviso to sub-section (f) of Section 35 of the Code. The third objection was that, the e-auction is dated 12.10.2020 and 14.10.2020. The letter of intent was issued on 16.10.2020 and therefore, in terms of the bid process document the entire amount should have been paid within 90 days i.e. before 15.01.2021 - Since this amount has not been paid, the sale cannot be termed as confirmed. As a result, the ex-promoter is entitled to participate and make an offer. This contention appears to be a misconception of the bid process document para 1.16.7 - there is no contradiction between the bid process document and clause 12 of schedule-I - mode of sale and therefore, this argument has no basis. The e-auction was conducted on 12.10.2020 and 14.10.2020 on the reserve price of Rs. 40 crores, and the letter of intent issued in favour of respondent nos. 1 to 4 on 16.10.2020, stands confirmed. The sale of the Corporate Debtor as a going concern in favour of respondent nos. 1 to 4 stands confirmed. As a result, this application stand allowed.

Summary

Issues Involved:
1. Approval of the Acquisition Plan submitted by a consortium.
2. Setting aside a corpus for liquidation expenses.
3. Waiver of penalties under GST laws.
4. Appointment of an independent Forensic Auditor.
5. Enquiry into the conduct of the Liquidator.
6. Stay on the application requesting approval of the acquisition of assets.
7. Eligibility of the ex-promoter to participate in the liquidation process.

Issue-wise Detailed Analysis:

1. Approval of the Acquisition Plan Submitted by a Consortium:
The Liquidator filed an application (IA-233(PB)/2021) seeking approval for the Acquisition Plan submitted by a consortium of individuals. The Tribunal confirmed the sale of the Corporate Debtor as a going concern to the consortium, which offered a bid of Rs. 49.95 Crores, far above the reserve price of Rs. 40 Crores. The Tribunal found no error in the valuation process and held that the e-auction conducted on 12.10.2020 and 14.10.2020 was valid. The letter of intent issued on 16.10.2020 stands confirmed, and the sale is binding on the Corporate Debtor and its stakeholders.

2. Setting Aside a Corpus for Liquidation Expenses:
The Liquidator's application included a prayer to set aside a corpus of Rs. 1 Crore from the consideration for any expenses incurred after the transfer date for liquidation-related processes and form filings. The Tribunal allowed this prayer, ensuring that the Liquidator has the necessary funds to cover post-transfer expenses.

3. Waiver of Penalties Under GST Laws:
The Liquidator requested an order waiving all penalties on account of non-compliances under GST laws and a direction to GST authorities to refrain from initiating coercive or penal action against the Liquidator. The Tribunal did not explicitly grant this prayer but mentioned that penalties and other issues would be dealt with according to the law.

4. Appointment of an Independent Forensic Auditor:
The ex-promoter filed an application (IA-672(PB)/2021) seeking the appointment of an independent Forensic Auditor to analyze the reduction in the value of the Corporate Debtor's assets. The Tribunal dismissed this application as infructuous following the approval of the Acquisition Plan in IA-233(PB)/2021.

5. Enquiry into the Conduct of the Liquidator:
The ex-promoter also sought an enquiry into the conduct of the Liquidator and the process adopted for liquidating the Corporate Debtor's assets. This request was dismissed as infructuous in light of the Tribunal's decision on the main application.

6. Stay on the Application Requesting Approval of the Acquisition of Assets:
The ex-promoter requested a stay on any application moved by the Liquidator requesting approval of the acquisition of the Corporate Debtor's assets. The Tribunal dismissed this request, reiterating that the ex-promoter had no locus standi to participate in the proceedings due to ineligibility under Section 29A(h) of the Insolvency and Bankruptcy Code.

7. Eligibility of the Ex-Promoter to Participate in the Liquidation Process:
The Tribunal reiterated that the ex-promoter was ineligible to participate in the liquidation process, as previously held by the Adjudicating Authority, Hon'ble NCLAT, and Hon'ble Supreme Court. The ex-promoter's objections regarding the e-auction and the bid process were found to be baseless and misconceived.

Conclusion:
The Tribunal approved the Acquisition Plan submitted by the consortium, set aside a corpus for liquidation expenses, and dismissed the ex-promoter's applications as infructuous. The sale of the Corporate Debtor as a going concern to the consortium was confirmed, and the ex-promoter was deemed ineligible to participate in the liquidation process. All other applications related to the case were scheduled for a subsequent hearing.