2019 (5) TMI 794 - HC - Indian Laws

Auction - Conditional order of stay - Due diligence to be taken over by highest bidder. HELD THAT - Petition is disposed of permitting the petitioners to make payment of the amounts now offered over and above the highest bid amounts in respect of the aforesaid three properties. The petitioners shall make payments on or before 31.03.2019 to avail this benefit. If the petitioners fail to make payment, it will be open to the bank to proceed further. In the event of the petitioners complying with this order, the bank shall refund the moneys paid by the highest bidders in the auction. However, in the circumstances of the case, there shall be no order as to costs.

Summary

Issues:
1. Challenge to conditional order of stay by Debts Recovery Tribunal (DRT) in an application for stay of auction.
2. Extension of time to comply with conditional order.
3. Impleadment of highest bidders in auction sale.
4. Consideration of properties of individual guarantors not covered by Insolvency and Bankruptcy Code (IBC) resolution process.
5. Release of properties of guarantors not covered by IBC resolution process.
6. Acceptance of higher payments offered by guarantors in respect of certain properties.

Analysis:
1. The judgment dealt with a writ petition challenging a conditional order of stay by the DRT in an auction matter. The petitioner sought an extension of time to comply with the conditions set by the DRT for the stay of auction.

2. The court, upon hearing the parties, directed the bank to provide details of the auction sale, including property descriptions, upset prices, bidders, bid amounts, and deposits made. The court postponed the confirmation of sale until further evaluation based on the provided information.

3. Subsequently, the court ordered the impleadment of the highest bidders in the auction sale to ensure their involvement in the proceedings. Details of highest bidders were to be furnished to the petitioner's counsel for necessary action.

4. Following the invocation of the IBC against the borrower company, the court noted that the writ petition challenging the auction could not be pursued further due to proceedings before the NCLT. However, individual guarantors sought relief for properties not covered by the IBC resolution process.

5. The court considered the request of individual guarantors regarding properties not covered by the IBC resolution process. While one property's sale had been confirmed, the court rejected the offer made by guarantors for that property. For the remaining properties, the court allowed the guarantors to make higher payments than the highest bids within a specified timeline.

6. The judgment disposed of the second writ petition by permitting the guarantors to pay amounts exceeding the highest bid amounts for three specific properties. The deadline for payment was set, and failure to comply would allow the bank to proceed further while refunding the highest bidders' payments. No costs were awarded in the case.