2020 (3) TMI 90 - Tri - Insolvency and Bankruptcy

Legality of Liquidation Process - Allegation that the Liquidator did not give opportunity to bid - HELD THAT - In our considered opinion, we have already permitted M/S Maithan Alloys Ltd. to withdraw from the process because we have accepted some good offer from the applicant in the applicants in CA(IB)No.796/KB/2019 are not complying the order passed by this Authority, they shall be dealt with separately but only for this reason the Liquidator cannot withhold the amount deposited by Maithan Alloys Ltd. - Hence, we direct the Liquidator to pay back sum of ₹ 17,06,25,000/- along with interest agreed thereon within 7 days from today.

Summary

Issues: Liquidation process challenge, Bidder opportunity denial, Refund of deposited amount

Liquidation Process Challenge:
In this case, an order of liquidation of the Corporate Debtor was passed, and the Liquidator was directed to sell the Corporate Debtor as a going concern. During the liquidation process, a bid was received from Maithan Alloys Limited, which was accepted by the Liquidator. However, another application was filed challenging the liquidation process, alleging that the Liquidator did not provide an opportunity to bid. The Adjudicating Authority directed the Liquidator and Maithan Alloys Ltd. to respond to the application.

Bidder Opportunity Denial:
The challenging parties, Sova Electricals Limited, Typhoon Financial Services Limited, and Sonar Bangla Career Academy Private Limited, offered a higher bid than Maithan Alloys Ltd. and the liquidation value of the Corporate Debtor. As a result, the Authority accepted their offer and directed the Liquidator to sell the Corporate Debtor to them. Maithan Alloys Ltd. expressed a desire to withdraw from the process, and the Authority allowed it. However, when Maithan Alloys Ltd. requested a refund of the deposited amount, the Liquidator did not comply, citing non-compliance by the challenging parties. The State Bank of India also argued against canceling the contract between the Liquidator and Maithan Alloys Ltd.

Refund of Deposited Amount:
The Authority held that since Maithan Alloys Ltd. was permitted to withdraw due to a higher offer from the challenging parties, the Liquidator must refund the deposited amount of Rupees Seventeen Crore Six Lakh Twenty Five Thousand along with interest within seven days. The Authority also noted the filing of additional applications by SBI, scheduling further consideration for a later date.

This judgment addressed the challenges to the liquidation process, the denial of bidding opportunities, and the subsequent refund of the deposited amount in a detailed and reasoned manner, ensuring fairness and compliance with legal principles.