2021 (5) TMI 11 - Tri - Insolvency and Bankruptcy

Seeking direction upon the Responded to consider the offer of the Applicant in a time bound and transparent manner - seeking declaration that the sale of metal scraps and sheds of the Company in Liquidation as null and void - seeking to stay the process of Private Sale of the assets of the Company in Liquidation till further orders by this Hon'ble Tribunal - seeking to grant status quo qua sale of sheds by the Respondent - HELD THAT - On perusal of the record, it is found that reserve price of the Surat material, scrap and sheds was fixed at ₹ 168 crores which the Liquidator succeeded in selling in Private Sale on the price higher than the reserve price in last failed auction at ₹ 168.11 crores. It is also to be mentioned herein that the reserve price is reflected in the Second Amendment to the Advertisement in inviting EoIs at page 75 of IA 136 of 2021 to the tune of ₹ 168 crores and its asset description and price can be seen from page 71-72 of the reply of the Liquidator, wherein the cost of ships and vessel under construction is included in the reserve price as ₹ 121 crores. Furthermore, Applicant of IA 238 of 2021 has paid total ₹ 169.11 crores i.e. higher than the reserve price. On perusal of the record, it is found that the delivery note was executed on 07.12.2020 and the final transfer was made after passing the order of Private Sale. Hence, the allegation that the Liquidator has entered for Private Sale prior to the permission granted by this Adjudicating Authority is not sustainable, in as much as, on 28.11.2020 no transfer has taken place. That apart, Liquidator has given the delivery note only on 07.12.2020 i.e. after getting the permission of Private Sale. It is also pertinent to mention herein that the material was also sold above the Reserve Price as per Regulation 33 of the Liquidation Process Regulations, 2016. Hence, there appears to be no irregularity. Application not maintainable.

Summary

Issues Involved:
1. Direction to consider the Applicant's offer in a time-bound and transparent manner.
2. Declaration of the sale of metal scraps and sheds as null and void.
3. Stay on the process of Private Sale of the assets.
4. Grant of status quo regarding the sale of sheds.

Issue-wise Detailed Analysis:

1. Direction to consider the Applicant's offer in a time-bound and transparent manner:
The Applicant, LP Naval, sought a directive for the Respondent to consider their offer transparently and within a specified timeframe. The Tribunal noted that the Applicant expressed interest in purchasing assets only after multiple failed e-auctions and after the Liquidator had already initiated a Private Sale process. The Liquidator had acted in accordance with the Insolvency and Bankruptcy Code (IB Code) and Liquidation Process Regulations, 2016, by inviting Expressions of Interest (EoI) and conducting multiple e-auctions before resorting to a Private Sale. The Liquidator had also provided the Applicant with access to relevant documents and facilitated a site visit. The Applicant's offer was found commercially non-viable compared to the successful Private Sale that maximized asset value for stakeholders.

2. Declaration of the sale of metal scraps and sheds as null and void:
The Applicant contended that the sale of metal scraps and sheds was conducted without proper authorization and sought to have it declared null and void. The Tribunal found that the Liquidator had sold the assets through a Private Sale at a price higher than the reserve price of the last failed auction, which was permissible under Regulation 33(2)(c) of the Liquidation Process Regulations. The sale was completed after obtaining the necessary permission from the Adjudicating Authority on 02.12.2020, and the delivery note was issued on 07.12.2020, finalizing the transfer. The Tribunal held that the sale was conducted in compliance with the regulations and could not be set aside merely because the Applicant wished to purchase the assets at a lower price.

3. Stay on the process of Private Sale of the assets:
The Applicant sought a stay on the Private Sale process until further orders. The Tribunal noted that the Liquidator had already concluded the sale of the assets, including metal scraps and sheds, for a consideration of ?169.11 crores, which was higher than the reserve price. The sale was conducted with due consultation of stakeholders and in accordance with the IB Code and Liquidation Process Regulations. The Tribunal found no irregularity in the process and vacated the interim status quo order previously granted.

4. Grant of status quo regarding the sale of sheds:
The Applicant requested a status quo order concerning the sale of sheds. The Tribunal observed that the sale had already been completed after obtaining the necessary permissions and issuing the delivery note. The Liquidator had acted in accordance with the law, and the sale was finalized at a price higher than the reserve price. The Tribunal found no grounds to maintain the status quo order and vacated it.

Conclusion:
The Tribunal dismissed the Applicant's claims and upheld the actions of the Liquidator, finding that the sale was conducted transparently, in compliance with the regulations, and in the best interest of the stakeholders. The interim status quo order was vacated, and the applications were disposed of accordingly.