2021 (6) TMI 350 - Tri - Insolvency and Bankruptcy

Extension of 4 months over and above the time provided - direction for stay on the Respondent Liquidator against proceedings with the invitation for EOI and accepting EOIs from prospective investors during such additional period of 4 months - HELD THAT - Once the schedule of general elections is announced by the Election Commission of India, the model code of conduct kicks in and the Government concerned is duty-bound not to take any major policy decisions. The acquisition of shares held by Nicco Corporation Limited in NPRL is indeed a policy decision to be taken at the highest levels of the State Government. For this, it was necessary to have a duly elected government. This process was completed, and the new government was sworn in only on 10.05.2021. The ends of justice will be met if further time of eight weeks is granted as a last opportunity to complete the decision-making process for acquisition of Nicco Corporation Limited's shares in NPRL - application disposed off.

Summary

Issues:
Application for additional time and stay against liquidator's proceedings for consideration of offer.

Analysis:
1. The application sought an extension of 4 months for considering the liquidator's offer and a stay on proceedings. The liquidator had offered shares at a fair value of ?44.91 each totaling ?52,54,47,000. The applicant, a government-controlled corporation, needed approval from various authorities due to the substantial amount involved.

2. The applicant argued that due to the model code of conduct during elections, no policy decisions could be made, delaying the acquisition process. Key officials were occupied with election duties, hindering the decision-making process. The cabinet couldn't deliberate due to the code of conduct and pandemic-related responsibilities.

3. The applicant highlighted the need for a policy-level decision by the cabinet as the offer price had significantly increased. The acquisition would increase the state government's shareholding in the company, requiring approval at the highest level. The applicant had invested substantially in the company over the years.

4. The liquidator opposed the extension, stating the applicant had sufficient time to respond to the offer but delayed the process. The liquidator had followed the prescribed timeline and offered a fair chance for share purchase. The applicant's behavior indicated a delay tactic, risking the liquidation process.

5. The tribunal acknowledged the unique circumstances and the necessity of a policy decision by the newly elected government. Granting a final extension of 8 weeks, the tribunal emphasized no further delays would be allowed. If the decision-making process wasn't completed within the specified period, the liquidator could proceed with the sale through alternate means.

6. The tribunal disposed of the application with the granted directions, ensuring all parties were informed promptly. The decision aimed to balance the need for a fair consideration period with the urgency of the liquidation process, respecting legal requirements and the objective of the statute.