2021 (7) TMI 288 - AT - Insolvency and Bankruptcy

Auction - appellant had vested right for sale or not - sale certificate issued in terms of the e-auction or not - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Object of the Code is Resolution . If this concept fails, then the objective shifts to maximization of the value of assets of the Corporate Debtor . It is well settled principle that an auction should be transparent and visible to other bidder. As per IBBI (Liquidation Process) Regulations, 2016 vide Chapter VI, the process of realisation of assets has elaborately been explained. Regulation 31 of IBBI (Liquidation Process) Regulation 2016 provides how the list of stakeholders be made by the Liquidator and Regulation 31 A - the stakeholders consultations committee to advice the Liquidators on the matters relating to sale under Regulation 32 - The Appellant has no vested right and has no sale certificate issued to him in terms of the e-auction. There appears has to be some technical glitches but the same is not support by the certificate of the administrator of the E-auction service provider of the agency involved. This is a case where the Liquidator has gone for e-auction based on the advice of the stakeholders consultation committee and this action is yet to be approved or disapproved by the Adjudicating Authority. This case is not right for review by the Appellate Tribunal as no order has been passed by the Adjudicating Authority. The Appellant has appealed under Section 61 of the Code where the appeal can be filed only against the order of the Adjudicating Authority vide 61(1) of the Code. The Appellant has come in this appeal against the decision taken by the stakeholders consultation committee and Liquidator going ahead with the e-auction. The Adjudicating Authority is to appropriately consider the observations while disposing of the petition. The Appellant is to approach first to the Adjudicating Authority for redressal of their grievance for any irregularity and only thereafter can approach before this Appellate Tribunal under Section 61(1) of the Code - there are no merits in the appeal - appeal dismissed.

Summary

Issues:
Appeal against order under Insolvency and Bankruptcy Code - Set aside order and public announcement - Dispute over auction process - Technical glitches in e-auction process - Adjudicating Authority's decision on e-auction - Applicability of regulations on realization of assets in liquidation process - Jurisdiction of Appellate Tribunal.

Analysis:
The judgment pertains to an appeal filed under Section 61 of the Insolvency and Bankruptcy Code against an order passed by the Adjudicating Authority. The Appellant sought to set aside the order and public announcement made by the Respondent No.1 for the sale of a specific lot. The Adjudicating Authority had not passed any order per se but adjourned the matter concerning a fresh public announcement. The Financial Creditor had initiated the Corporate Insolvency Resolution Process against the Corporate Debtor, leading to liquidation proceedings. The Resolution Professional was appointed as the Liquidator, and the decision for liquidation was taken in a CoC meeting. Subsequently, the Adjudicating Authority ordered the initiation of liquidation and appointed the Resolution Professional as the Liquidator.

The Appellant contended that the Adjudicating Authority's decision to allow a re-auction and issue a fresh public announcement favored the Respondent No.2 and was non-maintainable. The Appellant participated in an auction where their bid was accepted, and they deposited the required amount. However, the Respondent No.2 raised concerns about technical glitches during the auction process, claiming they were unable to submit a revised offer due to system issues. The Respondent No.2 argued for a higher bid and challenged the transparency of the auction process.

The judgment emphasized the importance of a transparent auction process for asset realization in liquidation. It highlighted the regulations governing stakeholder consultations and the role of the Liquidator in asset sale. The Appellate Tribunal concluded that the appeal was premature as no final order had been issued by the Adjudicating Authority regarding the e-auction. The Tribunal dismissed the appeal, stating that the Appellant should first seek redressal from the Adjudicating Authority before approaching the Appellate Tribunal. The decision was based on the lack of merit in the appeal both factually and legally, with no costs awarded.

In summary, the judgment addressed the dispute arising from the e-auction process in a liquidation scenario, emphasizing the need for transparency and adherence to regulations. It clarified the jurisdictional boundaries of the Appellate Tribunal and the proper sequence of seeking remedies in insolvency proceedings.