2023 (3) TMI 698 - AT - Insolvency and Bankruptcy

E-auction - submission which has much pressed by learned counsel for the Appellant is that the Appellant has made a higher offer of more than 10% from the offer of Respondent No.2 which was sufficient ground to accept the offer of the Appellant, maximisation of the value of the Corporate Debtor being the main objective of the I B Code. HELD THAT - There can be no dispute that maximisation of the value of the Corporate Debtor is one of the objectives of the I B Code. However, the said objective has to be achieved within timelines. There has been already five failed e-auctions and the Respondent No.2 was an entity who had been interested in the Corporate Debtor from very beginning by submitting Resolution Plan. Respondent No.2 was objecting to the liquidation and even filed an appeal in this Tribunal, where this Tribunal observed that Liquidator should explore the possibility for a scheme for compromise and arrangement. The Respondent No.2 has also filed a scheme for compromise which came to be considered by the Stakeholder Consultation Committee, which was not approved having received only 64% voting share. The Stakeholder Consultation Committee have thus well aware of the plan and scheme submitted by Respondent No.2 and Stakeholders has given their express approval to the proposal of Respondent No.2. The acceptance of proposal of Respondent No.2, which was more than the last Reserve Price of the failed auction, after due deliberation was accepted by the Stakeholders. The Respondent No.2 was not a stranger to the above process and he has already filed Resolution Plan and a scheme which was not earlier approved. Financial Creditors were aware of the credentials of the Respondent No.2 and must have interacted with the Respondent No.2 even earlier - there are no error in exercise of jurisdiction by the Adjudicating Authority in approving the proposal of Respondent No.2 and judgment of this Tribunal in Rimjhim Ispat Ltd. was on its own facts. There are no illegality in the order of the Adjudicating Authority which may warrant interference in the impugned order in exercise of our appellate jurisdiction - appeal dismissed.

Summary

Issues Involved:
1. Validity of the Liquidator's acceptance of the proposal from Respondent No.2.
2. Alleged procedural irregularities in the liquidation process.
3. Consideration of the Appellant's higher offer for the Corporate Debtor.

Summary:

1. Validity of the Liquidator's Acceptance:
The Appellant challenged the order dated 23.05.2022 by the Adjudicating Authority (National Company Law Tribunal), Jaipur Bench, which accepted the proposal from Respondent No.2 - Kautilya Industries Pvt. Ltd. for the purchase of the Corporate Debtor and rejected the Intervention Application filed by the Appellant. The Liquidator had conducted multiple e-auctions for the sale of the Corporate Debtor as a going concern, all of which failed. Eventually, a proposal was received from Respondent No.2, which was approved by the Stakeholders' Consultation Committee with a 66% vote and subsequently by the Adjudicating Authority.

2. Alleged Procedural Irregularities:
The Appellant argued that the Liquidator did not follow the Liquidation Regulation, 2016, specifically Regulation 32A, which mandates the identification and grouping of assets and liabilities to be sold as a going concern. The Appellant also raised concerns about the incorrect measurement of the Bhiwadi property. However, the Liquidator had documented the assets in the Asset Memorandum, and no objections were raised during the five e-auctions. The Adjudicating Authority found that the Liquidator conducted the process in accordance with the regulations.

3. Consideration of the Appellant's Higher Offer:
The Appellant contended that their offer, which was more than 10% higher than Respondent No.2's offer, should have been considered to maximize the value of the Corporate Debtor. The Adjudicating Authority, however, noted that the objective of value maximization must be achieved within timelines. Given the history of failed auctions and the timely proposal from Respondent No.2, which was higher than the last reserve price and approved by the stakeholders, the Adjudicating Authority found no reason to disrupt the process. The Tribunal emphasized that the Appellant's higher offer, made after significant delay, was insufficient to unsettle the approved proposal.

The appeal was dismissed, affirming the Adjudicating Authority's decision to approve the proposal from Respondent No.2.