2024 (4) TMI 633 - AT - Insolvency and Bankruptcy

CIRP - Liquidation of corporate debtor - Refusal to approve the private sale in favour of Eshan Minerals Private Limited - It is submitted that Appellant Eshan Minerals Private Limited has already undertaken to pay all MIDC dues, including transfer charges directly to the MIDC - Appellate being successful bidder and a prospective bidder for the debtor's assets - HELD THAT - Adjudicating Authority did not commit any error in issuing a direction for issue of a fresh Notice of conducting sale to other interested parties one party had been already expressed interest. The submission of Sh. Abhijeet Sinha that Sachani Developers who had shown interest and filed an I.A. No.261/2024 subsequently withdrawn his offer by letter dated 26.02.2024 there is no occasion to proceed with the Auction any further. The Auction Notice was already issued on 21.02.2024 and the letter dated 26.02.2024 was issued by Sachani Developers on 26.02.2024 subsequent to e-Auction and in pursuance of Notice for fresh Auction, EMD has already been received at least by one party - fresh Auction need to be conducted by issuance of corrigendum by Liquidator in continuation of the e-Auction Notice by 21.02.2024 by fixing a date within two weeks from today for conduct of the e-Auction. The Liquidator in the corrigendum may also state that the successful bidder has to pay all the dues of MIDC. The interest of the Appellant Eshan Minerals Private Limited are also protected by the impugned order since the bid given by the Appellant has been treated to be anchor bid. In event no higher bid is received in a Swiss Challenge Method, private sale in favour of the Appellant as per LoI dated 21.11.2023, need to be confirmed without requiring any further approval from the Adjudicating Authority. The prayer of the Appellant Best One Infraventures Pvt. Ltd., challenging the order of the Adjudicating Authority insofar as it direct for adopting Swiss Challenge Method cannot be accepted. Appellant- Best One Infraventures Pvt. Ltd. in event intend to participate in the Swiss Challenge Method. It is open for Best One Infraventures Pvt. Ltd. to submit an EMD in pursuance of EoI already issued by the Appellant and subject to this liberty to the Appellant- Best One Infraventures Pvt. Ltd., no other relief can be granted. The order passed by the Adjudicating Authority, challenged in the above Appeals is upheld - Liquidator to issue a corrigendum fixing a date of e-Auction within two weeks from today in continuation of e-Auction Notice dated 21.02.2024 to conduct the e-Auction by Swiss Challenge Method as directed by Adjudicating Authority by order dated 13.02.2024.

Summary

Issues Involved:
1. Approval of private sale in favor of Eshan Minerals Pvt. Ltd.
2. Participation of Sachani Developers in the bidding process.
3. Conducting fresh e-Auction using the Swiss Challenge Method.
4. Submission of EMD by Best One Infraventures Pvt. Ltd.

Summary:

Issue 1: Approval of private sale in favor of Eshan Minerals Pvt. Ltd.
The Appellant, Eshan Minerals Pvt. Ltd., a successful bidder in a private sale, challenged the order dated 13.02.2024 by the Adjudicating Authority, which refused to approve the private sale. Eshan Minerals offered Rs. 15,80,00,000/- plus GST and paid 25% of the sale consideration as Earnest Money Deposit (EMD). The Adjudicating Authority noted that the private sale should maximize realizations and attract more interested buyers. The Tribunal upheld the Adjudicating Authority's decision, emphasizing the need for transparency and competitive bidding.

Issue 2: Participation of Sachani Developers in the bidding process
Sachani Developers expressed interest in participating in the purchase of rights in the property under private sale after the Letter of Intent (LoI) was issued to Eshan Minerals. The Adjudicating Authority allowed Sachani Developers to participate in the bidding process. However, Sachani Developers withdrew their offer on 26.02.2024. Despite this, the Tribunal noted that the Auction Notice had already been issued, and EMD was received from another party, justifying the continuation of the auction process.

Issue 3: Conducting fresh e-Auction using the Swiss Challenge Method
The Adjudicating Authority directed the Liquidator to issue a fresh notice for conducting a sale using the Swiss Challenge Method, treating Eshan Minerals' bid as the anchor bid. The Tribunal upheld this direction, allowing other interested parties to participate and ensuring that the highest bid would be accepted. The Liquidator was instructed to issue a corrigendum for the e-Auction within two weeks and to complete the sale process within one month.

Issue 4: Submission of EMD by Best One Infraventures Pvt. Ltd.
Best One Infraventures Pvt. Ltd. claimed interest in the bidding process but did not submit the EMD. The Tribunal allowed Best One Infraventures to submit the EMD within a week and participate in the Swiss Challenge Process. The Tribunal emphasized that if no higher bid is received, the private sale in favor of Eshan Minerals as per the LoI dated 21.11.2023 would be confirmed without further approval from the Adjudicating Authority.

Conclusion:
The Appeals were decided as follows:
1. The order dated 13.02.2024 by the Adjudicating Authority was upheld.
2. The Liquidator was directed to issue a corrigendum for the e-Auction within two weeks.
3. Best One Infraventures Pvt. Ltd. was given the liberty to submit its EMD within a week and participate in the Swiss Challenge Process.
4. If no higher bid is received, the private sale in favor of Eshan Minerals would be confirmed.
5. The Liquidator was to issue LoI to the highest successful bidder post the Swiss Challenge Method.

Costs:
Parties shall bear their own costs.