2024 (5) TMI 423 - AT - Insolvency and Bankruptcy

Maintainability of appeal - CIRP - Aggrieved person or not / Locus Standi of minor operational creditor - It is submitted that the Appellant has 00.54 % share as an operational creditor and would fall much lower in the scale of Section 53 of IBC - HELD THAT - The Appellant was represented through GE International Inc. i.e. representative of the operational creditors appointed in terms of Regulation 31A(3) of the Regulations in the SCC of the CD. No objection to the draft report was filed by any of the members of the SCC of the CD and valuation reports were accepted. It is also pertinent to mention that the main stakeholders in the SCC are the financial creditors which includes the banks, LIC etc. having 95% share but they have not raised any objection about the valuation. Moreover, all the bidders were given access to the VDR which contained the entire description of the parcel of land put up for auction, therefore, the Appellant cannot agitate that the number of parcels of the land were not categorically mentioned. There was no objection by the Appellant to the sale which was conducted though first five auction and no effort was made by the Appellant to file any application for intervention even before the Adjudicating Authority when the present two applications were taken up for hearing and decided. By no means, the Appellant can be termed to be a person aggrieved for the purpose of invoking Section 61 of the Code to present these appeals to challenge the impugned order especially when no other member of the SCC has challenged the same. The Appellant has no locus standi to maintain the present appeals and their appeals deserves to be dismissed on this premise only but it is also observed that the sale which has been conducted by Respondent No. 1 is after following due process of law which have been described in the facts mentioned in the earlier part of this order and there is no error in selling the property in the e-auction to the sole bidder. There is hardly any merit in the present two appeals which requires any interference by this Court and the same are hereby dismissed.

Summary

Issues Involved:
1. Approval of the sale of the Corporate Debtor as a going concern.
2. Grant of reliefs and concessions to the Successful Bidder.
3. Distribution of sale proceeds and other monies.
4. Locus standi of the Appellant to challenge the e-auction process.

Summary:

1. Approval of the sale of the Corporate Debtor as a going concern:
The Respondent No. 1 (Liquidator) and Respondent No. 2 (Successful Bidder) filed applications u/s 60(5) of the Insolvency and Bankruptcy Code, 2016 r/w Regulation 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 and Rule 11 of the NCLT Rules, 2016, seeking approval for the sale of the Corporate Debtor (Lanco Kondapalli Power Ltd.) as a going concern. The applications were partly allowed by the Adjudicating Authority, which approved the sale and granted certain waivers and concessions, but did not accept the request for a four-month period for the removal of specific assets.

2. Grant of reliefs and concessions to the Successful Bidder:
The Successful Bidder, Respondent No. 2, sought approval for the sale of the Corporate Debtor to its SPV and requested various reliefs and concessions. The Adjudicating Authority granted these reliefs and concessions as captured in Para 21 of the impugned order, but did not agree to the request for fixing a four-month period for asset removal.

3. Distribution of sale proceeds and other monies:
The Liquidator sought approval for the distribution of sale proceeds and other available monies in accordance with the law. The Adjudicating Authority granted this relief, as detailed in Para 23 of the impugned order.

4. Locus standi of the Appellant to challenge the e-auction process:
The Appellant, an Operational Creditor, challenged the e-auction process, alleging undervaluation of assets and non-compliance with value maximization principles. The Respondents raised preliminary objections regarding the Appellant's locus standi, arguing that the Appellant did not suffer any legal injury or infringement of vested rights. The Tribunal held that the Appellant, holding a minuscule share of 0.54%, lacked the locus standi to challenge the process, especially since the main stakeholders, including financial creditors with 97% share, did not raise any objections. The Tribunal also noted that the sale process followed due procedure and there was no error in selling the property to the sole bidder. Consequently, the appeals were dismissed without any order as to costs.