2024 (6) TMI 961 - AT - Insolvency and Bankruptcy

Rejection of application - Auction Sale by a Liquidator in a Company Appeal - HELD THAT - The fact which would emerge from records is that the status of the present Appellant(s) happens to be that of the Erstwhile Director / Shareholder of the Corporate Debtor, as against whom the Order of Liquidation has already attained finality up to the Appellate stage before this Tribunal. Looking in to the circumstances particularly when the Appellant(s) questions the Sale Certificate and Sale made by the Liquidator, it would have been apt on his part to have earlier approached the Liquidator himself at the time of publication of Sale inviting the bids from the Prospective Buyer, which was made by the Liquidator. Having not done so and having waited till the same was actuated upon by publication on 05.05.2022, this inaction would not give the liberty to the Appellant(s) to open a new chapter by putting a question to the Sale Certificate which has been affirmed by the Liquidator who has filed the IA No. 1301 dated 12.03.2024 and who has further proceeded to distribute the Funds of the Liquidation to satisfy the Claims raised. In view of the stage at which the Interlocutory Application was filed, coupled with the fact that since the proceedings for Liquidation in the present case has already attained finality and his status being that of an Ex-Director / Shareholder of the Corporate Debtor, the prayer made in his Application may not be taken as to be a ground to re-open the entire proceedings of Auction Sale, which was held as a consequence to the finality attached to the Order of Liquidation. There are no merit in the instant appeal in question and the same would stand dismissed and the Impugned Order would stand affirmed - appeal dismissed.

Summary

Issues involved:
The judgment involves challenges to an Impugned Order related to rejection of an Application and the conduct of Auction Sale by a Liquidator in a Company Appeal.

Impugned Order Challenge (Comp. App (AT) (CH) (INS) No. 167 / 2024):
The Appellant, an erstwhile Director of a Corporate Debtor engaged in Real Estate Projects, contested the rejection of their Application (IA (IBC)/ 118 (CHE) / 2023) in the Impugned Order dated 13.03.2024. The Appellant raised concerns regarding the validity of an Auction Sale conducted by the Liquidator, alleging mala fides and improper conduct leading to undervaluation of assets. The Appellant argued that the Auction Sale did not comply with regulations, lacked wide publicity, and was conducted in connivance with a buyer, depriving them of potential dividends.

Connected Order Challenge (Comp. App (AT) (CH) (INS) No. 168 / 2024):
This appeal arises from the same Impugned Order of 13.03.2024, which pertains to similar factual issues regarding the Auction Sale conducted by the Liquidator. The Appellant contended that the Auction Sale process was flawed and did not maximize the realization of the Corporate Debtor's assets, as required.

Key Details:
The Corporate Debtor was put into Liquidation, and the Auction Sale of a disputed property owned by the Corporate Debtor was challenged by the Appellant. The Appellant criticized the Auction Sale process, alleging procedural irregularities, lack of wide publicity, and undervaluation of assets. The Appellant also argued that the Liquidator should have explored a Compromise or Arrangement before resorting to asset sales. The Appellant's status as an Erstwhile Director/Shareholder and the finality of the Liquidation process were crucial factors in the judgment.

Conclusion:
The Tribunal dismissed both Company Appeals (Comp. App (AT) (CH) (INS) No. 167 / 2024 and Comp. App (AT) (CH) (INS) No. 168 / 2024) as it found no merit in the challenges raised against the Impugned Order. The Tribunal emphasized that the Appellant's delayed objections to the Auction Sale, coupled with the finality of the Liquidation process, did not warrant a review of the proceedings. The Interlocutory Applications were also closed in light of the judgment.