2020 (6) TMI 254 - Tri - Insolvency and Bankruptcy

Maintainability of application - Valuation of the assets of Company in Liquidation - HELD THAT - Prima facie, there is not procedural lapse and it cannot be said that the assets of the Company are being sold by the Corporate Debtor at a low price. Liquidator has followed the norms prescribed under the Insolvency and Bankruptcy Code, 2016 and relied on the valuation reports of two registered valuers. This application is not maintainable.

Issues Involved:
1. Allegation of assets being sold below actual price.
2. Lack of communication to the Corporate Debtor.
3. Typographical errors in reserve prices.
4. Compliance with Insolvency and Bankruptcy Code, 2016 and related regulations.
5. Adequacy of notice served to the Corporate Debtor.
6. Validity of the liquidation process and auction.

Issue-wise Detailed Analysis:

1. Allegation of assets being sold below actual price:
The applicant, the Ex-Managing Director of the Corporate Debtor, alleged that the Liquidator was selling assets at prices lower than their actual value. Specifically, the reserve price of Property-A was reduced from ?9.48 Crore to ?3.21 Crore, and Property-B's reserve price increased from ?3.88 Crore to ?10.14 Crore. The applicant claimed that the reduced prices were below the benchmark valuations set by the State of Odisha.

2. Lack of communication to the Corporate Debtor:
The applicant contended that there was no communication from the Registry to the Corporate Debtor regarding the initiation of the Corporate Insolvency Resolution Process (CIRP) and the subsequent sale of properties. The applicant argued that the lack of communication violated natural justice and fair play principles.

3. Typographical errors in reserve prices:
The Liquidator admitted that there were typographical errors in the initial publication of reserve prices, which were corrected in a corrigendum. The auction proceeded based on the corrected reserve prices.

4. Compliance with Insolvency and Bankruptcy Code, 2016 and related regulations:
The Liquidator argued that the valuation and sale of the properties were conducted in accordance with the Insolvency and Bankruptcy Code, 2016, and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Two registered valuers were appointed, and their average valuations were used to set the reserve prices.

5. Adequacy of notice served to the Corporate Debtor:
The Financial Creditor served notice to the Corporate Debtor through multiple modes, including Speed Post, e-mail, and newspaper publications. Despite these efforts, the Corporate Debtor did not participate in the proceedings. The Tribunal found that the notices were adequately served, as evidenced by affidavits of compliance.

6. Validity of the liquidation process and auction:
The Tribunal noted that the liquidation process was initiated after the Committee of Creditors (CoC) unanimously decided to liquidate the Corporate Debtor due to the absence of any resolution plan. The auction was conducted according to the prescribed rules and regulations, and the reserve prices were set based on the valuations provided by registered valuers.

Conclusion:
The Tribunal concluded that there was no procedural lapse in the liquidation process. The Liquidator followed the norms prescribed under the Insolvency and Bankruptcy Code, 2016, and the valuation reports of two registered valuers were relied upon. The application was deemed not maintainable and was dismissed accordingly.

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