9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 697 - AT - Insolvency and BankruptcyE-auction - seeking direction to declare the applicant as successful bidder and cancel the bid of Appellant which was accepted by the Liquidator - It is submitted that since the Respondent No.1 has given the equal bid of Rs.38,40,00,000/- within two minutes of the bid submitted by the Appellant, by virtue of the E-auction Process Information Document, the Respondent No.1 was to be declared as Successful Bidder and the Liquidator committed error in declaring the Appellant as Successful Bidder. HELD THAT - The document clearly indicate that if bid under option 1 and 2 are equal, then bidder under option 1 as going concern shall be declared as successful bidder. The system of bidding and various entries shows that bid of Appellant and Respondent No.1 were of equal amount, whereas the system of bidding as was applied by the bidding forum rejected the bid of Respondent No.1, which was required to be analysed by the Liquidator. It is on the record that the last bid given by the Appellant was of Rs.38,40,00,000/- and since there is no incremental increase by Respondent No.1, its bid of same amount was rejected by the system. The requirement in the Process Document that if the both the bids in option 1 and 2 are equal, bidder under option 1 for sale as going concern shall be successful bidder, there was no measure to apply said provision in the system. System proceeded on its own basis as per terms and conditions. There is no dispute that one of the participant i.e. Respondent No.1 has submitted bids under option 1 i.e. sale of Corporate Debtor as going concern and bid by the Appellant was under option 2 and preference to bid under option 1 has to be given since sale of Corporate Debtor as going concern is audible objection in an insolvency proceeding for revival of the Corporate Debtor. The bidding was closed after receiving aforesaid bid and it was duty of the Liquidator to apply the relevant conditions to find out who should be declared as the successful bidder. The Liquidator instead of looking into the relevant conditions, acted mechanically and followed the auction platform in declaring the Appellant as the highest bidder. The Liquidator is the best person, in facts of the present case, to appreciate the requirements and interpretation of the Information Document and E-auction Document issued by him. In the present case, the Liquidator has not given effect to the requirement in the Information Document that in event bid under option 1 and 2 are equal, the bidder under option 1 shall be declared as successful bidder. The liquidation process has to be conducted as per the Liquidation Regulation and as per the Process Document issued by the Liquidator. When the process was completed, highest bidder was to be chosen as per the terms and conditions. Present is not a case where this Tribunal should allow the bidding process to again commence. The question before the Adjudicating Authority was as to whether in the facts and circumstances of the present case, on an application, Respondent No.1 was required to be declared as successful bidder, which decision has been taken by the Adjudicating Authority after considering the relevant Process Document. This Tribunal in the case of Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI has held that it is clear that during the liquidation process, steps required to be taken for its revival and continuance of the Corporate Debtor by protecting the Corporate Debtor from its management and from a death by liquidation. The Adjudicating Authority has also permitted to refund the amount of deposited by the Appellant with the accrued interest as accrued - no grounds have been made to interfere with the impugned order. Appeal dismissed.
Issues Involved:
1. Validity of the Appellant's bid acceptance by the Liquidator. 2. Compliance with the E-auction Process Information Document. 3. The Liquidator's duty in declaring the highest bidder. 4. Consideration of bids under different auction options. 5. Judicial review of the Liquidator's decision. Summary: 1. Validity of the Appellant's bid acceptance by the Liquidator: The appeal challenges the order dated 20.06.2022 by the Adjudicating Authority (NCLT), which directed the Liquidator to declare Respondent No.1 as the successful bidder and refund the amount deposited by the Appellant with interest. The Appellant's bid of Rs.38,40,00,000/- was initially accepted by the system, but Respondent No.1's subsequent bid of the same amount was rejected by the system. 2. Compliance with the E-auction Process Information Document: The E-auction Process Information Document stipulated that bids must increase by a minimum incremental amount of Rs.5,00,000/-. It also stated that if bids under options 1 and 2 are equal, the bidder for the sale of the Corporate Debtor as a going concern (option 1) shall be declared the successful bidder. The Liquidator conducted the e-auction on 28.02.2022, where the Appellant's bid was accepted, but Respondent No.1's bid was rejected due to non-compliance with the incremental increase criteria. 3. The Liquidator's duty in declaring the highest bidder: The Adjudicating Authority found that the Liquidator should have considered the broader objective of the Insolvency and Bankruptcy Code, 2016, which prioritizes the sale of the Corporate Debtor as a going concern. The Liquidator acted mechanically by following the auction platform without applying the relevant conditions from the Process Document, which led to the erroneous declaration of the Appellant as the highest bidder. 4. Consideration of bids under different auction options: The Adjudicating Authority observed that the Respondent No.1's bid, although rejected by the system, matched the Appellant's bid and was for the sale of the Corporate Debtor as a going concern. This aspect should have been considered by the Liquidator, as the Process Document clearly gave preference to bids under option 1 when bids under options 1 and 2 were equal. 5. Judicial review of the Liquidator's decision: The Tribunal emphasized that the Liquidator, as the author of the tender document, is the best person to interpret its requirements. However, the Liquidator failed to give effect to the clause that prioritized bids under option 1. The Tribunal upheld the Adjudicating Authority's decision, stating that the Liquidator's mechanical approach led to an error. The appeal was dismissed, and the interests of the Appellant were protected by ordering a refund with accrued interest.
|
