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2024 (12) TMI 1032 - AT - IBCPrayer for recall of the order of liquidation - continuation of the auction process by the liquidator. Whether Adjudicating Authority committed error in rejecting IA (IB) No.93/CB/2024 filed by the Appellant praying for recall of the order dated 13.12.2023? - HELD THAT - The order dated 13.12.2023 was an order which was passed by the Adjudicating Authority on an application which was filed by the Resolution Professional praying for excluding the CIRP period from 22.03.2023 till the date of filing of the application (30.11.2023). Adjudicating Authority heard the application and by the order dated 13.12.2023 after noticing the relevant facts refused to extend the period. It was noticed by the Adjudicating Authority that already 365 days have expired. The Appellant contended that in view of the law laid down by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Through Authorised Signatory vs. Satish Kumar Gupta Ors 2019 (11) TMI 731 - SUPREME COURT , period of CIRP could have been extended even beyond 330 days. There can be no dispute to the proposition laid down by the Hon ble Supreme Court in the above case. However, for extension of period beyond 330 days there has to be valid reason. The present is a case where in CIRP no substantial progress has been made nor completion of Resolution Process was insight. The most important fact to be considered is that the application which was filed by the Appellant was for recall of the order dated 13.12.2023 passed by the Adjudicating Authority refusing exclusion of the period and directing the liquidation of the corporate debtor. On looking into the grounds which are available for a recall of the judgment and the grounds which were raised by the Appellant, they does not fall within any of the grounds on which recall could have been directed - the Adjudicating Authority did not commit any error in rejecting application filed by the Appellant for recall of the liquidation order. Whether the continuation of the auction process by the liquidator, as directed by the Adjudicating Authority, was appropriate? - HELD THAT - There are no error committed by the Adjudicating Authority rejecting IA (IB) No.93/CB/2024 filed by the Appellant, hence, the liquidation order dated 13.12.2023 remains unaffected. We further are of the view that the Appellant is at liberty to file objection to the auction already undertaken by the liquidator before the Adjudicating Authority which may be considered while considering the application for confirmation of the auction. Appellant is free to raise all issues regarding the auction including inappropriate valuation of the assets as is being contended before us in these Appeals. The order dated 21.11.2024 which is challenged in the Company Appeal also does not require any interference since the said application IA ( IB ) No.301 / CB / 2024 filed by the Appellant is still pending and fixed for 19.12.2024. There are no good ground to interfere with the orders impugned in these Appeals, giving liberty to the Appellant to raise objection with respect to auction already held by the liquidator which are yet to be confirmed by the Adjudicating Authority - appeal disposed off.
Issues Involved:
1. Whether the Adjudicating Authority committed an error in rejecting the application for recall of the liquidation order dated 13.12.2023. 2. Whether the continuation of the auction process by the liquidator, as directed by the Adjudicating Authority, was appropriate. Detailed Analysis: 1. Recall of Liquidation Order: The primary issue in this appeal was whether the Adjudicating Authority erred in rejecting the application for recalling the liquidation order dated 13.12.2023. The appellant argued that the liquidation order should be recalled due to procedural errors and the suppression of material facts. The appellant contended that the Corporate Insolvency Resolution Process (CIRP) period should have been extended beyond 330 days, citing the Supreme Court's decision in "Committee of Creditors of Essar Steel India Limited Through Authorised Signatory vs. Satish Kumar Gupta & Ors- (2020) 8 SCC 53," which allows for such extensions under exceptional circumstances. The Adjudicating Authority, however, found that no substantial progress had been made in the CIRP, and there was no resolution plan pending. The Authority noted that the maximum prescribed timeline under Section 12(3) of the Insolvency and Bankruptcy Code (IBC) is 330 days, and any extension beyond this period requires exceptional circumstances, which were not present in this case. The Authority emphasized that the appellant had not demonstrated any exceptional circumstances or prospects of receiving a resolution plan, thus justifying the liquidation order. Furthermore, the grounds for recalling a judgment are limited to procedural errors, lack of jurisdiction, or orders obtained by fraud or misrepresentation. The appellant's grounds did not fall within these categories, leading to the rejection of the recall application. 2. Continuation of Auction Process: The second issue pertained to the continuation of the auction process by the liquidator, as directed by the Adjudicating Authority. The appellant challenged the order allowing the auction process to continue, arguing that it was based on undervalued reserved prices and should be stayed. The Adjudicating Authority had directed that the auction process could proceed but would be subject to the decision of the appellate tribunal. The bank clarified that the One-Time Settlement (OTS) proposal was never agreed upon, and the appellant was free to withdraw the deposited amount without the bank's intervention. The tribunal found no error in the Adjudicating Authority's decision to allow the auction process to continue. The appellant was given the liberty to file objections regarding the auction, including the valuation of assets, when the auction comes up for confirmation before the Adjudicating Authority. The tribunal emphasized that the appellant could raise all relevant issues concerning the auction in accordance with the law. Conclusion: The tribunal concluded that there were no grounds to interfere with the orders impugned in these appeals. The liquidation order dated 13.12.2023 remained unaffected, and the appellant was granted the liberty to raise objections regarding the auction process before the Adjudicating Authority. Both appeals were disposed of accordingly, with the tribunal upholding the decisions of the Adjudicating Authority.
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