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TMI Blog2020 (9) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable to the Corporate Debtor. 2. This application was earlier heard on 24th February 2020 and interim order was passed on that date to enable the applicant to prove its bona fide and seriousness by submitting a proposal and depositing 25% of the proposed amount on the condition that the same would be forfeited if the applicant was subsequently declared successful bidder and failed to implement its bid. 3. During the course of hearing on 03.03.2020, the Ld. Counsel along with the applicant appeared. He submitted proof of deposit of Rs. 3.87 crores, being 25% of the bid amount of Rs. 15.5 crores proposed by the applicant. Being satisfied on the aspect of seriousness of the applicant and keeping in mind the object of the Code of maximization of value in a time bound manner, we proceed to decide the matter on merits. 4. The Ld. Counsel for the applicant again reiterated the basic facts and drew our attention to the e-auction notice published by the liquidator. It was contended that only one bidder participated. The bid was submitted at reserve price and which was accepted as such without any attempt being made by the liquidator for upward revision. It was also contended that a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as further contended that the successful bidder matched the reserve price and deposited Rs. 1.44 crores as per the terms and conditions of invitation for expression of interest. Hence, it could not be said that there was a case of inadequacy of price and, therefore, the decision relied on by the applicant was not applicable. It was further contended that if in such manner the applications were entertained, then, there would remain no sanctity of auction process. Strong reliance was placed on the decision of the Hon'ble NCLAT in the case of SBI vs. Maithan Alloys Ltd. And Ors. in Company Appeal (AT)(Insolvency) No. 1245-1247 of 2009. 6. The Ld. Liquidator, on the other hand, contended that if new application was going to be accepted, then, that should be subject to due diligence and verification of the norms/rules as prescribed under Section 29A of IBC, 2016. It was further contended that the new applicant should also be made liable to pay GST, transfer charges etc. as applicable. 7. We have considered the submissions made by all the parties involved herein and also perused the material on record. It is not in dispute that the Corporate Debtor is under liquidation and notice f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. Thus, these general powers exist. Apart from this, specific powers have been given in different sections in relation to different aspects as per the context of that situation. Having said so, it is not in dispute that unlike section 31, no mechanism has been prescribed specifically for confirmation of asset sale under liquidation by this Authority. However, in case of private sale, approval of this Adjudicating Authority is a must. It is further to be noted that section 60(5)(c) is a residuary provision and it overrides contrary provisions of any other law and not IBC, 2016. Thus, if any specific mechanism is provided for such situation, then, this provision will not apply for the reason that such situation would be dealt with in accordance with that specific provision. Having said so, the provision deals with situations in relation to liquidation proceedings, hence, if there exists no specific provision, at the cost of repetition, we hold that such situation can be considered under provisions of section 60(5)(c) of IBC, 2016 particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under a resolution plan shall be given priority in payment over financial creditors. If nothing is to be paid to operational creditors, the minimum, being liquidation value - which in most cases would amount to nil after secured creditors have been paid - would certainly not balance the interest of all stakeholders or maximize the value of assets of a corporate debtor if it becomes impossible to continue running its business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximizing the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this Code and the term "specify" shall construe accordingly. 'The Board', as per section 3(1), means Insolvency & Bankruptcy Board of India established under sub-section (1) of section 188. As per section 240 of the Code, the Board is empowered to make Regulations/Rules consistent with this Code so that provisions of this Code could be effectively implemented. In pursuance of this scheme, Liquidation Process Regulations, 2016 have been made and notified. Chapter VI of such Regulations deals with the realization of assets. As per regulation 32, various forms have been prescribed for sale of assets. Regulation 33 governs mode of sale. As per Regulation 33(1), the liquidator is obliged to ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I. Regulation 33(2) prescribes for sale by private means, again in the manner specified in Schedule I. However, such mode can be adopted only in situations specified therein. One of such situations is that as per clause (c) of Regulation 33(2), the asset can be sold at price higher than reserve price of a failed auction. One other situation is as per clause (d) which provides that it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts; (b) preparing information sheets for the asset; (c) preparing a notice of sale; and (d) liaising with agents. (3) The liquidator shall prepare terms and conditions of sale, including reserve price, earnest money deposit as well as pre-bid qualifications, if any. (4) ---------------------------------------------------------------------------- (5) The liquidator shall make a public announcement of an auction in the manner specified in Regulation 12(3): Provided that the liquidator may apply to Adjudicating Authority to dispense with the requirement of Regulation 12(3)(a) keeping in view the value of the asset intended to be sold by auction. (6) The liquidator shall provide all assistance necessary for the conduct of due diligence by interest buyers. (7) The liquidator shall sell the assets through an electronic auction on an online portal, if any, designated by the Board, where the interested buyers can register, bid and receive confirmation of the acceptance of their bid online. (8) If the liquidator is of the opinion that a physical auction is likely to maximize the realization from the sale of assets and is in the best interests of the creditors, he may sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new bidder owing to cancellation of earlier auction and declaring the applicant as successful bidder. The said decision is also not applicable for the reason that in the present case new bid is at much higher value as well as a condition has been imposed that if the new bidder does not honour its commitment, such deposit shall stand forfeited which was not the case there. 17. Apart from this, the decisions relied on by the applicant in that case pertain to general situations and not a situation covered under IBC, 2016. IBC, 2016 is a complete Code in itself and as per provisions of section 238 of the IBC, 2016, any inconsistent law shall not be applicable to the proceedings under IBC, 2016 i.e., specific provisions of the Code which override such other contradictory laws. As evident from the various provisions of the Code as well as Liquidation Process Regulations discussed herein before, maximization of value of the assets of the corporate debtor is a key factor / prime consideration and in the present case this object has not been achieved by accepting the bid of the applicant at the reserve price which has been now outbid by a substantial higher amount. Much higher Earnest mone ..... X X X X Extracts X X X X X X X X Extracts X X X X
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