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TMI Blog2022 (1) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Order, the Adjudicating Authority has dismissed the Application preferred by the Appellant and also disposed of the Application CA (IB) No. 1313/KB/2019 filed by the Liquidator with the following directions: "i). The Liquidator shall issue fresh invitation to the bidder to provide balance sale consideration within such time as per clause (12) of Schedule I of Regulation 33; ii). In case of payment of the full amount the liquidator shall execute certificate of sale or sale deed to transfer the assets in the manner specified in the terms of sale as per bidding document following clause (13) of the Schedule I of Regulation 33; iii). In case of failure to pay the balance sale consideration he is at the liberty to cancel the sale in favour of the bidder by forfeiting the EMD and the amount paid towards the price of biding document and to proceed with sale as per Regulation 32-A; (Emphasis Supplied) 2. The facts in Brief are as follows: * On 12.10.2018, an Application under Section 10 of the Code filed by the Corporate Debtor was admitted by the Adjudicating Authority. On 19.07.2019, an Order of Liquidation was passed and Mr. S. V. Ramani/the first Respondent was appointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and e-Auction Process. The Learned Counsel submitted that these queries pertain to the claims and liabilities of the Corporate Debtor such as charges over the assets, outstanding statutory dues to the Tax Authorities, Electricity Authorities, etc. It is submitted that the Appellant made it amply clear that it could be willing to participate in the e-Auction only if the liabilities attached to the units of the Corporate Debtor, both statutory and non-statutory in nature, were clarified and dispensed with and/or extinguished on the completion of the liquidation process. Different payment terms were also proposed and these conditional terms formed part of the multiple subsequent correspondence issued by the Appellant to the Liquidator, including the letter dated 06.09.2019. * The terms of the Bid laid down in the Bid document are not absolute and only an intimation to offer. The intending purchaser is at liberty to negotiate and agree upon the terms subject to which the offer will be made. In support of his contention, the Learned Counsel relied on the Judgement of the Hon'ble Supreme Court of India in the matter of 'Dresser Rand S.A vs. Bindal Agro Chem Ltd & Anr., (2006) 1 SCC 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : * It is contended that the Appellant after payment of EMD, wrote a letter to the Liquidator on 06.09.2019 that the sale of the Corporate Debtor Company should be transferred without any liabilities. The Appellant was aware of the fact that the sale of the assets of the Corporate Debtor included its liabilities as the sale was on an 'as is very basis'. Learned Counsel to buttress his arguments placed reliance on the Judgement of this Tribunal in 'Tarun International Ltd. Vs. Mr. Vikram Bajaj', Company Appeal (AT) Ins. No. 1194 of 2019 dated 03.03.2021. * The e-Auction Process Information Document clearly states that the sale of the Corporate Debtor Company was on 'as is very basis'. It is also submitted that the Appellant was involved in the CIRP process where it was the Unsuccessful Resolution Applicant and thus was aware of the liabilities attached to the assets of the Corporate Debtor. * The Liquidator in its response dated 05.01.2020 to the email sent by the Appellant dated 03.09.2020 had clarified that no changes can be made to the Information Document for the Auction, once it is published in the public domain. The Appellant is bound by its declaration dated 05.09.2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016. The Learned Counsel drew our attention to the Bid Document amount and the terms and conditions of the proposed sale in support of his arguments. Assessment: 6. The Issues which arise in this Appeal for consideration are: a. Whether sale of Corporate Debtor as a 'Going Concern, in Liquidation Proceedings includes its liabilities; b. Whether the Appellant herein can withdraw from the Bid after payment of the EMD and seek for refund of the amount paid on the ground that the offer made by the Bidder was a 'conditional offer'. 7. Regulation 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 reads as follows: "32A. Sale as a going concern. 1. Where the committee of creditors has recommended sale under clause (e) or (f) or regulation 32 or where the liquidator is of the opinion that sale under clause (e) or (f) of regulation 32 shall maximise the value of the corporate debtor, he shall endeavour to first sell under the said clauses. 2. For the purpose of sale under sub-regulation (1), the group of assets and liabilities of the corporate debtor, as identified by the committee of creditors under sub-regulation (2) of regulation 39C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of the CD, and therefore, the CD will be dissolved. The existing shares will be extinguished. The remaining assets, other than those sold as part of business will be sold and the proceeds thereof will be used to meet the claims under section 53 of the Code. ........ 4.2 Should 'Going Concern Sale' be defined? 4.2.1. The term is well understood in legal parlance. The jurisprudence in this regard is fairly well-developed out of the erstwhile liquidation regime under the Companies Act, 1956. The Code recognises 'going concern' and envisages resolution as a 'going concern' but does not define it. It has been in vogue for more than two years and has not caused any difficulty. The Insolvency Law Committee in its report dated 26th March, 2016 noted that the phrase "as a going concern" implies that the CD would be functional as it would have been prior to initiation of CIRP, other than the restrictions put by the Code. It may not, therefore, be defined. However, it may be explained that going concern means all such assets and the liabilities, which constitute an integral business or the CD, that must be transferred together and the consideration must be for the business or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of financial commitment; including but not limited to pledge of shares or any security interest created or provided, whether guaranteed or contractually agreed in writing or otherwise by the Company on behalf of or for its subsidiary companies, associate companies, Group companies and / or their respective Affiliates, shareholders/associates; as the case may be, which are in existence prior to the Closing Date and which may be invoked prior to the Closing date or at any time thereafter, shall stand irrevocably and unconditionally waived and extinguished. 2. We propose the following payment terms if we are chosen as the successful bidder in the following manner: Rs. 42 lacs upfront as EMD and purchase of bidding document 50% of the remaining successful bid amount within 45 days of being the successful bidder. Remaining Amount of successful bid within 75 days of being the successful bidder. 3. Finally we are having profit on one crore only in one of the three financial years prior to financial year 2018.19. If you can allow us given this eligibility to bid then only we can enable us to bid for it. 4. In the event of any litigation arising in any courts of India by any pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ostpone or cancel the auction sale anytime without assigning any reason thereon. Any notice of such adjournment/ postponement/ cancellation of the auction sale shall be published on the website https://ncltauction.acutiontigernet. ........" (Emphasis Supplied) 15. Clauses detailed above show that Applicant has accepted all the terms and conditions and cannot revise the same. The Bid Document also specifies under the heading 'Costs, Expenses and Tax Implications' that payment of all statutory and non-statutory dues, taxes, rates, assessments, charges, fees, owed by the Corporate Debtor to anybody in respect of the subject property shall be the sole responsibility of the Successful Bidder. It is also significant to note that an email dated 06.09.2019; the Liquidator has clearly mentioned that 'legal issues pertaining to e-Auction cannot be changed after public notification'. By paying the EMD amount and accepting the Bid, the Successful Bidder cannot now say that it was not a concluded contract. The Bidder-Appellant is bound by the terms and conditions of the Bid document and no communication to the Liquidator stating that it is a conditional offer, is sustainable. If the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia in 'Pawan Kumar Agarwal Vs. Association of Management Studies and Anr.; Meerut Development Authority 2009(6) SCC 171 has observed in Paragraph 26 as follows: "26. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process." (Emphasis Supplied) 17. The Hon'ble Apex Court in 'Punjab Urban Planning and Development Authority and Ors. Vs. Raghu Nath Gupta and Ors' (2012) 8 SCC 197 has referred to another Judgement of the Hon'ble Supreme Court in 'UT Chandigarh Admn. Vs. Amarjeet Singh', (2012) 8 SCC 202 and observed as follows: "The Apex Court after having referred to the Judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12-2002 for the belated payment of instalments. Consequently, the judgments of the High Court are set aside and the writ petitions would stand dismissed and the appeals would stand allowed as above. There will be no order as to costs." (Emphasis Supplied) 18. Keeping in view the ratio laid down by Hon'ble Supreme Court of India in a catena of Judgments that the Bidder cannot wriggle out of the contractual obligations arising out of acceptance of his Bid and also having regard to Regulations 32A and the scope and objective of the Code together with the Principle laid down by this Tribunal in 'Mohan Gems and Jewels' (Supra) we are of the opinion that the Appellant cannot be entitled to the EMD amount and the amount paid towards the Bid Purchase document, if he does not comply with the terms of the contract. 19. We do not find any illegality or infirmity in the well-reasoned order of the Adjudicating Authority. Hence this Appeal fails and is dismissed, accordingly. No order as to costs. 20. The Registry is directed to upload the Judgement on the website of this Tribunal and send the copy of this Judgement to the Learned Adjudicating Authority (National Company Law Tribunal, Kolk ..... X X X X Extracts X X X X X X X X Extracts X X X X
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