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TMI Blog2022 (3) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... - during the process, the valuation reports were obtained from two valuers and since it came to the notice of then Resolution Professional that the estimates of the values provided are significantly different, the then Resolution Professional /Liquidator in compliance with Regulation 35(1)(b) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 appointed a third valuer as approved by the Members of the CoC in the third meeting of CoC on 12.03.2019 being Crest Capital Group Private Limited and in compliance with Regulation 35(1) of the CIRP Regulations 2016, considered the average of estimates of the values. As per the summary of the valuation the fair value is fixed at 24.63 Crores and liquidation value at 18.45 Crores. The e-auction was conducted on 19.11.2019, the Appellant also participated in the e-auction and successfully bid an amount of ₹ 18,45,86,646/- being 100% of the reserve price. The Letter of Intent was issued to the Appellant on 21.11.2019 declaring the prospective bidder as successful bidder and the Appellant deposited ₹ 17,42,86,646/- after netting off the process participation depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding liabilities prior to the sale of the Company as a going concern and after payment of the sale proceeds distributed in accordance with Section 53 of the Code - Impugned Order is modified to the extent that the sale of the first Respondent as a going concern is upheld and the direction seeking extinguishment of past/remaining unpaid outstanding liabilities including contingent liabilities, prior to the sale as a going concern , after payment of sale proceeds distributed in accordance with Section 53 of the Code, is allowed. Appeal allowed. - Company Appeal (AT) (Insolvency) No. 650 of 2020 - - - Dated:- 25-2-2022 - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant: Mr. Vijay K. Singh, Advocate For the Respondents: Mr. Krishnendu Datta, Sr. Advocate with Mr. Anup Kumar Singh, Mr. Debarshi Dutta, Mr. Aayush Kevlani, Ms. Mehak Khurana, Advocates for R-2 JUDGMENT Justice Anant Bijay Singh; This Appeal has been preferred by the Appellant M/s Shiv Shakti Inter Globe Exports (P) Ltd. limited being aggrieved by the order dated 18.05.2020 passed by the Ld. Adjudicating Authority in CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor and appointed the Resolution Professional as the Liquidator. iv) After direction of liquidation, the Liquidator has made Public Announcement in the newspapers for inviting proof of claims from the Stakeholders of the Corporate Debtor in the specified Forms on or before 30.06.2019 and the same was also informed to the Insolvency and Bankruptcy Board of India. v) That on or before the last date for submission of claim, the Liquidator had received one claim in Form D from Oriental Bank of Commerce, NCB Branch, Haryana and from eight Operational Creditors and no other claims were received in response to the said public Announcement made by the Liquidator. vi) That during the process, the valuation reports were obtained from two valuers and since it came to the notice of the then Resolution Professional, that the estimates of the values provided are significantly different, the then Resolution Professional /Liquidator in compliance with Regulation 35(1)(b) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 appointed a third valuer being Crest Capital Group Private Limited as approved by the Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. xii) The Liquidator filed an Application before the Ld. Adjudicating Authority under Regulation 45(3)(a) of Liquidation Process Regulations, for closure of liquidation process of the Corporate Debtor as per approval of Sale of the Corporate Debtor as a going concern to the Successful Bidder namely, M/s Shiv Shakti Inter Globe Exports Private Limited (Appellant herein). The following reliefs have been sought by the Liquidator in the aforesaid Application which is hereunder; a. That the Hon ble Tribunal may graciously be pleased to approve the closure of Liquidation Process of the Corporate Debtor under Regulation 53 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and sale of Corporate Debtor as a going concern to M/s Shiv Shakti Inter Globe Exports Private Limited, the highest bidder without any liabilities including contingent liabilities and with immunity from existing litigations, if any, against the Corporate Debtor by way of E-Auction at a total consideration of INR 18,45,86,646/- (Rupees Eighteen Crores Forty Five Lacs Eighty Six Thousand Six Hundred and Forty Six only); b. That the Hon ble Tribunal may graciously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the liquidation process about any liability of Uttar Haryana Bijili Vitran Nigam or any other liability on the Respondent No. 1 / Corporate Debtor. The e-auction process was conducted on 19.11.2019 and the Appellant successfully bid an amount of ₹ 18,45,86,646/-. The letter of intent was issued to the Appellant on 21.11.2019 (at page 84 to 122 of the Appeal) and further sale certificate was issued on 26.11.2019 (at page 123 to 124 of the Appeal). The post distribution of funds in compliance with Section 53 of the Code, the Liquidator handed over the possession of all assets to the Appellant being the successful bidder. 6. It is further submitted that while passing the impugned order the Adjudicating Authority completely ignored the principle that any liabilities including contingent liabilities with immunity from existing litigation if any against the Corporate Debtor stands extinguished. The impugned order erred by not giving any finding about extinguishment of prior liability and also by not giving any finding about the extinguishment of remaining unpaid liabilities of Corporate debtor after distribution of proceeds of the sale of Corporate Debtor as a going conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv Shakti Inter Globe Exports Private Limited was the highest bidder of INR 18,45,86,646 (being 100% of the reserve price) and thus was declared successful in the e-auction process for Respondent No. 1 company s sale as a going concern. 12. It is further submitted that the sale proceeds were released on 25.11.2019 and sale certificate dated 26.11.2019 was issued to Shiv Shakti Inter Globe Exports Private Limited. The sale proceeds were then distributed in accordance with section 53 of the IBC. Accordingly, the entire amount of INR 18,45,86,646 was paid towards 13.17% of the admitted debt of Respondent No. 1 sole Financial Creditor, Oriental Bank of Commerce after its relinquishment of security interest over Respondent No. 1 fixed, current and non-current assets, through its email dated 05.10.2019 sent to Respondent No. 2. 13. It is further submitted that it is settled law that when the sale proceeds of a Corporate Debtor are duly distributed in the order of priority and in the manner prescribed by Section 53 of the IBC, no creditor of the Corporate Debtor can claim any share in such proceeds contrary to its rank in the order of priority under Section 53 of the IBC. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the sale proceeds in accordance with Section 53 of the IBC, its revival as a running establishment and a going concern cannot be achieved. It is no longer res integra that while approving a Corporate Debtor s sale as a going concern in liquidation proceedings without its dissolution in terms of Regulation 32(e) of the Liquidation Process Regulations, it is essential to grant the necessary consequential reliefs, especially including: a) extinguishment of the Corporate Debtor s past/any remaining unpaid outstanding liabilities, prior to the corporate debtor s sale as a going concern, after payment of sale proceeds distributed in accordance with Section 53 of the IBC; and b) waiver of all past non-compliances of the corporate debtor under applicable laws, for the period prior to the corporate debtor s sale as a going concern; So as to prevent the corporate debtor s purchaser from being saddled with unlimited and unforeseeable liabilities after purchasing the corporate debtor as a going concern and payment of the sale proceeds. 17. It is further submitted that the settled position of law on extinguishment of a corporate debtor s past liabilities after its sale as a goi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Chechi was appointed Interim Resolution Professional on 07.09.2018 However, in the second meeting, the Committee of Creditors approved the appointment of Mr. Anup Kumar Singh as the Resolution Professional. Since, no Resolution Plan was received during the CIRP, the Committee of Creditors in the meeting held on 25.04.2019 passed resolution with 100% voting rights approving liquidation of the Corporate debtor and the Ld. Adjudicating Authority after considering entire facts passed the liquidation order against the Corporate Debtor and appointed the Resolution Professional as the Liquidator (Annexure P-3 at page 74 to 80 of the Appeal). The Liquidator has made Public Announcement in the newspapers for inviting proof of claims from the Stakeholders of the Corporate Debtor in the specified Forms on or before 30.06.2019 and the same was also informed to the Insolvency and Bankruptcy Board of India and that time no claim for ₹ 81,34,157/- or for any other amount was raised by the Uttar Haryana Bijli Vitran Nigam due against the Corporate Debtor, only one claim received from Oriental Bank of Commerce, NCB Branch, Haryana and from eight Operational Creditors. During the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going concern shall be allocated for payment to respective creditors in terms of Section 53 of the Code (Annexure P-7 at page 123 to 124 of the Appeal). Post distribution of funds in compliance of Section 53 of the Code, the Liquidator handed over the possession of all assets of Corporate Debtor to the Appellant. The Respondent No. 2 (Liquidator) filed an Application on 29.11.2019 (Annexure P-8 at page 125 to 142 of the Appeal) before the Ld. Adjudicating Authority under Regulation 45(3)(a) of Liquidation Process Regulations, for closure of liquidation process of the Corporate Debtor namely K.T.C. Foods Private Limited. Vide letter dated 18.06.2020 the fact that Uttar Haryana Bijili Vitran Nigam informed the Appellant that an amount of ₹ 81,34,157/- is overdue against the Corporate Debtor K.T.C. Foods Private Limited (Annexure P-9 at page 143 to 144 of the Appeal). ORDER 21. Adverting to the contention of the Learned Counsel for the Appellant that the Adjudicating Authority has erred in denying the sale of the Corporate Debtor as a going concern to the Appellant without including any contingent liabilities, we hold that it is a settled law that when t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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