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TMI Blog2022 (5) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... ite documents and EMD within the stipulated time and now by virtue of this Application is trying to make a back door entry by making frivolous allegations and also with an intention to stall the process of Liquidation - In a nutshell, it is clear that the successful bidders are individuals and the next point is that they are not covered under Section 29A of the Code. Application dismissed. - IA Nos. 52 of 2022 and 51 of 2022 in CP (IB) No. 294/7/HDB/2017 - - - Dated:- 6-5-2022 - Bhaskara Pantula Mohan, Member (J) And Dr. Binod Kumar Sinha, Member (T) For the Appellant : P.B. Vijaya Kumar, Senior Counsel and M.N. Agastya For the Respondents : Om Prakash, Senior Counsel, Nirav Shah and Sutanu Sinha, Liquidator ORDER 1. The present IA No. 51 of 2022 is filed under Section 42 R/w. 60(5)(c) of IB Code, 2016 seeking the following relief a. To declare the 3rd E-auction process initiated under invitation for expression of interest to submit bid in respect of sale of IVRCL Ltd. (Under liquidation) as a going concern by notification dt. 20-11-2021 by the 2nd Respondent herein accepting the bid of Sri Ponguleti Prasad Reddy, Promoter of M/s. Raghava Water and Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligence, was not entertained. The time schedule published by the Liquidator on 20.11.2021 for submission of EOI with EMD of Rs. 50 Crs. was fixed on 10.12.2021 and for the bid on 15.12.2021. When the Applicant made request for extension of time for payment of EMD, the same was rejected/unanswered and the Liquidator entertained the bid of M/s. Raghava Construction represented by Sri Ponguleti Prasad Reddy, who deposited Rs. 50 Crs. as EMD. Here it is to note that the announcement of Bid result was not done by the Liquidator on 15.12.2021 as of his published schedule. Rather as of the information received from the business sources, the Liquidator was engaged in doing secret meeting with M/s. Raghava Constructions's representative Mr. Ponguleti Prasad Reddy till late night on 15.12.2021. There is no confirmation whether the EMD was deposited on 15.12.2021 or later which needs to be investigated. To our surprise, in this context, this was reliably learnt by a news item published in Economic Times dated 31.12.2021 and also another Telugu newspaper that the liquidator issued a demand notice to the said Sri Ponguleti Prasad Reddy requiring him to make payment within 90 days from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the son-in-law of Mr. E. Sunil Reddy, the promoter and ex-Director of the first respondent. The entire process is extremely shady and Liquidator appears to be only responsible for it. d) That both the promoters Sri Eragam Sudhir Reddy and Mr. Eragam Sunil Reddy who are related (real brother) are actively involved in siphoning of funds in coordination with lenders. It is learnt that they are already active in their business and the siphoned money as mentioned supra was well invested for carrying out their business activities during construction and post construction activities. The third e-auction process is totally vitiated and tainted with malice and manipulation intended to help the Corporate Debtor in collusion by handling over the company to their own kith and kin in a clandestine manner. Announcement of successful bidder has not been published as per the schedule mentioned by the Liquidator and the Applicant herein, who intended to participate in case the time fixed for EMD is extended for due diligence, came to know about the same only through the news published in the newspapers. The process of Bid was kept very secret by the 2nd respondent whereas the E-Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which clearly raised suspicion on its financial wherewithal and its ability to submit a viable bid for the purchase of the Corporate Debtor as a going concern. It is a pure conjecture when the Applicant states that if he had granted the extension, the Applicant would have quoted a higher price. f) That moreover, on 09.12.2021 (a day before the last date of filing documents and EMD as per Third E-Auction Process Information Document), the Applicant sought extension of time for submission of Bid and EMD till 31.12.2021, due to some unavoidable situation . No cogent reason was given as to why was the applicant seeking extension. However, in accordance with the Third E-Auction Process Information Document, the Liquidator refused to grant any additional time to all prospective bidders to submit pre-bid qualifications/requirements documents and EMD as provided in the Third E-Auction Process Information Document, including the Applicant. In any event, the Respondent/Liquidator had received documents as were mandatorily required to be submitted by any prospective Bidder in compliance to the pre-bid qualifications/requirements including EMD from the Successful Bidders within timeline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s daughter is married to the son of Mr. Ponguleti Prasad Reddy. The Liquidator says that Mr. E. Sunil Reddy's daughter is married to Mr. Ponguleti Prasad Reddy's-Elder Brother's Son. The Liquidator says that on 02.02.2022 when the captioned Application was listed before this Adjudicating Authority, a statement was made across the bar by the Counsel appearing on behalf of the Applicant that Mr. Ponguleti Prasad Reddy sits in the office of the Corporate Debtor on a daily basis. No proof has been provided on the same. And this statement was recorded in the order passed by this Adjudicating Authority in its Order dated 02.02.2022. Thus, these statements made by the Applicant are patently false, incorrect and erroneous. l) That the Successful Bidders, including Mr. Ponguleti Prasad Reddy have submitted their compliance affidavit qua disclosure and undertaking on eligibility under Section 29A of the Code; m) That pursuant to the preliminary inquiry by the Respondent No. 2 it was noted that the Successful Bidders were not in violation of Section 29A of the Code; n) That the Liquidator has undertaken a due diligence and based on which he has arrived at the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting jointly or in concert with such person-- (a) is an undischarged insolvent; (b) is a willful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949; (c) at the time of submission of the resolution plan has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 or the guidelines of a financial sector regulator issued under any other law for the time being in force, and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan; Provided further that nothing in this clause shall apply to a resolution applicant where such app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan approved under this Code or pursuant to a scheme or plan approved by a financial sector regulator or a court, and such resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction; (h) has executed a guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code and such guarantee has been invoked by the creditor and remains unpaid in full or part; (i) is subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or (j) has a connected person not eligible under clauses (a) to (i). Explanation 8[1].-- For the purposes of this clause, the expression connected person means-- (i) any person who is the promoter or in the management or control of the resolution applicant; or (ii) any person who shall be the promote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above provision of law with the alleged relationship, as levelled by the Applicant herein, it is seen that Sri Ponguleti Prasad Reddy does not fall within ambit of ineligibility as per the provisions of the Section 29A of the IB Code, 2016. 11. It appears to us that the Applicant herein has moved the instant Application upon having failed to submit the requisite documents and EMD within the stipulated time and now by virtue of this Application is trying to make a back door entry by making frivolous allegations and also with an intention to stall the process of Liquidation. 12. In a nutshell, it is clear that the successful bidders are individuals and the next point is that they are not covered under Section 29A of the Code. 13. It is further seen that the Applicant herein failing to submit the requisite documents and EMD and having not participated in the Auction process, has no locus standi to maintain the instant Application before this Adjudicating Authority and the instant Application is liable to be dismissed on this ground alone. 14. With the above observations, Applications bearing I.A. No. 51 52 of 2022 stand rejected. No order as to costs. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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