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TMI Blog2022 (10) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLT which is part of the sale, there is no occasion to question the requirement in the Process Information Document. Even if under Regulation 33 (2) proviso, no prior permission is required for sale in question, there was no prohibition from including such terms of the sale. The reason for containing such terms for sale is not far to seek. Looking to the enormous value of the assets of the corporate debtor and further that e- Auction did not succeed, in event the Liquidator has put a condition for requiring approval of the sale from NCLT, no exception can be taken to the terms of the sale. It is such condition which ensures the transparency and protects the liquidator as well. It is true that if any e-Auction Process a person does not participate, he has no right to make any offer and his Application subsequently to make higher offer has to be rejected but present being case of a private sale and the terms and conditions stipulated approval of the NCLT, the Adjudicating Authority did not commit any error in taking note of the offer made by the Respondent No. 1 who made an offer of initial Rs. 190 Crores and revised offer was Rs. 201 Crores i.e. much higher than the one on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for liquidation of the Corporate Debtor was filed before the Adjudicating Authority which was allowed by Order dated 19th June, 2020 by the Adjudicating Authority. Mr. Harish Chander Arora, Respondent No. 2 herein who was working as Resolution Professional, has been appointed as Liquidator in accordance with Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidator Process) Regulations, 2016. A Public Announcement was made inviting claims from the Creditors of the Corporate Debtor. The Liquidator prepared a List of Stakeholders and constituted the Stakeholders Consultation Committee (hereinafter referred to as SCC ). A Notice was issued by the Liquidator for e- Auction of the sale of the Corporate Debtor as a going concern at reserved price of Rs. 200 Crores on 30.09.2020 but no bid was received. Second, third and 4th attempt for sale of the Corporate Debtor as a going concern was made on 26.10.2020, 10.11.2020 and 27.11.2020 for reserved price of Rs. 180 Crores, Rs. 180 Crores and 162 Crores, respectively without any success. On 29.12.2020, fifth attempt of e-Auction was made for sale of the Corporate Debtor via slump sale at a reserved price of Rs. 156 Crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellants on 05th August, 2021 with inclusion of certain reliefs and concessions which was requested by the Appellants. On 31st August, 2021, Compliance Certificate under Form-H was submitted by the Liquidator. The Liquidator filed an I.A. No. 3871/2021 seeking closure of Liquidation process and approval of terms and conditions of sale. On 03.10.2021, an Application I.A. No. 4489/2021 was filed by the Jindal Stainless Limited for consideration of its bid for acquiring CD as a going concern. In the Application filed by the Jindal Stainless Limited, the Applicant made an offer of Rs. 190 Crores payable within 90 days from acceptance of the bid for purchase of the CD. 3. The Adjudicating Authority on 30th November, 2021 directed the Jindal Stainless Limited to serve a copy of the Application to the Appellants-the Successful Bidder. The Appellant filed reply to the I.A. of Jindal Stainless Limited opposing the prayer of the Applicant-Jindal Stainless Limited. Both the Applications filed by the Liquidator for closure of the Liquidation Process and approval of the terms and conditions of sale as well as Application filed by the Jindal Stainless Limited were heard and vide Impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther by this Adjudicating Authority. 4. This Appeal was filed challenging the Order dated 28th September, 2022 before this Tribunal on 29th September, 2022 and Appeal was entertained after hearing both the parties and Interim Order was passed adjourning the Auction for 15 days. 5. We have heard Ms. Sonal Alagn, Learned Counsel for the Appellant. Mr. Ramji Srinivasan, Sr. Advocate and Mr. Abhinav Vasisht, Sr. Advocate for Jindal Stainless Limited and Mr. Sumant Batra, Advocate for the Liquidator. 6. Learned Counsel for the Appellant Ms. Sonal Alagn advanced submissions on behalf of the Appellant with clarity and emphasis. It is submitted that the private sale conducted on 17th June, 2021 by Limited e- Auction Process did not require any approval of the Adjudicating Authority. It is submitted that under Regulation 33 sub-regulation 2 proviso, the embargo on Liquidator not to sale without prior permission of the Adjudicating Authority, is with regard to only three circumstances i.e. (a) a related party of the corporate debtor, (b) his related party or (c) any professional appointed by the Liquidator. The present case is not covered by any of the contingency as contemplate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est to close the Liquidation Process. The Adjudicating Authority while considering the Application of closure could not have assumed jurisdiction of approval of the sale and the assumption of jurisdiction of Adjudicating Authority is not in accordance with statutory scheme and deserved to be set aside. 7. It is further submitted that the offer submitted by the Appellant was higher than the last reserved price hence the sale being on a price higher than the reserved price, Liquidator was entitled to conduct the Private Sale without any intervention of the Adjudicating Authority. 8. Learned Counsel for the Appellant has relied on a Judgment of this Tribunal in the matter of Manjit Commercial LLP Vs. SPM Auto Pvt. Ltd. Anr. (Company Appeal (AT) (Ins.) No. 732 of 2019) where this Tribunal has taken the view that the Appellant of that case who have not participated in the e-Auction had sent an email of making an offer to purchase the asset at higher price, was not entertained which Judgement is fully applicable in the facts of the present case. Learned Counsel for the Appellants further relying on a Judgement of Hon ble Supreme Court in Pratap Technocrats (P) Ltd. Ors. Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Process dated 17th June, 2021. The Order passed by the Adjudicating Authority does substantial justice and is in accordance with the object of IBC which does not require any interference by this Tribunal. The Appellants as well as the Jindal Stainless Limited had not participated in any of the seven EAuction conducted by the Liquidator. With regard to private sale offer submitted by the Appellants and entertained by the Liquidator, the Respondent had no knowledge and it came to know about the developments only when the Adjudicating Authority granted extension of the Liquidation Process on 29th June, 2021. Successful Bidder does not acquire any vested right to enforce the auction which is a law settled by the various Judgements of the Hon ble Supreme Court and this Tribunal. Learned Counsel for the Respondent has relied on Judgment of this Tribunal in Company Appeal (AT) Ins. No. 757 of 2021 in Punjab National Bank, Sastra Division Vs. EVA Agro Feeds Pvt. Ltd. Ors. . 10. Mr. Sumant Batra, Learned Counsel for the Liquidator submitted that Process Information Document of the Sale clearly contemplated the approval of the NCLT and further Letter of Intent specifically contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall conduct the sale in the manner specified herein. (2) The liquidator shall prepare a strategy to approach interested buyers for assets to be sold by private sale. (3) Private sale may be conducted through directly liaising with potential buyers or their agents, through retail shops, or through any other means that is likely to maximize the realizations from the sale of assets. (4) The sale shall stand completed in accordance with the terms of sale. (5) Thereafter, the assets shall be delivered to the purchaser, on receipt of full consideration for the assets, in the manner specified in the terms of sale. 14. It was in the process of Private Sale that Appellants and two other entities have expressed their desire to the Liquidator for purchase of the Corporate Debtor. 18th Stakeholders Consultation Committee held on 11th June, 2021 where Liquidator brought into notice of Stakeholders Consultation Committee about the three offers which was received by the Liquidator in the Private Sale. It is useful to notice following from the Item No. 3: 8. The members present in the meeting had a detailed discussion on the revised offers submitted by the three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Liquidator to appoint such experts, professionals or other persons, as the Liquidator might think necessary and appropriate, as per the provisions of the Code and the applicable rules thereunder, so as to enable the sale of the Company on Going Concern Basis. ( Emphasis Supplied ) 16. Further under the heading D. Earnest Money Deposit (EMD), there are certain bullet points under the heading issuance of Letter of Intent and Transaction Documents, following is stated: The Liquidator within twenty days of the end of EAuction date shall issue the letter of intent (LOI) to the Successful Bidder. The Successful Bidder within two (2) Working Days from the date issue of LOI, shall be required to execute a LOI provided by the Liquidator, the terms of which shall be binding on the Successful Bidder. 17. Further under heading G. Terms and Conditions of Limited EAuction, following is also one of the stipulations: . The Liquidator will issue a Letter of Intent (LOI) to the Successful Bidder, detailing the total amount payable and other Terms and Conditions. The Successful Bidder shall have to comply with the payments terms as was decided in the 18th Stakehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document containing terms and conditions of the sale and also certain conditions contained in the LOI issued by the Appellant, it is clear that the process documents itself contemplated about the approval of the NCLT. We have noticed above under heading G-Terms and Conditions of Limited e- Auction which specifically noted that payment shall be done in three instalments (i) 10% of reserve price amount as EMD amount before participation in the E-Auction Process, (ii) 33% to be paid after the approval order from the Hon ble NCLT within 60 days and (iii) balance amount shall be paid within one year from the date approval by the AA with interest at MCLR. We further noticed that in the Letter of Intent also there are specific conditions which contemplated the sale of the Corporate Debtor as a going concern to the Successful Bidder is subject to approval by the Hon ble NCLT, Principal Bench, New Delhi. 20. Now the submissions which has been pressed by Learned Counsel for the Appellant is that prior permission for sale with regard to the private sale as contemplated under Regulation 33 is only with regard to three circumstances mentioned in the proviso and for no other private sale, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivate Sale provides the sale shall stand completed in accordance with the terms of sale. The Terms of Sale as noticed above clearly contemplates approval by the NCLT which is further clarified and amplified by the conditions contained in the LOI issued by the Liquidator to the Appellant. When the approval of the NCLT is contemplated in the Terms of Sale we do not agree with the submissions of Learned Counsel for the Appellant that there is any conflict between the terms of the sale requiring approval of the NCLT under the Regulation 33 or Schedule I. In the meeting of the Stakeholders Consultation Committee dated 11th June, 2021 as noted above under Item No. 3, there was clear contemplation for Order of the Adjudicating Authority. Stakeholders Consultation Committee thus contemplated approval of the NCLT which conditions also got reflected in the Process Information Document. The Process Information Document having been issued by the Liquidator which reflects the requirement of approval of the sale by the NCLT which is part of the sale, there is no occasion to question the aforesaid requirement in the Process Information Document. Even if under Regulation 33 (2) proviso, no pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case and in the interest of justice. 24. The prayers which has been made by the Liquidator as noted above clearly mentioned about the terms and conditions mentioned in Limited E- Auction and the sale was to be taken cognizance by the Adjudicating Authority. The prayers thus contained a request for recognition of the sale in question. Adjudicating Authority after considering all terms and conditions of the sale and others attending facts and circumstances, have taken view that sale was not complete unless approval is granted by the Adjudicating Authority. We see no reason to take a different view. The submissions of Learned Counsel for the Appellant that at the stage when request/offer was made by the Jindal Stainless Limited which was subsequent to filing of the Application by the Liquidator ought not to have been entertained. The present was a private sale, present was not a case of sale by e-auction as per Regulation 33(1). It is true that if any e-Auction Process a person does not participate, he has no right to make any offer and his Application subsequently to make higher offer has to be rejected but present being case of a private sale and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant may be related party to the ex-Director. However, we are not expressing any opinion with respect to the same. As per Regulation 33 (Liquidation Process Regulations, 2016) and as per sub-clause 3, the Liquidator shall not proceed with the sale of asset if he has reason to believe that there is any collusion between the buyer and creditor and the buyer shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties. 11. However, the Appellant did not participate in the e-auction and now making vague allegations without any substantial grounds cannot be accepted. As per Regulation 44(1) of the Liquidation Process Regulations, 2016, the Liquidator shall liquidate the Corporate Debtor within a period of two years. We are of the view that there should not be any unnecessary delay and protract the liquidation process for undue advantage of some of individuals or group, which would adversely affect the liquidation process. 26. The above case was public e-Auction and was not case of private sale. There cannot be any quarrel to the preposition laid down in the above Judgment in reference to a Public e-Auction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, the learned Liquidator invoked the provisions contained in Clause 3(k) of the sale auction notice dated 28 June 2021 and decided to cancel the auction. However, the learned Adjudicating Authority failed to consider Clause 13 of the Schedule 1, to IBBI (liquidation process) Regulation 2016, which provides that on payment of the total amount, the sale shall stand completed, the Liquidator shall execute the certificate of sale deed to transfer such assets. The assets shall be delivered to him in the manner specified in terms of sale. 15. It is well-settled law laid down by Hon'ble Supreme Court in the catena of decisions that the successful bidder in the auction sale does not acquire any vested right in law to enforce the auction, more particularly, when the auction notice confers power on the Authority conducting the auction to cancel the auction in its discretion. Therefore, Respondent No. 1, being the highest bidder (sole) that too at the reserve price, had no vested right in law. 17. An auction sale is not completed under Clause 12 merely because the person has been declared the highest bidder. Instead, the sale is concluded only on full payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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