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TMI Blog2024 (7) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... feited if the Successful Bidder fails to make the complete payment towards total sale consideration as per the terms of the Letter of Intent issued by the Liquidator within the stipulated time not exceeding 90 days from the date of e-auction. Admittedly, the Appellant has not paid the balance amount within the period of 90 days and Clause 4.9 clearly entitle the Liquidator forfeit the EMD. On looking into the E-Auction Process Document, there was clear stipulation that entire sale including issue of Sale Certificate is subject to orders and directions passed by NCLT/NCLAT. Clause 5.11 Sub-clause (viii) has already been extracted above which clearly provides that issue of sale certificate in respect of a particular Block of assets shall subject to such orders and directions as maybe passed by the NCLT/NCLAT. Thus, the Process Document already contemplated that issue of Sale Certificate is subject to orders passed by NCLT/NCLAT. Thus, the submission of the Appellant cannot be accepted that Appellant was not aware that the Sale Certificate shall not be issued without leave of the NCLT. Present is not a case where the Liquidator due to any deficiency on his part could not issue Sale Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption, lying at JVL's plant at Deoghat, District Purba Medinpur, Haldia, West Bengal. (ii) E-auction was fixed for 06.04.2022. Reserved price for asset A-11 being Rs.9.60 Crore, EMD of Rs.96 Lakhs was required for participation. Appellant submitted EMD of Rs.96 Lakhs and participated in the e-auction held on 06.04.2022. Appellant submitted bid of Rs.12.60 Crores and was declared as successful bidder for Block A-11. (iii) Letter of Intent was issued by the Liquidator on 07.04.2022 to the Appellant along with bank details for remittance of the balance consideration. Appellant wrote letter dated 08.04.2022 informing that the Appellant is ready to lift the entire material at one-time and shall make full payment, as once confirmation is given that total oil is unpacked and ready to load. On 11.04.2022, the Appellant again wrote to the Liquidator praying for loading of material confirmation. On 11.04.2022, Appellant wrote to the Liquidator that 48 hours prior intimation may be given so that payment can be made and the material can be lifted for delivery. (iv) The Liquidator wrote to the Appellant on 12.04.2022 informing that NCLT, Allahabad Bench vide order dated 04.04.2022 has dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, if prayed for Pending final decision of application the applicant prays for the following interim relief: That this Hon'ble Tribunal may be pleased to direct the respondent to withdraw his email dated 28.06.2022 and refund the amount of earnest money to the Applicant. (xi) The Liquidator filed reply to IA No.226/2022 bringing all correspondence between the parties on record. The Liquidator in the Reply stated that the Liquidator is taking steps for disposal of IA No.98/2022. It was pleaded that the Appellant was informed that Sale Certificate cannot be issued in light of the order dated 04.04.2022 passed by the Adjudicating Authority. Under the E-auction Process Information Document, entire process of sale was subject to orders of the Tribunal, which was expressly communicated to all interested bidders. In the application it was stated that the Appellant till date has not paid the balance consideration. The prayer of the Appellant to refund the EMD and compensation are contrary to the Code, Regulations and E-auction Process Document. There has been no failure on part of the Liquidator in delivery of auctioned block and the Liquidator could not issue Sale Certificate due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id assets, no fault can be laid on the appellant for non-payment of full amount. The Liquidator being unable to transfer the assets and issue Sale Certificate, the Appellant has written to the Liquidator on 22.06.2022 to refund the EMD. It is submitted that the EMD of the Appellant of Rs.96 Lakhs has been forfeited without any fault of the Appellant. 4. Learned counsel for the Liquidator refuting the submission of learned counsel for the Appellant submits that the E-auction Process Document clearly contemplate that e-auction sale as well as Sale Certificate were subject to order of the Tribunal which fact was clearly in the notice and known to all bidders including the Appellant. In view of the order dated 04.04.2022 passed by the Adjudicating Authority that Liquidator to proceed with the sale process but shall not issue Sale Certificate without leave of the Tribunal, the Liquidator could not have issued any Sale Certificate in favour of the Appellant. It is submitted that Appellant did not deposit the balance amount within the time allowed as per the clauses of the E-auction Process Document. EMD submitted by the Appellant was required to be forfeited and has been forfeited by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Cc: PRAMUKH BIO FOOD PRODUCT, Abhishek Kumar, Asit Das, Suhas Mitra, [email protected], Amrita Nandy, Supriyo Chaudhuri Dear Successful bidders Congratulations! We are sending two copies of LOI along with bank details fur remittance of balance consideration, through speed post on your address mentioned in the EOI submitted by you. The same must be signed by the authorised person and one copy with the send to us on the same address provided to you earlier. We are also attaching a scanned copy of the said LOI duly signed by the Liquidator confirming you as a successful bidder in the auction conducted on 06.04.2022. You are requested to print and sign this scanned copy and send to us via mail by today. Thanks Regards Liquidator Team JVL Agro Industries Limited (in Liquidation) ___________________________________________________ 2 attachments LOI BRS.PDF BANK DETAILS FOR PAYMENT.pdf 7. Appellant also wrote to the Liquidator on 11.04.2022 that Appellant is ready with full payment and Liquidator was asked to confirm when Sale Certificate will be issued so that Appellant can make payment and lift the material. Email dated 11.04.2022 is as follows: Date: 11th April, 2022 To, Mr. Supriyo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLT/NCLAT and the Hon'ble Supreme Court of India, as the case may be. While we express our sincere thanks for your participation in the E-Auction process, we would like to inform you that the Hon'ble National Company Law Tribunal (NCLT), Allahabad Bench, vide its order dated 4th April, 2022 directed to proceed with the auction, however, it is stated in the said order that the Liquidator shall not proceed to issue the sale certificate without prior approval of the Adjudicating Authority. The matter has been listed before the Hon'ble NCLT on 26th April, 2022. We would like to assure you that on receipt of the Hon'ble NCLT's direction in this regard, we will start dispatching the aforesaid old, expired stock of oil from JVL Haldia Plant, subject to receipt of full payment of the successful bid amount, net of the EMD received, from your end. Meanwhile, we would request you to immediately send to us the Letter of Intent duly signed by you and arrange to make the payment as mentioned above. Thanks and Regards Liquidator, JVL Agro Industries Ltd. (in liquidation) 9. There has been subsequent correspondence between the parties. On 28.06.2022, the Liquidator requested t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n issue of sale certificate. The quality of material will further deteriorate with passage of time. In our e-mail dated 23.06.22, we had explained our perspective on the current situation of the case in detail and the various losses incurred by us as a result of non-receipt of material, to which we have not received your reply. We have repetitively explained our plight, all the facts clearly describe that the material fact is not informed to us and as a result of delay in issue of sale certificate we are at huge loss. The quality and conditions of material is highly doubtf'ul. Hence, we claim the following compensation from you already mentioned in our letters dated 22.06 and 23.06.22. a) Cancellation of E auction and immediate refund of' EMD of Rupees Ninety Six Lakhs. b) Up to date interest on the EMD amount. c) Indemnification of the loss of Rs.1.20 Crores incurred by us. d) Damages for loss of time, money and mental pressure as result of non-information to us of the restriction on issue of sale certificate. We expect you to take immediate action on the above. Thanks Regards For BRS Refineries 11. Subsequent to aforesaid, IA No.226/2022 was filed by the Appellant praying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails to make the complete payment towards total sale consideration as per the terms of the Letter of Intent issued by the Liquidator within the stipulated time not exceeding 90 days from the date of E-Auction or the date of Letter of Intent (LOI), whichever is later. 13. Clause 5.11 deals with Other Terms and Conditions of the E-Auction , sub-clause (viii) of which provides as follows: viii. The issue of sale certificate or invoice, as the case may be, in respect of a particular Block of assets shall subject to such orders and directions as maybe passed by the Hon'ble NCLT/NCLAT and shall be issued in the name of Successful Bidder only. The sale shall be subject to conditions prescribed under the Insolvency Bankruptcy Code, 2016, and the provisions and regulations made thereunder. 14. Clause 6 deals with timelines for completion of sale through e-auction. Clause 6 of the document provides as follows: 6. TIMELINE FOR COMPLETION OF SALE THROUGH E-AUCTION The following timetable shall apply to the E-Auction Process as embodied in this E-Auction Process Information Document. The timetable may be amended/modified by the Liquidator through issuance of an addendum to the E-Auction Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is E-Auction Process Information Document to Successful Bidder. Simultaneously with execution of Sale Certificate The Timeline as per the Table above may undergo change subject to any further development and/ or unforeseen circumstances which will be uploaded on the website of the corporate debtor and also intimated to the Prospective Bidders via. Email. 15. A perusal of Clause 6.16 indicates that handing over charge of the assets as Stand-alone Blocks has to be simultaneously with execution of Sale Certificate. 16. From the facts as noticed above, it is clear that however Letter of Intent was issued on 07.04.2022 declaring the Appellant as Successful Bidder of Block A-11, but the Sale Certificate could not have been issued in view of order dated 04.04.2022. Order dated 04.04.2022 was passed by the Adjudicating Authority in IA No.98/2022, which order is as follows : IA No. 98/2022 The Liquidator directed to file reply affidavit in the matter within TEN days from today. Copies of the same be served on the counsel on record for the applicant. List this matter on 26th April, 2022. In the meantime, auction sale to proceed as planned. However, the same shall be subject to outcome of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te or hand over the material but on account of order dated 04.04.2022, the Liquidator could not issue Sale Certificate and that was cleared only after passing of order dated 01.06.2023 when IA No.98 of 2022 was rejected. Appellant even before the said date communicated that EMD be refunded and filed IA No.266 of 2022. Appellant has neither deposited the balance amount nor has complied with the terms and conditions of the Process Document. 19. The submission of the Appellant is that the material which was sold, of which the Appellant was declared successful bidder was an old expired stocks of more or less 1000 tons of packed Refined Edible Oil, not fit for human consumption delivery of which cannot be suspended for such a long period. When the bidder in any auction participate it is subject to all terms and conditions as provided in the E-auction Process Information Document and all bidders are binding to all terms and conditions of the Process Document. When Clause 4.9 provides that EMD has to be forfeited on occurrence of any event as provided in the clause and one of the event being successful bidder failing to make payment towards total sale consideration, Appellant is clearly b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plazas would be got completed by the appellant and handed over to the selected enterprise. The notice required the bidders to furnish: (i) a bid security in a sum of 50 lakhs in the form of a bank draft or bank guarantee, and (ii) a performance security in the form of a bank guarantee of 2 crores. The bid security was liable to forfeiture in case the bidder withdrew his bid during the validity period of the bid or failed within the specified period to furnish the performance security and sign the agreement. The bid was to remain valid for a period of 120 days after the last date of bid submission. In terms of the tender document, the respondent firm gave its bid or offer and furnished a bank guarantee in a sum of 50 lakhs. It was an on-demand bank guarantee stating that it could be enforced on demand if the bidder withdrew his bid during the period of bid validity or failed to furnish the performance security or failed to sign the agreement. While the validity period of the bid was to end on 28.11.1997, the respondent withdrew its bid on 20.11.1997 and did not furnish the performance guarantee. Therefore, the appellant although found the respondent to be the highest bidder and acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the bid security was liable to forfeiture in case the bidder withdrew his bid during the validity period of the bid or failed within the specified period to furnish the performance security and sign the agreement. In the present case, the Appellant did not deposit the balance amount so as to enable the Sale Certificate to be issued in favour of the Appellant and before the event of Sale Certificate could happen has requested for withdrawal of the EMD. The judgment of the Hon ble Supreme Court relied by the Adjudicating Authority do support the submission advanced by the Liquidator. 23. Another judgment which has been referred to and relied by the Adjudicating Authority is judgment this Tribunal in Westcoast Infraprojects Pvt. Ltd. vs. Mr. Ram Chandra Dallaram Chaudhary, Liquidator of Anil Ltd., Company Appeal (AT) (Ins.) No.1258 of 2022 , in which case e-auction was held where Appellant has emerged as highest bidder, EMD of Rs.15 Crore was submitted by the Appellant, Appellant was informed to remit the balance amount, Appellant wrote to the Liquidator for extension of time on the pretext that in the revenue entries the name of Corporate Debtor is not registered. The Liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ighest Bidder, no exception can be taken to the action of the Liquidator in cancelling the sale and forfeiting the amount deposited by the Appellant. 24. The above judgment clearly lays down that no exception can be taken to the action of the Liquidator in cancelling the sale and forfeiting the amount deposited by the Appellant, the Successful Auction Bidder having failed to deposit the balance amount. It was further held that Bidders have given an unqualified undertaking for participation in the e-Auction after knowing fully well of clauses of the E-auction Process Document and undertook to abide by the clauses. Learned counsel for the Respondent relies on judgment of this Tribunal in VDB Projects Private Limited vs. Anil Mehta, Liquidator of Pratibha Industries Limited, 2023 SCC OnLine NCLAT 173 , which judgment also supported the submission of the Respondent. 25. In view of the foregoing discussion, we are of the view that the Appellant having breached the clauses of the E-auction Process Information Document and having failed to deposit the balance amount within the time allowed, the Liquidator did not commit any error in forfeiting the EMD. Appellant was not entitled for refun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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