9911796707
TMI Blog2025 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... the award by attracting foreign investors, was unable to do so because of the inordinate time taken by the Financial Investment Unit (FIU) of RBI to process the case as per their regulations in relation to investment in India by foreign investors. The Appellant had made all genuine efforts to deposit the amount, but he could not do so despite of extensions granted, because of the factors outside his control. Hence, he should not be saddled with the forfeiture of the entire EMD amount, which has been deposited by him as part of contract. As such taking a pragmatic view, and particularly in the light of the Judgment, of Alisha Khan, of [2021 (12) TMI 1483 - SUPREME COURT] it is apt and fair that, in order to balance the equities without adversely affecting the interest of any of the parties to the appeal, 25% of the Rs. 5 Crores of EMD deposited by the Appellant, i.e. Rs. 1,25,00,000/- is to be retained and the balance 75% of the EMD amount i.e. Rs. 3,75,00,000/- is to be refunded back to the Appellant, within one month from the date of service of the certified copy of this Judgment. Conclusion - The Appellant's request for an extension of time to pay the balance amount denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation, and ultimately the order of dissolution all have attained its finality, and they may not require a detailed scrutiny by us while delivering this Judgment. 3. The short controversy, which would be required to be considered by us, in the instant company appeal, would be limited to the extent as to whether the Appellant herein, being determined as to be a successful bidder in the liquidation proceedings and having apparently defaulted in the remittance of the amount which was the settled due to be paid under the terms and conditions of the tender document, could be granted any leverage by way of an extension of time period to pay the amount, beyond the time period stipulated under the tender document. It will also be needed to considered as to whether, as prayed by the Ld. Counsel for the Appellants, that in case it is not possible to grant an extension of time to deposit the amount due to be paid under the tender document by the Appellant, who had been determined to be the successful bidder, the Earnest Money Deposit (EMD) remitted by him can be returned back to him as now the subsequent sale process has been completed and settled in favour of a third person, at a higher pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liquidation process by issuance of public announcements on 30.10.2018 as it was carried, in the two newspapers namely, "The Hindu" (English) and "Sakshi" (Telugu-vernacular language) newspaper. In accordance with the compliance of the provisions contained under Section 33 (1)(a)(ii) of the Code to be read with Regulation 12 of (IBBI) Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, the claims were invited from the stakeholders which was directed to be submitted on or before 25.11.2018. viii. In continuation to the process of invitation of the claims, the liquidator had meticulously verified the claims submitted in accordance with the stipulations intended by Regulation 30 of the (liquidation process) regulations and had compiled the list of stakeholders, and the same was filed before the Ld. Tribunal on 05.01.2019. ix. Owing to certain shortcomings and discrepancies, though not very vital in nature, which could have at all affected the liquidation process at all, the list of stakeholders was modified for the first time on 27.05.2020. This aspect of modification of the list of stakeholders on 27.05.2020, will not have any bearing on the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d stipulation was contained in the communication made by the liquidator on 28.08.2020 to the present Appellant particularly that as contained in para 11 of the said communication which provided for the forfeiture clause. Relevant para 11 is extracted hereunder: - 11. In the event you are found to have made any misrepresentation, wrongful disclosure or misleading declaration of eligibility, this Letter of Intent may be revoked and on account of such revocation you shall have no right under this Letter of Intent and the Earnest Money and other monies deposited will be forfeited." Thus, according to the stipulations of the Letter of Intent (LoI) issued in favour of the Appellant on 28.08.2020, the Appellant was required to pay the balance amount of Rs. 346 Crores (Three Hundred and Forty-Six Crores) which is the balance amount for the sale of the Corporate Debtor, as a going concern, on or before 24.11.2020. xvii. Admittedly the appellant had defaulted, and was unable to keep up with the commitment made by the Appellant, in depositing the amount within the period of 90 days i.e. on or before 24.11.2020. The fact of having committed the default is admitted. xviii. The Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the knowledge of this Tribunal that, on account of default in making the payment despite of grant of extension of time and despite giving an undertaking to Ld. NCLT to make payment, the Respondent liquidator on 25.08.2021 had cancelled the sale of the Corporate Debtor to the Appellants with immediate effect and had forfeited the EMD amount of Rs. 5 Crores as per clause 11 of Letter of Intent issued by him even after the cancellation of the sale on 25.08.2021, the Appellant vide his communications of 17.09.2021, 07.10.2021, 29.11.2021, and by filing IA No. 260/2021 & IA No. 727/2021, had been consistently seeking extension of time to deposit the amount and the last extension which was sought for, was for the periods from 30.11.2021 to 30.01.2022 and from 31.01.2022 to 28.02.2022 to deposit the amount under the affirmation of the auction. But the said extension of time to deposit as sought by IA No. 727/2021, as filed on 29.11.2021 and by IA No. 114/2022 couldn't have been granted, because admittedly according to the Appellant, the sale as made in favour of the Appellant by the affirmation of auction on 26.08.2020, was cancelled on 25.08.2021, and after the cancellation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared as to be the successful bidder. Consequently, the liquidator issued a Letter of Intent on 08.01.2024, which was duly accepted by the Ld. Adjudicating Authority holding M/s. Kalyani Steel's limited, as to be the successful bidder with a quoted bid price of Rs. 450 Crores (Four Hundered and Fifty Crores) which was much higher than to the earlier bid price of Rs. 351 Crores (Three Hundered and Fifty One Crores) offered by the Appellant. xxvi. It is Appellant's own case, that the subsequent successful bidder, M/s. Kalyani Steels Limited had remitted the entire sale consideration of Rs. 450 Crores, after deducting the applicable TDS on 07.02.2024, including the EMD of Rs. 23 Crores. It is further an admitted case that consequent to, the Kalyani Steel Limited having been declared, as to be a successful bidder, in the sixth sale notice as issued on 09.12.2023 in compliance of the Ld. NCLT's order. The sale certificate has been issued on 10.02.2024, and the entire assets have been handed over to Kalyani Steel Limited and that a final report in regards thereto has been submitted, on 08.03.2024. xxvii. Lastly, after submission of the final report filed on 08.03.2024 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nafides to the bidder, who is ultimately declared as to be a successful bidder for sale of the assets of the Corporate Debtor and that the stipulation to deposit Earnest Money Deposit (EMD) in order to participate in the bidding process is to attach a sanctity to the participation so that the entire auctioning process may not be made as a farcical exercise. 9. We yet again make it clear, that there cannot be any dispute with regards to the argument extended by the Ld. Counsel for the Respondent, that there cannot be an extension of any period beyond the given 90 days for depositing the amount, after having been declared as to be a successful bidder, because that it defeats the very purpose and objective of the auction proceedings to find a bonafide purchaser. 10. Faced with this scenario, the Ld. Counsel for the Appellant, has ultimately confined herself to the plea of securing, the relief for refund of the EMD amount of Rs. 5 Crores, which the Appellant had deposited, at the time of submission of the bid document. 11. The Ld. Counsel for the Appellant, having now confined the argument limited to the extent of the refund of the EMD amount, as deposited by the Appellant has submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all result into any financial loss, to the Respondents for the reason that, they have already been paid Rs. 450 Crores (Four Hundered and Fifty Crores) in full, from the successful bidder, M/s. Kalyani Steels Limited. Accordingly she has contended that the amount of the earnest money deposited by the Appellant in 4th e-auction process, may at least permitted to be refunded back, especially in view of the situation which prevailed at the time when the Appellant has participated in the bidding process which was not a situation which was ever conceived of, at any point of time, because of which he was unable to deposit the required amount as during, the COVID-19 pandemic the economy not only of India, but also of the entire world had suffered and that, in view of the above, the EMD should not be permitted to be forfeited to the detriment to his interest for no fault of his. For the aforesaid purpose referred to the Judgment as reported in 2021 SCC Online SC page 3340 in the matter of Alisha Khan vs Indian Bank (Allahabad Bank) and others, where the Hon'ble Apex Court had considered that, owing to the situation prevailing due to Covid- 19, the earnest money should not be permitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of RBI to process the case as per their regulations in relation to investment in India by foreign investors. b) The Appellant had made all genuine efforts to deposit the amount, but he could not do so despite of extensions granted, because of the factors outside his control. Hence, he should not be saddled with the forfeiture of the entire EMD amount, which has been deposited by him as part of contract. As such taking a pragmatic view, and particularly in the light of the Judgment, of Alisha Khan, of (Supra), we hereby think it apt and fair that, in order to balance the equities without adversely affecting the interest of any of the parties to the appeal, 25% of the Rs. 5 Crores of EMD deposited by the Appellant, i.e. Rs. 1,25,00,000/- (One Crore Twenty Five Lakhs) is to be retained and the balance 75% of the EMD amount i.e. Rs. 3,75,00,000/- (Three Crores Seventy Five Lakhs) is to be refunded back to the Appellant, within one month from the date of service of the certified copy of this Judgment. c) The aforesaid Judgment is exclusively to balance the equity, owing to the COVID-19 situation and will not carry a precedence in future on an issue of the forfeiture of an amount, un ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
