TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal Upholds Bidder Eligibility Criteria in E-Auction Decision, Emphasizes Payment Capacity</h1> <h3>Oriental Bank of Commerce Versus KMG A to Z System Pvt. Ltd.</h3> The Tribunal upheld the eligibility criteria for bidders in the e-auction, emphasizing the importance of ensuring participants' capacity to make payments. ... Seeking participation in e-auction - Section 60(5) of the IBC, read with Rule 11 of the IBC - HELD THAT:- The tender document clearly specified the eligibility criteria at Clause 1.15, stating that the Individual/Partnership firm, HUF, LLP or any company, which is three years old with Turnover of Rs. 20.00 Cr. and Net Worth of Rs. 03.00 Cr. for each set of Land & Building. It clearly states that no such condition will apply to plant and machinery and other moveable assets. This eligibility criteria according to the Liquidator has been fixed on the basis of the minutes of the meeting held by the Stakeholders Consultation Committee (SCC), which is also based on in the documents relied by the applicant namely Discussion Paper. Hon'ble Appellate Tribunal and higher forums have been repeatedly requesting this Tribunal to take up cases on priority basis, where several home buyers, individual companies and IBC proceedings require time of the Tribunal but this applicant chooses to file an application of this nature, knowing the consequences and wants the luxury of being heard by this Tribunal at length. The application therefore requires to be rejected with proportionate cost for pursuing such a claim and making such untenable plea before this Tribunal which is likely to stall the auction proceedings to be held at 03:00 P.M. today. Application dismissed. The pre-bid qualification is the eligibility criteria of the bidders, as specified by the Stakeholders Consultation Committee, which is binding on the Liquidator. The faint argument of Mr. Rakesh Kumar, Ld. Counsel for the applicant, that pre-bid qualification will not bind the bidders, is totally misconceived because in all these cases the eligibility criteria of bidders is an essential component for bidding process, otherwise, it will lead to all and sundry participating in the bid process, which will only jeopardise the Liquidator's endeavour to maximise the value of the asset of the corporate debtor in liquidation - Issues Involved:1. Eligibility criteria for bidders in the e-auction.2. Applicant's participation in the e-auction.3. Pre-bid qualification conditions.4. Procedural fairness and rectification of email error.Issue-wise Detailed Analysis:1. Eligibility Criteria for Bidders in the E-Auction:The primary issue revolves around the eligibility criteria specified in the tender document, particularly Clause 1.15, which mandates that bidders must have a turnover of Rs. 20 Cr. and a net worth of Rs. 3 Cr. for each set of industrial land and building. The applicant contended that this condition was unfair and contrary to the objective of maximizing asset value in the liquidation process. However, the Tribunal upheld the eligibility criteria, noting that it was established by the Stakeholders Consultation Committee (SCC) to ensure bidders' capacity to participate and make payments. The Tribunal emphasized that this criterion was binding and essential to prevent unqualified participants from jeopardizing the auction process.2. Applicant's Participation in the E-Auction:The applicant sought directions to participate in the e-auction for two properties, arguing that they met the eligibility criteria collectively for both properties. The Liquidator initially rejected the applicant's bid due to an email error but later allowed participation for one property after rectifying the mistake. The Tribunal found no prejudice against the applicant as the rectification was done promptly, and participation for one property was confirmed. The Tribunal dismissed the applicant's plea to participate in both properties, citing the clear terms of the eligibility criteria and the applicant's failure to challenge these terms appropriately.3. Pre-bid Qualification Conditions:The applicant argued that the pre-bid qualification conditions were unreasonable and contrary to a discussion paper by the Insolvency and Bankruptcy Board of India (IBBI). The Tribunal rejected this argument, stating that the eligibility criteria were essential to ensure serious and capable bidders. It referred to Regulation 33 of the IBBI (Liquidation Process) Regulations, 2016, which allows the Liquidator to set pre-bid qualifications. The Tribunal found that the criteria did not inhibit participation but rather ensured the integrity and success of the auction process.4. Procedural Fairness and Rectification of Email Error:The Tribunal addressed the procedural fairness concerning the email error where the Liquidator's email to the applicant contained a typo, leading to non-receipt. The error was rectified the next day, and the applicant was given time to resubmit documents. The Tribunal concluded that no prejudice was caused to the applicant due to this rectification and subsequent confirmation of eligibility for one property. The Tribunal criticized the applicant for not amending their prayer to reflect the Liquidator's rectification and for wasting the Tribunal's time with an untenable claim.Conclusion:The Tribunal dismissed the application, emphasizing the importance of adhering to established eligibility criteria and the applicant's failure to challenge these criteria appropriately. The Tribunal imposed a cost of Rs. 9,00,000 on the applicant for pursuing a baseless claim and consuming the Tribunal's time, directing the amount to be deposited in the Prime Minister's Relief Fund within 15 days.
TaxTMI 
TaxTMI 
