Tribunal allows withdrawal from e-auction, directs refund of Earnest Money Deposit.

The Tribunal allowed M/s. Lucky Holdings Private Limited to withdraw from the e-auction process of M/s. PSL Limited and directed the liquidator to refund the Earnest Money Deposit of Rs. 30 crores, retaining Rs. 5 lakhs for process costs. This decision was based on the liquidator's inability to deliver the assets due to the Enforcement Directorate's attachment, not attributable to the applicant. The Tribunal justified its jurisdiction under section 60(5)(C) of the IBC, 2016, to address the unique circumstances of the liquidation process.

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Issues Involved:
1. Withdrawal from the e-auction process.
2. Refund of the Earnest Money Deposit (EMD).
3. Impact of Enforcement Directorate's (ED) provisional attachment on the sale process.
4. Jurisdiction to permit withdrawal from the e-auction process.

Issue-wise
Detailed Analysis:

1. Withdrawal from the e-auction process:
The applicant, M/s. Lucky Holdings Private Limited, sought permission to withdraw from the e-auction process of M/s. PSL Limited, the corporate debtor, citing the liquidator's inability to hand over possession of the assets due to the ED's provisional attachment. The applicant argued that the corporate debtor's status had changed from a going concern to a closed unit, which was not the condition when they participated in the auction. The Tribunal noted that the liquidator was not in a position to hand over the assets due to the ED's attachment and allowed the applicant to withdraw from the e-auction process.

2. Refund of the Earnest Money Deposit (EMD):
The applicant requested a refund of the EMD of Rs. 30 crores deposited with the liquidator. The Tribunal considered the ruling in Popatrao Vyankatrao Patil v. State of Maharashtra, where the Supreme Court held that a bidder is entitled to a refund if the contract is frustrated due to reasons not attributable to the bidder. The Tribunal found that the delay and inability to hand over the assets were not attributable to the applicant. Therefore, the Tribunal directed the liquidator to refund the EMD, retaining Rs. 5 lakhs towards process costs.

3. Impact of Enforcement Directorate's (ED) provisional attachment on the sale process:
The liquidator had received summons from the ED to attach the assets of the corporate debtor under the PMLA Act, 2002. The liquidator challenged this in the Delhi High Court, which initially allowed the sale to proceed. However, the ED's subsequent provisional attachment order and the Division Bench's status quo order created uncertainty. The Tribunal noted that the applicant participated in the auction when no provisional attachment was in place and that the liquidator had given the impression that the assets were immune to PMLA proceedings. This situation was not attributable to the applicant, justifying their withdrawal and refund request.

4. Jurisdiction to permit withdrawal from the e-auction process:
The liquidator argued that allowing the applicant to withdraw would amount to a review of the Tribunal's earlier order confirming the sale, which is beyond its jurisdiction. The Tribunal distinguished this case from the cited precedents, noting that the application was under section 60(5)(C) of the IBC, 2016, dealing with liquidation processes. The Tribunal concluded that it had the jurisdiction to permit the withdrawal due to the liquidator's inability to deliver the assets as a going concern.

Conclusion:
The Tribunal allowed the applicant to withdraw from the e-auction process and directed the liquidator to refund the EMD of Rs. 30 crores with accrued interest, retaining Rs. 5 lakhs for process costs. The decision was based on the liquidator's inability to hand over the assets due to the ED's attachment, which was not attributable to the applicant. The Tribunal exercised its jurisdiction under section 60(5)(C) of the IBC, 2016, to address the specific circumstances of the liquidation process.

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