Successful bidder must honor terms in going concern sale. Unilateral changes invalid. No refund for rejected conditional offer.

The Tribunal held that in a going concern sale, the successful bidder must take over all assets and liabilities of the corporate debtor. Unilateral terms imposed by a bidder inconsistent with the bidding document were deemed invalid. The bidder was not entitled to withdraw from the bid or claim a refund of the Earnest Money Deposit (EMD) as their conditional offer was rejected, and force majeure did not apply. The liquidator was directed to issue a fresh invitation for the balance sale consideration, execute the transfer of assets upon full payment, and proceed with cancellation and forfeiture of EMD if the balance was not paid.

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Issues Involved:
1. Whether in a going concern sale, all the assets and liabilities are to be taken by the successful bidder as per Regulation 32-A of IBBI (Liquidation Process) Regulations, 2016Rs.
2. Can a bidder raise unilateral terms and conditions in the form of a conditional offer inconsistent with the terms in the bidding document publishedRs.
3. Can a successful bidder, upon writing a letter to the liquidator before the date of E-auction, stating that his bid is on the condition that other liabilities will not be foisted upon the bidder, amount to a conditional offer, and in case of non-acceptance of the said offer, is the bidder entitled to withdraw from the bid with a refund of EMD as claimedRs.

Detailed Analysis:

Issue 1: Transfer of Assets and Liabilities in a Going Concern Sale
The Tribunal examined whether a going concern sale includes the transfer of all assets and liabilities to the successful bidder. Regulation 32-A of the IBBI (Liquidation Process) Regulations, 2016, and Regulation 39-C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, were scrutinized. It was concluded that the sale as a going concern means the transfer of the corporate debtor with its assets and liabilities. This is supported by the IBBI Discussion Paper on Corporate Liquidation Process, which states that the corporate debtor will be transferred along with its business, assets, and liabilities, including all contracts and agreements. Therefore, the bidder must take over the corporate debtor with its existing liabilities.

Issue 2: Unilateral Terms and Conditions by a Bidder
The Tribunal addressed whether a bidder can impose unilateral terms inconsistent with the bidding document. The Tribunal found that the bidding document did not permit conditional offers. The bidder, Visisth Services Limited, had sought reliefs and waivers through a letter dated 04/09/2019, which were beyond the liquidator's powers to grant. The liquidator's reply on 05/09/2019 clarified that the terms of the bid could not be altered post-public notification. The Tribunal emphasized that a bidder cannot unilaterally alter the terms of a public auction, as supported by precedents like Air India Limited v. Cochin International Airport Limited and State of Punjab v. Devans Modern Breweries Ltd. Thus, the bidder's conditional offer was invalid.

Issue 3: Entitlement to Withdraw from the Bid and Refund of EMD
The Tribunal considered whether the bidder could withdraw from the bid and claim a refund of the EMD due to the alleged conditional offer and force majeure (COVID-19). The Tribunal found that the bidder's conditional offer was rejected by the liquidator, and the bidder had accepted the bid by depositing the EMD, thus binding the bidder to the terms of the bid. The declaration signed by the bidder confirmed unconditional acceptance of the bid terms. The Tribunal also noted that force majeure was not applicable as there was no agreement covering such extraordinary events. Consequently, the bidder was not entitled to withdraw from the bid or claim a refund of the EMD.

Orders:
1. The liquidator shall issue a fresh invitation to the bidder to provide the balance sale consideration within the stipulated time.
2. Upon payment of the full amount, the liquidator shall execute the certificate of sale or sale deed to transfer the assets as per the bidding document.
3. In case of failure to pay the balance sale consideration, the liquidator is at liberty to cancel the sale, forfeit the EMD, and proceed with the sale as per Regulation 32-A.

The unnumbered IA filed by Visisth Services Limited was dismissed, and the Interlocutory Application C.A. (IB) No. 1313/KB/2019 was disposed of accordingly.

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