Tribunal: No Violation of Insolvency Code in E-Auction Bidder Selection

The Tribunal ruled that the successful bidder in the 3rd E-auction process for IVRCL Ltd. did not violate Section 29A of the Insolvency and Bankruptcy Code, 2016, as alleged by the Applicant. The Applicant lacked standing to challenge the auction process due to not participating in it. Allegations of collusion and manipulation were dismissed, with the Tribunal finding no evidence to support them. The applications were rejected, and no costs were awarded.

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Issues Involved:
1. Legality of the 3rd E-auction process and compliance with Section 29A of the Insolvency and Bankruptcy Code, 2016.
2. Applicant's locus standi to challenge the auction process.
3. Allegations of collusion and manipulation in the auction process.

Detailed Analysis:

1. Legality of the 3rd E-auction Process and Compliance with Section 29A of the Insolvency and Bankruptcy Code, 2016:

The Applicant sought to declare the 3rd E-auction process initiated for the sale of IVRCL Ltd. as arbitrary, illegal, and violative of Section 29(A) of the Insolvency and Bankruptcy Code, 2016. The Applicant contended that the successful bidder, Sri Ponguleti Prasad Reddy, is closely related to the promoters of IVRCL Ltd., thereby violating Section 29A, which prohibits related parties from participating in the bidding process. The Tribunal reviewed the relationship and found that Sri Ponguleti Prasad Reddy did not fall within the ambit of ineligibility under Section 29A. The Tribunal noted that the Liquidator had undertaken due diligence and concluded that the successful bidders were not in violation of Section 29A.

2. Applicant's Locus Standi to Challenge the Auction Process:

The Respondent argued that the Applicant had no locus standi to file the application as they did not submit a bid or the required documents and EMD within the stipulated time. The Tribunal agreed, stating that the Applicant, having failed to participate in the auction process, had no standing to challenge it. The Tribunal emphasized that the Applicant's attempt to challenge the process was an effort to make a backdoor entry and stall the liquidation process.

3. Allegations of Collusion and Manipulation in the Auction Process:

The Applicant alleged that the auction process was manipulated to favor the successful bidder, who is related to the promoters of IVRCL Ltd. The Applicant claimed that the Liquidator engaged in secret meetings and did not announce the bid results as per the published schedule. The Respondent countered these allegations, stating that the successful bidders submitted all required documents and EMD within the timeline, and the bid result announcement was done in accordance with the auction process document. The Tribunal found no evidence to support the Applicant's allegations of collusion and manipulation.

Conclusion:

The Tribunal concluded that the successful bidders were not covered under Section 29A of the Code and that the Applicant, having failed to participate in the auction process, had no locus standi to maintain the application. Consequently, the applications bearing I.A. No. 51 & 52 of 2022 were rejected, with no order as to costs.

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