2021 (11) TMI 1205 - Tri - IBC

Promoter fails to halt e-auction as liquidator's process deemed proper under IBC provisions

V.S. Palanivel, Share Holder/Ex-Managing Director Sri Lakshmi Hotels Pvt. Ltd. Versus P. Sriram Liquidator Sri Lakshmi Hotels Pvt. Ltd. and Ors.

V.S. Palanivel, Share Holder/Ex-Managing Director Sri Lakshmi Hotels Pvt. Ltd. Versus P. Sriram Liquidator Sri Lakshmi Hotels Pvt. Ltd. and Ors. - TMI Issues Involved:1. Validity of e-auction conducted on 23.12.2019.2. Request to divide and sell a portion of the property.3. Request for sufficient time to make payment to the Financial Creditor.4. Setting aside the sale deed dated 28.08.2020.5. Request to recall the order dated 05.05.2020.6. Claim for damages and costs of the proceedings.Issue-wise Detailed Analysis:1. Validity of e-auction conducted on 23.12.2019:The applicant sought to stall further proceedings related to the e-auction conducted on 23.12.2019. The tribunal found that the Liquidator had adhered to the provisions and timelines prescribed under the Insolvency and Bankruptcy Code (IBC), 2016. The e-auction process was conducted properly, and the successful bidder was informed. The tribunal concluded that the grounds raised by the applicant were frivolous and not sustainable in law.2. Request to divide and sell a portion of the property:The applicant suggested selling a portion of the property to meet the financial demand. The tribunal noted that the property was sold for Rs. 29.35 Crore, which was sufficient to meet the outstanding liabilities of the Corporate Debtor. The remaining amount would be distributed according to the waterfall mechanism under IBC, 2016. The tribunal did not find any merit in the applicant's suggestion to divide the property.3. Request for sufficient time to make payment to the Financial Creditor:The applicant requested more time to make payment to the Financial Creditor. The tribunal observed that the Liquidator had already conducted the e-auction and the sale process was complete. The balance sale consideration was deposited by the successful bidder, and the sale deed was executed. The tribunal dismissed the request for additional time as the process had already been completed.4. Setting aside the sale deed dated 28.08.2020:The applicant sought to set aside the sale deed dated 28.08.2020. The tribunal found that the applicant had not challenged the first e-auction sale notice or the order of the Liquidator for issuing the second e-auction sale notice. The tribunal held that the sale deed executed by the Liquidator was valid and dismissed the request to set it aside.5. Request to recall the order dated 05.05.2020:The applicant requested to recall the order dated 05.05.2020. The tribunal referred to the Hon'ble Supreme Court's rulings, stating that quasi-judicial authorities cannot review their own orders. The tribunal emphasized that there is no express provision for review under the National Company Law Appellate Tribunal Rules, 2016. The appropriate remedy for the aggrieved person is to file an appeal. The tribunal dismissed the request to recall the order.6. Claim for damages and costs of the proceedings:The applicant sought damages for undue hardship and mental agony, along with the costs of the proceedings. The tribunal found no violation committed by the Liquidator and concluded that the Liquidator had acted according to the Act and Regulations of IBC and IBBI. The tribunal dismissed the claim for damages and costs.Conclusion:The tribunal dismissed both MA/120/2020 and SR/944/2020 applications, finding no legal infirmities in the actions of the Liquidator. The tribunal emphasized that the Liquidator had followed due process under IBC, 2016, and the applicant's grounds were not sustainable in the eye of law. No costs were awarded.