Minor operational creditor with 0.54% share lacks standing to challenge asset sale under Section 61 IBC

The NCLAT dismissed appeals filed by a minor operational creditor holding 0.54% share challenging asset sale in CIRP proceedings. The court held the appellant lacked locus standi under Section 61 of IBC as they were not an aggrieved person. The appellant was represented through an operational creditor representative in the stakeholder consultation committee, made no objections to the draft report or valuation, and failed to intervene during earlier proceedings. Main stakeholders including financial creditors with 95% share raised no objections. The court found the e-auction sale followed due process with proper access to virtual data room provided to all bidders.

---

---

Issues Involved:
1. Approval of the sale of the Corporate Debtor as a going concern.
2. Grant of reliefs and concessions to the Successful Bidder.
3. Distribution of sale proceeds and other monies.
4. Locus standi of the Appellant to challenge the e-auction process.

Summary:

1. Approval of the sale of the Corporate Debtor as a going concern:
The Respondent No. 1 (Liquidator) and Respondent No. 2 (Successful Bidder) filed applications u/s 60(5) of the Insolvency and Bankruptcy Code, 2016 r/w Regulation 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 and Rule 11 of the NCLT Rules, 2016, seeking approval for the sale of the Corporate Debtor (Lanco Kondapalli Power Ltd.) as a going concern. The applications were partly allowed by the Adjudicating Authority, which approved the sale and granted certain waivers and concessions, but did not accept the request for a four-month period for the removal of specific assets.

2. Grant of reliefs and concessions to the Successful Bidder:
The Successful Bidder, Respondent No. 2, sought approval for the sale of the Corporate Debtor to its SPV and requested various reliefs and concessions. The Adjudicating Authority granted these reliefs and concessions as captured in Para 21 of the impugned order, but did not agree to the request for fixing a four-month period for asset removal.

3. Distribution of sale proceeds and other monies:
The Liquidator sought approval for the distribution of sale proceeds and other available monies in accordance with the law. The Adjudicating Authority granted this relief, as detailed in Para 23 of the impugned order.

4. Locus standi of the Appellant to challenge the e-auction process:
The Appellant, an Operational Creditor, challenged the e-auction process, alleging undervaluation of assets and non-compliance with value maximization principles. The Respondents raised preliminary objections regarding the Appellant's locus standi, arguing that the Appellant did not suffer any legal injury or infringement of vested rights. The Tribunal held that the Appellant, holding a minuscule share of 0.54%, lacked the locus standi to challenge the process, especially since the main stakeholders, including financial creditors with 97% share, did not raise any objections. The Tribunal also noted that the sale process followed due procedure and there was no error in selling the property to the sole bidder. Consequently, the appeals were dismissed without any order as to costs.

---