TaxTMI 
TaxTMI 
2021 (12) TMI 82
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....e Mirzapur Asset of the Corporate Debtor which is the subject matter of the Appeal, has filed this Appeal and is seeking relief as stated below: "a) Set aside the order against the impugned order dated 12.08.2021 in I.A.(IB) No. 663/KB/2021 in CP(IB) 440/KB/2018 passed by the Ld. NCLT Kolkata Bench (Adjudicating Authority) at Kolkata; and/or b) Call for record from the Ld. Adjudicating Authority, Kolkata Bench at Kolkata in I.A (IB) No. 663/KB/2021 in CP(IB) 440/KB/2018; etc." 3. The Adjudicating Authority has allowed the I.A. filed by Respondent No. 1-EVA Agro Feeds Pvt. Ltd. observing the followings: a. He has not found irregularity in the e-auction process in terms of Regulation 33 and Schedule 1 of the IBBI (Liquidation Process) Regulations, 2016. b. He has also observed that there is no whiff of any short of collusion between the highest bidder and other bidders. c. There is no material in record to sustain the perception of the Liquidator that cancelling the present auction would have resulted in a better price for the assets in question. d. There cannot be endless wait to get the best price for assets especially when there is no material to support a conjecture ....
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....ght to carry on trade or business in country liquor. That right can be regulated only by imposing reasonable restrictions in the interest of the general public. It was further urged that the power retained by the Government to accept or to reject the highest bid without assigning any reason is an unguided power and hence it is violative of Article 14. These contentions were accepted by the High Court. To us, none of these contentions appear to be well founded. As seen earlier Section 22 of the Act confers power on the Government to grant to any person on such conditions and for such period as it may think fit the exclusive privilege of selling in retail any country liquor. Section 29 empowers the Government to accept payment of a sum in consideration for the grant of any exclusive privilege under Section 22 either by calling tenders or by auction or otherwise as it may by general or special Order direct. The powers conferred on the State Government by Section 22 and Section 29 are absolute powers. As seen earlier, the validity of those provisions has not been challenged before us. Under Section 29(2) the Government had power to dispose of any of the exclusive privileges mentioned i....
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....uded contract, it was open to the bidders to withdraw their bids - see Union of India v. Bhimsen Walaiti Ram [(1969) 3 SCC 146: (1970) 2 SCR 594]. By merely giving bids, the bidders had not acquired any vested rights. The fact that the Government was the seller does not change the legal position once its exclusive right to deal with those privileges is conceded. If the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant." Hon'ble Supreme Court in case of State of Jharkhand v. CWE-SOMA Consortium, (2016) 14 SCC 172: 2016 SCC OnLine SC 690 at page 177 wherein it is held that; "13. In case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender. After a tender is called for and on seeing the rates or the status of the contractors who have given tenders that there is no competition, the person issuing tender may decide not to enter into any contract and thereby cancel the tender. It is well settled that so long as the bid has not been accepted, the highest bidder acquires no vested right to have the auction concluded in his favour (v....
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....uccessful bidder shall have no claim to the land or building auctioned. (3) The payment of balance of the price/premium, rate of interest chargeable and the recovery of interest shall be in the same manner as provided in sub-regulations (6) and (7) of Regulation 5. (4) The general terms and conditions of the auction shall be such as may be framed by the Chief Administrator from time to time and announced to the public before auction on the spot." 14. We are fortified in our view by a decision of this Court in U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma [U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma, (2013) 5 SCC 182 : (2013) 2 SCC (Civ) 737] , wherein the questions arose for its consideration that : whether there is any vested right upon the plaintiff bidder until the bid is accepted by the competent Authority in relation to the property in question? Merely because the plaintiff is the highest bidder by depositing 20% of the bid amount without there being approval of the same by the competent Authority and it amounts to a concluded contract in relation to the plot in question; and whether the plaintiff could have maintained the suit in the absence of a conclude....
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....id amount along with the earnest money with the Board. In the absence of acceptance of bid offered by the plaintiff to the competent Authority of the first defendant, there is no concluded contract in respect of the plot in question, which is evident from letters dated 26-5-1977 and 8-7-1977 wherein the third defendant had rejected the bid amount deposited by the plaintiff and the same was refunded to him by way of demand draft, which is an undisputed fact and it is also not his case that the then Assistant Housing Commissioner who has conducted the public auction had accepted the bid of the plaintiff." (emphasis supplied) 6. Hon'ble Supreme Court in case of Meerut Development Authority Vs. Association of Management Studies (2009) 6 SCC 171 has held that tender conditions are not open to judicial scrutiny unless the action of tendering Authority is found to be malicious and misuse of statutory powers. Bidders participating in the tender process have no other right except the right to equality and fair treatment. The terms of the invitation to tender are not open to judicial scrutiny as they lie in the realm of contract. No bidder is entitled as a matter of right to insist the ....
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....this E-Auction Process information Document. ii) Clause 3(k) at pg. 49 - The Liquidator has absolute right to accept or reject any or all bids or adjourn / postpone / cancel the E-Auction or withdraw any asset / property or portion thereof from the E-Auction at any stage without assigning any reason thereof. iii) Clause 5(m) at pg. 51 of the Appeal Paper book - The Bidder with the highest offer / bid does not get any right to demand for acceptance of his bid." 10. It is necessary to go through Regulation 31A, 33 of the Liquidation Process Regulations and Schedule 1 of the Liquidation Process Regulations, given below for ready reference: Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 33. Mode of sale. (1) The Liquidator shall ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I. (2) The Liquidator may sell the assets of the corporate debtor by means of private sale in the manner specified in Schedule I when- (a) the asset is perishable; (b) the asset is likely to deteriorate in value significantly if not sold immediately; (c) the asset is sold at a price higher than the r....
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....3)(a) keeping in view the value of the asset intended to be sold by auction. (6) The Liquidator shall provide all assistance necessary for the conduct of due diligence by interested buyers. (7) The Liquidator shall sell the assets through an electronic auction on an online portal, if any, designated by the Board, where the interested buyers can register, bid and receive confirmation of the acceptance of their bid online. (8) If the Liquidator is of the opinion that a physical auction is likely to maximise the realisation from the sale of assets and is in the best interests of the creditors, he may sell assets through a physical auction after obtaining the permission of the Adjudicating Authority. The Liquidator may engage the services of qualified professional auctioneers specialising in auctioning such assets for this purpose. (9) An auction shall be transparent, and the highest bid at any given point shall be visible to the other bidders. (10) If the Liquidator is of the opinion that an auction where bid amounts are not visible is likely to maximise realisations from the sale of assets and is in the best interests of the creditors, he may apply, in writing, to the ....
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.... directors and guarantors of the corporate debtor; (c) displayed on the website, if any, of the corporate debtor. [(d) filed on the electronic platform of the Board for dissemination on its website: Provided that this clause shall apply to every liquidation process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021.] [31-A. Stakeholders' consultation committee.- [(1) The Liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under Regulation 31, to advise him on matters relating to- (a) appointment of professionals and their remuneration under Regulation 7; (b) sale under Regulation 32, including manner of sale, pre-bid qualifications, reserve price, amount of earnest money deposit, and marketing strategy: Provided that the decision(s) taken by the Liquidator prior to the constitution of consultation committee shall be placed before the consultation committee for information in its first meeting.] (2) The composition of the consultation committee u....
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....tee. (7) The Liquidator shall chair the meetings of consultation committee and record deliberations of the meeting. (8) The Liquidator shall place the recommendation of committee of creditors made under sub-regulation (1) of Regulation 39-C of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, before the consultation committee for its information. (9) The consultation committee shall advise the Liquidator, by a vote of not less than sixty-six percent of the representatives of the consultation committee, present and voting.(10) The advice of the consultation committee shall not be binding on the Liquidator: Provided that where the Liquidator takes a decision different from the advice given by the consultation committee, he shall record the reasons for the same in writing [and mention it in the next progress report].] 11. Regulation 33(3) of the Liquidation Process Regulation casts a duty upon the Liquidator not to proceed with the sale in the circumstances mentioned therein. Regulation 33(3) is not an exhaustive provision applicable only in the specific circumstances stated therein. Thus, it cannot be sai....
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....No. 1, being the highest bidder (sole) that too at the reserve price, had no vested right in law. 16. The learned Adjudicating Authority in the impugned judgement and Order dated 12 August 2021 has only relied upon clause 12 of Schedule 1 of the Regulations 2016 to hold that clause 12 does not vest any discretion in the learned Liquidator to cancel the auction. However, while arriving at the above conclusion, the Learned Adjudicating Authority has failed to consider that clause 11 of the Schedule 1 authorises the Liquidator to conduct multiple rounds of the auction to maximise the realisation from the sale of assets and promote the creditors' best interest. Therefore, unless the power to cancel the auction is read into the conjoint reading of clauses 11, 12 and 13, the provisions in Clause 11 cannot be implemented. 17. An auction sale is not completed under Clause 12 merely because the person has been declared the highest bidder. Instead, the sale is concluded only on full payment of the amount envisaged under Clause 13 of Schedule 1. 18. Therefore, given the settled position in law as stated above, the learned Liquidator in a stage between Clause 12 and Clause 13 of Schedul....