TaxTMI 
TaxTMI 
2022 (1) TMI 460
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....with C.P.(IB) No.-898/KB/2018. By the Impugned Order, the Adjudicating Authority has dismissed the Application preferred by the Appellant and also disposed of the Application CA (IB) No. 1313/KB/2019 filed by the Liquidator with the following directions: "i). The Liquidator shall issue fresh invitation to the bidder to provide balance sale consideration within such time as per clause (12) of Schedule I of Regulation 33; ii). In case of payment of the full amount the liquidator shall execute certificate of sale or sale deed to transfer the assets in the manner specified in the terms of sale as per bidding document following clause (13) of the Schedule I of Regulation 33; iii). In case of failure to pay the balance sale consideration he is at the liberty to cancel the sale in favour of the bidder by forfeiting the EMD and the amount paid towards the price of biding document and to proceed with sale as per Regulation 32-A; (Emphasis Supplied) 2. The facts in Brief are as follows: * On 12.10.2018, an Application under Section 10 of the Code filed by the Corporate Debtor was admitted by the Adjudicating Authority. On 19.07.2019, an Order o....
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.....09.2019, a detailed email was addressed to the Liquidator seeking clarifications to facilitate the Appellant's participation and e-Auction Process. The Learned Counsel submitted that these queries pertain to the claims and liabilities of the Corporate Debtor such as charges over the assets, outstanding statutory dues to the Tax Authorities, Electricity Authorities, etc. It is submitted that the Appellant made it amply clear that it could be willing to participate in the e-Auction only if the liabilities attached to the units of the Corporate Debtor, both statutory and non-statutory in nature, were clarified and dispensed with and/or extinguished on the completion of the liquidation process. Different payment terms were also proposed and these conditional terms formed part of the multiple subsequent correspondence issued by the Appellant to the Liquidator, including the letter dated 06.09.2019. * The terms of the Bid laid down in the Bid document are not absolute and only an intimation to offer. The intending purchaser is at liberty to negotiate and agree upon the terms subject to which the offer will be made. In support of his contention, the Learned Counsel relied on the....
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....will be permitted to make unlawful gains and unjustly enrich at the expense of the Appellant. 4. Submissions of the Learned Counsel appearing on behalf of the first Respondent /Liquidator: * It is contended that the Appellant after payment of EMD, wrote a letter to the Liquidator on 06.09.2019 that the sale of the Corporate Debtor Company should be transferred without any liabilities. The Appellant was aware of the fact that the sale of the assets of the Corporate Debtor included its liabilities as the sale was on an 'as is very basis'. Learned Counsel to buttress his arguments placed reliance on the Judgement of this Tribunal in 'Tarun International Ltd. Vs. Mr. Vikram Bajaj', Company Appeal (AT) Ins. No. 1194 of 2019 dated 03.03.2021. * The e-Auction Process Information Document clearly states that the sale of the Corporate Debtor Company was on 'as is very basis'. It is also submitted that the Appellant was involved in the CIRP process where it was the Unsuccessful Resolution Applicant and thus was aware of the liabilities attached to the assets of the Corporate Debtor. * The Liquidator in its response dated 05.01.2020 to the email sent by the Appel....
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....he Appellant has no right to make any claim in as much as it has failed to put in the subsequent due, less EMD deposit towards the sale consideration within the time frame of 90 days as per clause 12 of Schedule 1 of the Liquidation Process Regulations, 2016. The Learned Counsel drew our attention to the Bid Document amount and the terms and conditions of the proposed sale in support of his arguments. Assessment: 6. The Issues which arise in this Appeal for consideration are: a. Whether sale of Corporate Debtor as a 'Going Concern, in Liquidation Proceedings includes its liabilities; b. Whether the Appellant herein can withdraw from the Bid after payment of the EMD and seek for refund of the amount paid on the ground that the offer made by the Bidder was a 'conditional offer'. 7. Regulation 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 reads as follows: "32A. Sale as a going concern. 1. Where the committee of creditors has recommended sale under clause (e) or (f) or regulation 32 or where the liquidator is of the opinion that sale under clause (e) or (f) of regulation 32 shall maximise the va....
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.... of shares by the CD being sold to the extent of the share capital. The existing shareholders will become claimants from liquidation proceeds under section 53 of the Code. 3.2.2 Sale under regulation 32(f): The business(s) along with assets and liabilities, including intangibles, will be transferred as a going concern to the acquirer, without transfer of the CD, and therefore, the CD will be dissolved. The existing shares will be extinguished. The remaining assets, other than those sold as part of business will be sold and the proceeds thereof will be used to meet the claims under section 53 of the Code. ........ 4.2 Should 'Going Concern Sale' be defined? 4.2.1. The term is well understood in legal parlance. The jurisprudence in this regard is fairly well-developed out of the erstwhile liquidation regime under the Companies Act, 1956. The Code recognises 'going concern' and envisages resolution as a 'going concern' but does not define it. It has been in vogue for more than two years and has not caused any difficulty. The Insolvency Law Committee in its report dated 26th March, 2016 noted that the phrase "as a going concern" implies that the CD w....
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....s, group companies and/or their respective affiliates /associates). However, it is clarified that all claims of the Company against such related parties (and all Liabilities of such related parties towards the Company) shall remain outstanding due and payable to the successful bidder in accordance with their terms. Any Liabilities, claims, demands, capital contributions or any other form of financial commitment; including but not limited to pledge of shares or any security interest created or provided, whether guaranteed or contractually agreed in writing or otherwise by the Company on behalf of or for its subsidiary companies, associate companies, Group companies and / or their respective Affiliates, shareholders/associates; as the case may be, which are in existence prior to the Closing Date and which may be invoked prior to the Closing date or at any time thereafter, shall stand irrevocably and unconditionally waived and extinguished. 2. We propose the following payment terms if we are chosen as the successful bidder in the following manner: Rs. 42 lacs upfront as EMD and purchase of bidding document 50% of the remaining successful bid amount ....
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....ty for any specific purpose or use. It should be clearly understood that no claim/complaint about the quality/conditions/fitness for use will be entertained by the Liquidator. 13. The submission of the bid means and implies that the Applicant has read carefully and unconditionally and irrevocably agreed to and accepted all the terms and conditions laid herein. 14. Bids once submitted cannot be withdrawn or revised. 15. The Liquidator reserves the right to accept or reject any/or all the bids or adjourn, postpone or cancel the auction sale anytime without assigning any reason thereon. Any notice of such adjournment/ postponement/ cancellation of the auction sale shall be published on the website https://ncltauction.acutiontigernet. ........" (Emphasis Supplied) 15. Clauses detailed above show that Applicant has accepted all the terms and conditions and cannot revise the same. The Bid Document also specifies under the heading 'Costs, Expenses and Tax Implications' that payment of all statutory and non-statutory dues, taxes, rates, assessments, charges, fees, owed by the Corporate Debtor to anybody in respect of the subject property shal....
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....ration signed, the Appellant-Bidder unconditionally agreed to abide by the terms of the e-Auction which is inclusive of forfeiture of the EMD, in the event the Bidder did not perform their part of obligation after the acceptance of the Bid in their favour. The acceptance was conveyed to the Bidder on 25.09.2019. Clearly noting the terms and conditions that the Company was being sold as a 'Going Concern in an as is very basis', the Bidder cannot now be permitted to turn around and plead that their offer was conditional. The Hon'ble Supreme Court of India in 'Pawan Kumar Agarwal Vs. Association of Management Studies and Anr.; Meerut Development Authority 2009(6) SCC 171 has observed in Paragraph 26 as follows: "26. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is establ....
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.... "as-is-where-is" basis and after having accepted the terms and conditions of the allotment letter, including instalment facility for payment, the respondents cannot say that they are not bound by the terms and conditions of the auction notice, as well as that of the allotment letter. On facts, we have found that there was no inordinate delay on the part of PUDA in providing those facilities. 18. We are of the view that the High Court was not justified in holding that the respondents are not liable to pay the interest, penal interest and penalty for the period commencing from 1-6-2001 to 31-12-2002 for the belated payment of instalments. Consequently, the judgments of the High Court are set aside and the writ petitions would stand dismissed and the appeals would stand allowed as above. There will be no order as to costs." (Emphasis Supplied) 18. Keeping in view the ratio laid down by Hon'ble Supreme Court of India in a catena of Judgments that the Bidder cannot wriggle out of the contractual obligations arising out of acceptance of his Bid and also having regard to Regulations 32A and the scope and objective of the Code together with the Principle laid down by ....