AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2022 (8) TMI 835
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal' in I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 to rely on the pleadings, in regard to the subject matter of the instant proceedings. The Appellant/Applicant had engaged KPMG Assurance and Consulting Services LLP ('KPMG') for the ambit of work Viz., (i) in reviewing the documents and electronically stored information available with the client, as regards the 'Auction' and 'Bidding Process', (ii) in reviewing the documents given by the Liquidator, as part of the ongoing 'litigation process', (iii) in reviewing the supporting documentation, logs and metadata to identify potential instances of bid rigging or manipulation in the auction process (iv) to perform document review procedures and attempt to identify misrepresentation, if any. (v) in reviewing the System general 'Auction Logs', 'User Logs' and analysis of all relevant Data generated from 'Auction Website' and (vi) to provide a 'Fact Finding Report Basis Review' conducted, to be submitted to this 'Appellate Tribunal' as part of the 'Litigation Proceedings'. 2. The Learned Counsel for the Applicant / Appellant submits that the 'KPMG' was engaged by the 'Appellant' for its 'Expert Review and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....given case. 7. A mere assertion in the 'Application'/'Petition' is not good enough to establish that inspite of due diligence, additional evidence could not be produced / filed before the 'Adjudicating Authority'. If no satisfactory explanation is offered for non-production of additional documents before the 'Appellate Authority', then, the 'Interlocutory Application' is liable to be dismissed. 8. If the 'Appellate Tribunal' can determine the 'Appeal' (based on the available materials on record), without the production of the 'Additional Documents' / 'Additional Evidence', in a given case, and pronounced its judgment, then, the Interlocutory Application for letting in additional documents in a given proceeding before the 'Appellate Tribunal', does not arise. 9. As far as the present case is concerned, this 'Tribunal' on a careful consideration, respective contentions, keeping in mind of the 'Report' dated 20.03.2021 of M/s. Tata Communications and the Independent Auditor's Report dated 24.04.2021, are from 'Third Parties' and these additional materials admittedly have come into existence, after the 'impugned order' dated 18.03.2021, passed by the 'Adjudicating Authority', ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e screen has also been shared as "you are screen sharing" is being displayed at the top of the page. As rightly pointed out by the Respondents namely, R2 and R3 the snapshots evidence which has been predominantly produced being system generated by the Applicant to sustain its plea that the auction itself has been closed at the time viz., 05:43:17 hour IST is not supported by a certificate as required under the provisions of Section 65-B (4) of the Indian Evidence Act, 1872. 47. In fact, none of the screenshots which are system generated as relied before this Tribunal by the Applicant is supported by the certificate as are mandatory under the provisions of Section 65-B (4) of the Indian Evidence Act, 1872 which it is required of, in order to place reliance, as held by the Hon'ble Supreme Court in the decision of Arjun Panditrao Khotkar -vs- Kailash Kushanrao Gorantyal (2020) 7 SCC 1. Further, the Hon'ble Supreme Court also held in Anvar P.V - vs - P.K. Basheer (2014) 10 SCC 473, a certificate must accompany the electronic record like computer printout, compact disc, video compact disc, pendrive, etc., when the same is relied upon as an evidence. 48. Even perusal of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e auction screen during the active auction session should not be shared with the third party application, however, in the instant case "ZOOM" sharing of screen is seen to have been carried which also gives a scope for internet connectivity issue as rightly contended by R2 which makes the connectivity not seamless which it is required of, particularly during the E-auction process of the nature involved presently before this Tribunal as these are commercial transactions of high value and hence it is required of the Applicant to be vigilant. 53. In the circumstances, it is for the Applicant to have its connectivity of its system to be constantly logged in into the Eauction of the process and portal consistently and remained continuously vigil and not to have logged out at any point of time. Further, the Applicant it also seen that for a long time (in view of the E-auction process) where minutes matter, had not been reacting as referred to in paragraph supra and the Applicant being a bidder is not required to wait till last moment just before the expiry of five minutes duration within which the bids are required to be refreshed, in view of any connectivity issue or any technic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is found that the offer of Rs. 32 crores was a fair offer in a competitive bid conducted fairly and the offer has been accepted and the sale confirmed, it would not be proper for this court to undermine the value of such auction sale conducted not only by the secured creditor but also by the Official Liquidator who was permitted to be associated with the whole process of finding out of valuation as well as the conduct of sale. M/s. Venus Realcon has rightly placed reliance upon the judgments of this court in the case of Valji Khimji & Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. MANU/SC/3408/2008 : 2008 (9) SCC 299 and Vedica Procon Private Limited v. Balleshwar Greens P. Ltd. MANU/SC/0870/2015 : 2015 (8) SCALE 713. In Valji Khimji, the law was enunciated in Paragraph 28 in the following words: "If it is held that every confirmed sale can be set aside the result would be that no auction-sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. It could have been a different matter if the auction had been held without adequate publicity in well-known newspapers having wide circulatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... part of the Respondents." and was constrained to dismiss the 'Application', but without costs. Appellant's contentions: 12. According to the Learned Senior Counsel for the Appellant/Applicant, the 'Adjudicating Authority' had erroneously dismissed the IA/74/2021 in CP/508/IB/2017 (Filed by the Applicant/Appellant under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 ('IBC'), read with Regulation 33 (1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 ('Liquidation Regulations') read with Rule 11 of the National Company Law Tribunal Rules, 2016. 13. It is represented on behalf of the Appellant/Applicant that, the Applicant/Appellant was declared as 'H1 Successful Bidder' with the highest bid on the date of the e-auction, i.e., on 21.01.2021, when the eauction was closed at 17.42 hours and that the 1st Respondent (Liquidator) had refused to act on the result of the auction and contended that there was a higher bid received at 17.41 hours after the last bid of the Appellant at 17.37 hours (which alleged higher bid of the 3rd Respondent who was not visible to the Appellant on the e-auction portal), in the event a higher bid ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 2nd Respondent in its Counter Affidavit nowhere stated that the Appellant was logged out for 20 minutes, as was mentioned in the 'impugned order'. In fact, the 2nd Respondent had admitted that higher bid of the 3rd Respondent might not have been visible to the Appellant. 18. The categorical plea projected on the side of the Appellant is that, there is no evidence to contradict its position that the purported bid of the 3rd Respondent was visible to the Appellant, when it was placed at 17.41 hours on 21.01.2021. Apart from that, in the absence of evidence, withholding the best evidence in the light of evidence produced by the Appellant including the 'Project Pursuit Report by KPMG', any proof and in the interest of the integrity of the process, the 1st Respondent should have held a further auction between the Appellant and the 3rd Respondent, especially, when the Appellant was ready and willing to outbid the 3rd Respondent by increasing its bid amount substantially. 19. The Learned Counsel for the Appellant adverts to Clause 11 to Schedule I of Regulations 33 of the Liquidation Regulations which provides that 'the Liquidator may conduct multiple rounds of auctions to maximi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s'. In fact, the highest bid purportedly, placed at 17.41 hours by the 3rd Respondent was really visible to all the 'Bidders' in the normal course, was not provided by the 2nd Respondent and the 'live recording' was not volunteered by the 2nd Respondent to produce the same before this 'Tribunal', for its benefits. 24. The Learned Counsel for the Appellant comes out with a stand the 2nd Respondent produces the purported log reports which show the 'login' and 'logout' reports maintained in the 2nd Respondent System which cannot be verified by anyone and cannot be relied upon. Indeed, the 2nd Respondent continues to rely upon a 'Demo' annexed as 'Annexure R2 and R3' to the Counter Affidavit and the said 'Demo' was produced before the 'Adjudicating Authority' and in fact, there is no proof at all, on what actually transpired on that day. 25. It is represented on behalf of the Appellant that the 'Report' of the 'Tata Communications' shows that the Internet Connectivity to the Appellant had no issues on 21.01.2021 at the time of 'e-bidding'. 26. The Learned Counsel for the Appellant adverts to the inconsistencies in the 'Reports' of the 2nd Respondent to the effect that; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inkstar to the 'NCLT', raise concerns on the integrity of the entire eauction process and credibility of the reports. Further, the screenshots taken by 'Startree' raise additional doubts on the 'integrity' of the 'Auction Process'. 28. The Learned Counsel for the Appellant brings it to the notice of this 'Tribunal' that in the 'E-auction Process' document, nowhere provides any such requirement for refreshing the e-auction page and also that the 2nd Respondent's 'E-auction Portal' had not given any 'Notification' to the 'Appellant' for 'Automatic Log Out', during the 'Eauction Process'. 29. Added further, that it is the version of the Appellant that the times stamp on the e-auction page was running, as evident from the 'screenshot' filed by the 'Appellant' and there was no explanation as to how the time was running on the e-auction page as was captured by the Appellant which ultimately showed that after five minutes of 17.37 hours, the eauction had closed at 17:42 hours, the Appellant being the highest bidder. 30. According to the Appellant, the 2nd Respondent does not say that a 'Bidder' is notified if it is automatically 'logged out' and in fact, the Liquidator has not chall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld be put to auction should have directed auction by public sale instead of confining it to two persons alone. Since there was want of publicity and there was lack of opportunity to the public to take part in the auction the acceptance of the highest bid by the learned Judge was not a sound exercise of discretion. It is contended on behalf of the appellant that confirmation was discretionary with the Court and the Division Bench ought not to have interfered with the discretion exercised by the Company Judge. It is true that the discretion exercised by the Judge ought not to be interfered with unless the Judge has gone wrong on principle. As already pointed out the learned Company Judge having decided to put the property to auction went wrong in not holding the auction as a public auction after due publicity and this has resulted in prejudice to the Company and the creditors in that the auction did not fetch adequate price. The prejudice was inherent in the method adopted. The petition of Padam Chand Agarwal also suggests that want of publicity had resulted in prejudice. In these circumstances the Company Judge ought not to have confirmed the bid of the appellant in the au....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the Court may prevent, to some extent, underbidding at the time of auction through Court." (emphasis supplied) 37. In the present case, it was alleged that there were several irregularities in the first auction. The tender notice did not state valuation of movable and immovable property; reserve price was not fixed, inventory of plant and machinery was not made available, etc. If on consideration of these facts, the Company Judge ordered fresh auction, in our considered opinion, no complaint can be made against such action." [Emphasis Added] 38. The Learned Counsel for the Appellant seeks in aid of the decision of the Hon'ble Supreme Court in Divya Mfg. Co. (P) Ltd. V Union Bank of India (2000) (6) SCC at page 69 at Spl. Page 78, wherein at paragraph 13, it is observed as under: 13. "From the aforesaid observation, it is abundantly clear that the Court is the custodian of the interests of the Company and its creditors. Hence, it is the dut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmed. As stated above, neither the possession of the property nor the sale deed was executed in favour of the appellant. The offer of Rs.1.30 crores is totally inadequate in comparison to the offer of Rs.2 crores and in case where such higher price is offered, it would be in the interest of the Company and its creditors to set aside the sale. This may cause some inconvenience or loss to the highest bidder but that cannot be helped in view of the fact that such sales are conducted in Court precincts and not by a business house well versed with the market forces and price. Confirmation of the sale by a Court at a grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the Court may prevent, to some extent, underbidding at the time of auction through Court. In the present case, the Court has reviewed its exercise of judicial discretion within a shortest time." [Emphasis Added] 40. The Learned Counsel for the Appellant refers to the decision of the Hon'ble Supreme Court of Indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... conduct of a party was not fair, the same, by itself, cannot be a ground to adopt a procedure which is unjust or unfair, particularly, when by reason thereof, not only the Company itself but also other creditors are seriously prejudiced. We fail to see any reason as to why the hearing of the case was to be preponed. Why even a day's time could not have been granted when a prayer for adjournment was made. The jurisdiction of the Company Court is vast and wide. It can mould its reliefs. It may exercise one jurisdiction or the other. It may grant a variety of reliefs to the parties before it. The parties before the Company Judge are not only the Company or the creditors who had initiated the proceedings but also others who have something to do therewith. Even in a given case a larger public interest may have to be kept in mind. The court may direct winding up. It may prepare a scheme for its restructuring. 77. We, therefore, are of the opinion that the Company Judge was not correct in its view and passed the impugned judgments only having regard to the wrongful conduct on the part of the appellant in obtaining an award from the Conciliation Tribunal or failure to bring a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the party which makes a factual averment." ... ... ... "In case one party has asked the court to direct the other side to produce the document and the other side failed to comply with the court's order, the court may be justified in drawing the adverse inference. All the pros and cons must be examined before the adverse inference is drawn. Such presumption is permissible, if other larger evidence is shown to the contrary." [Emphasis Added] 1st Respondent/Liquidator's Submissions: 43. The Learned Counsel for the 1st Respondent/Liquidator contends that in the instant case, an 'Expression of Interest' ('EOI') was issued on 24.12.2020, inviting 'Prospective Bidders' to bid for the 'Assets' in (Liquidation) together with a 'Process Memorandum', wherein a reserve price of Rs.16,20,00,000/- was fixed. In fact, the 'Prospective Bidders' were required to pay 5% Earnest Money Deposit and upon acceptance of the 'Bid' (within seven days) 25% of the total price and later, within one month the remaining amount was to be paid. 44. It is represented on behalf of the 1st Respondent/Liquidator that the Auction took place on 21.01.2021 with two Qualified Bidders Viz., The Appellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity, who confirmed the eauction sale to and in favour of the 3rd Respondent and consequently has filed the instant Comp. App (AT) (CH) (INS) No. 49 of 2021. 48. The Learned Counsel for the 1st Respondent/Liquidator submits that the 2nd Respondent is a Service Provider having over 500 satisfied clients and had completed over 200 Projects and many of them similar to the instant one and other provisions of the I & B Code, 2016. Indeed, the present e-auction was conducted in terms of the 'Process Memorandum' and the results were communicated to the 1st Respondent/Liquidator which is fully automated through the System and therefore, there is no irregularity in regard to the 'conduct of the Auction'. 49. The Learned Counsel for the 1st Respondent/Liquidator brings it to the notice of this Tribunal that both the 'Bidders' have taken part successfully in the 'e-auction' which began at 3.00 P.M. and that the 'auction' was not concluded at 5.00 P.M., since further 'Bids' were received from either 'Bidder', within five minutes. More importantly, the 'Bidding' went on till 17:46:00 hours as per the Report of the 2nd Respondent and in terms of the 'Process Memorandum' within five minutes ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t'/'Applicant' was inactive, the 3rd Respondent had submitted the 'Bid' at 17:41:01 hours and because of no further 'activity' deducted till 17:46:00 hours, the 'e-auction' was automatically closed and no further bids could be made. 53. The Learned Counsel for the 1st Respondent/Liquidator forcefully advances an argument that the Appellant/Applicant itself admittedly was able to see all the 'Bids' until its last 'Bid' was placed at 17:37:33 hours, which involved around eight rounds of 'Bidding' by each party upto the stage. Further, in regard to the final bid, it is likely that the 'Appellant' was unable to view the same, as it was logged out or had some issue from its end, which is evident from the fact that it had sought trouble shooting assistance from the 2nd Respondent during the time of 'e-auction', and it has admittedly not followed the specific instructions of the 2nd Respondent to 'login' only from one 'Browser' and not to open 'multiple windows' while it was participating in the 'e-auction process', therefore, it is the plea of the 1st Respondent / Liquidator that the 'Appellant/Applicant' cannot assail the conduct of 'e-auction process' for a technical error on its pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... issue of any fraud in the conduct of an 'Auction Sale' even according to the Appellant's averments. Further, the Appellant's endeavor to undermine the 'Auction Sale' to secure a marginally better or higher price may prove a 'self defeating exercise', since the 'Bidders' will lose faith in the 'Actual Sale' taking place. 1st Respondent / Liquidator's Citations: 59. The Learned Counsel for the 1st Respondent/Liquidator refers to the decision of the Hon'ble Supreme Court of India in Valji Khimji & Co. v. The Official Liquidator, (2008) 9 SCC at Page No. 299 at Spl. Pgs: 304 and 305, wherein at paragraphs 27 to 31, it is observed and held as under: 27. "In our opinion the decision of this Court in Divya Mfg. Co. (P) Ltd. [(2000) 6 SCC 69] cannot be treated as laying down any absolute rule that a confirmed sale can be set aside in all circumstances. As observed by one of us (Hon. Katju, J.) in his judgment in Rajbir Singh Dalal (Dr.) v. Chaudhari Devi Lal University [(2008) 9 SCC 284], a decision of a Court cannot be treated as Euclid's formula and read and understood mechanically. A decision must be considered on the facts of that particular case. 28. If it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in exceptional cases such as fraud. 31. In the present case, the auction having been confirmed on 30-7-2003 by the Court it cannot be set aside unless some fraud or collusion has been proved. We are satisfied that no fraud or collusion has been established by any one in this case." 60. The Learned Counsel for the 1st Respondent/Liquidator refers to the decision of this 'Tribunal' in Manjith Commercial LLP - Appellant SPM Auto Pvt. Ltd. (in Liquidation), (2019) SCC Online NCLAT 1173, wherein at paragraphs 7 to 11, it is observed as under: 7. "In so far as the wide publicity was not given in the second eauction held on 15.04.2019 is concerned, the Liquidator has publicly advertised the auction notice in the Business Standard circulated in Delhi and Jaipur duly disclosing the asset for auctioning and followed the procedure as laid down in the Regulations 12 of (Liquidation Process Regulation). Hence we do not find any merit in the allegation. 8. In so far as the allegations of the Appellant with regard to reducing the time period is concerned, the Liquidator followed the procedures as contemplated in clause 3 of Schedule I of the Regulations, which prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idate the 'Corporate Debtor' within a period of two years. We are of the view that there should not be any unnecessary delay and protract the liquidation process for undue advantage of some of individuals or group, which would adversely affect the liquidation process." 61. The Learned Counsel for the 1st Respondent/Liquidator points out to the decision of this 'Tribunal' in State Bank of India Vs Maithan Alloys Ltd. & Others, (2020) SCC Online NCLAT 429 at paragraphs 29 and 30, wherein it is observed as under: 29. "We have gone through the various submissions made by them. Appellant, Respondent No. 1 and liquidator and we found that R-2 to R-4 did not participate in the e-auction and filed an application as objectors and offering a higher price in order to create a lust for worth maximisation and thereby vitiated the whole process. In any case R-1 has also withdrawn the offer without there being any corresponding provision in the IBC and NCLT was entitled to forfeit their entire amount. Regulation 32, 32(A) and 33 of Insolvency and Bankruptcy Board of India liquidation process regulation 2016, provides for the mode of liquidation. Regulation 32 of Insolvency and Bankrup....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, provided an 'Incremental Bid' is placed by the 'Bidder', in that, the extended period of five minutes, thereby the 'Auction' would go and on until the 'Successful Bidder' chosen or no further 'Bid' is placed by the other 'Bidder' in the extended time of five minutes. 64. The Learned Counsel for the 2nd Respondent points out that the Appellant, although relies on the purported screenshots had not furnished the 'Mandatory Certification' as per Section 65B of the Indian Evidence Act, 1872, for the reasons best known to it. As a matter of fact, the screenshots are inadmissible because of the fact that as per Section 65B (4) of the Indian Evidence Act, 1872, 'Certificate' is a condition precedent for the admissibility of an 'Electronic Record' as 'Evidence'. 65. The Learned Counsel for the 2nd Respondent by referring to the Report dated 20.03.2021, prepared by Tata Communications and Auditor's Report dated 24.04.2021, secured from a 'Third Party' and these Reports were not filed before the 'Adjudicating Authority' for the purpose of 'Adjudication' and these materials cannot be allowed to be received at the 'Appellate's stage', before this 'Tribunal' in the instant 'Appeal' and....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... he had chosen to simultaneously logged in from two Browsers, despite from the instructions from the 2nd Respondent. 70. The Learned Counsel for the 2nd Respondent brings it to the notice of this 'Tribunal' that 'E-auction' services offered by the 2nd Respondent are end-to-end encrypted meaning thereby neither the 2nd Respondent nor the Liquidator or any other party whatsoever can interfere / intervene in the course of live action and hence the 2nd Respondent cannot have any access of any such screenshots. 71. The Learned Counsel for the 2nd Respondent submits that the 2nd Respondent being a 'Service Provider' cannot be held responsible for the 'System Error' or the 'Appellant's Internet Connection'. Furthermore, the 'Timer' associated with the 'E-auction' is the 'Client Based' / 'Global Timer' which repeatedly upgrades and updates by sending the signals to and fro with the 'Server' meaning that during the course of 'E-auction' the signal will be shared with the Server repeatedly which in turn will upgrade the 'Timer'. After the completion of 'E-auction', System generated e-mail is sent to the 'Successful Bidder' automatically. 2nd Respondent's Citations: 72. The Learne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, company owning the mine is liable to prosecution. No question of violation of Article 14 therefore arises. 2 70. Perusal of the opinion of the Full Bench in B.R. Gupta-I [Balak Ram Gupta v. Union of India, AIR 1987 Del 239] would clearly indicate with regard to interpretation of the word any in Explanation 1 to the first proviso to Section 6 of the Act which expands the scope of stay order granted in one case of landowners to be automatically extended to all those landowners, whose lands are covered under the notifications issued under Section 4 of the Act, irrespective of the fact whether there was any separate order of stay or not as regards their lands. The logic a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elief. Most importantly, such a certificate must accompany the electronic record like computer printout, compact disc (CD), video compact disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. 17. Only if the electronic record is duly produced in terms of Section 65-B of the Evidence Act, would the question arise as to the genuineness thereof and in that situation, resort can be made to Section 45-A opinion of Examiner of Electronic Evidence. 18. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65-B of the Evidence Act are not complied with, as the law now stands in India. xxx xxx xxx 20. Proof of electronic record is a specia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duction itself. The signatures in the certificate were also identified. That is apparently in compliance with the procedure prescribed under Section 65-B of the Evidence Act. However, it was held that irrespective of the compliance with the requirements of Section 65-B, which is a special provision dealing with admissibility of the electronic record, there is no bar in adducing secondary evidence, under Sections 63 and 65, of an electronic record. 22. The evidence relating to electronic record, as noted hereinbefore, being a special provision, the general law on secondary evidence under Section 63 read with Section 65 of the Evidence Act shall yield to the same. Generalia specialibus non derogant, special law will always prevail over the general law. It appears, the court omitted to take note of Sections 59 and 65-A dealing with the admissibility of electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Sections 65-A and 65-B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this Court in Navjot Sandhu cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o gives this certificate can be anyone out of several persons who occupy a 'responsible official position' in relation to the operation of the relevant device, as also the person who may otherwise be in the 'management of relevant activities' spoken of in Sub-section (4) of Section 65B. Considering that such certificate may also be given long after the electronic record has actually been produced by the computer, Section 65B(4) makes it clear that it is sufficient that such person gives the requisite certificate to the "best of his knowledge and belief" (Obviously, the word "and" between knowledge and belief in Section 65B(4) must be read as "or", as a person cannot testify to the best of his knowledge and belief at the same time). 59. We may reiterate, therefore, that the certificate required under Section 65B(4) is a condition precedent to the admissibility of evidence by way of electronic record, as correctly held in Anvar P.V. (supra), and incorrectly "clarified" in Shafhi Mohammed (supra). Oral evidence in the place of such certificate cannot possibly suffice as Section 65B(4) is a mandatory requirement of the law. Indeed, the hallowed principle in Taylor v. Taylor (1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mum five minutes to outbid the 3rd Respondent by 17:47:33 and the fact is that the Appellant had not logged in 17:57:59, which indicates that it was not interested in 'bidding' anymore, after submitting its offer for Rs.17.80 Crores. 77. The Learned Counsel for the 3rd Respondent points out that the 3rd Respondent after obtaining the 'Sales Certificate' from the 1st Respondent/Liquidator, had altered its position which is detriment by spending substantial money for reviving the 'Plant' and took numerous steps for 'Revival' of the same. Indeed, the Sale, which was conducted by the 2nd Respondent on behalf of the 1st Respondent, was properly conducted 'E-auction Process' in a fair and transparent manner. 78. The Learned Counsel for the 3rd Respondent brings it to the notice of this 'Tribunal' that the 3rd Respondent has spent various sums and in fact old machineries were repaired at the cost of 3rd Respondent and new machineries were ordered for the 'Plant'. The 3rd Respondent took possession of the factor and had applied for 'Renewal of Licenses' before the different 'Authorities' in fact, the 3rd Respondent had paid the 'whole consideration' for the 'Sale' and the 'Sale' was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ell-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they are themselves to be blamed if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed after the bidding (or confirmation) is over to offer a higher price. Of course, the situation may be different if an auction-sale is finalized, say for Rs.1 crore, and subsequently somebody turns up offering Rs.10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, then an inference can be drawn that an attempt had been made to acquire that property/asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done. 33. In Vedica Procons case (supra) the aforesaid view was noticed and after considering many judgments in Paragraph 39, the Court approved....
X X X X Extracts X X X X
X X X X Extracts X X X X
....btor through an auction and private auction is permitted only in certain classes of assets which are of perishable nature, assets likely to deteriorate in value if not sold immediately, if it is sold at a higher price than the Reserve Price of a failed auction etc. Regulation 33(3) states as follows:- "The liquidator shall not proceed with the sale of an asset if he has reason to believe that there is any collusion between the buyers, or the corporate debtor's related parties and buyers, or the creditors and the buyer, and shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties. 29. Hon'ble Supreme Court has already observed in Valji and Khimji Company vs. Official liquidator of Hindustan nitro product (Gujarat) limited and others. where bids were received and were opened in the Court. The highest bid was that of the appellant M/s. Valji Khimji & Company amounting to Rs. 3.51 crores. With the consent of the learned advocates representing the secured creditors, the said bid was accepted and the sale was confirmed on 30.7.2003. The Court directed the appellant to deposit 25% of the purchase....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Impex Metal & Ferro Alloys Limited (in Liquidation) and be handed over to Liquidator, Mr. Samir Kumar Bhattacharya within 30 days from the date of this Judgment. 38. If such dubious systems are permitted, the liquidation process will become unending leading to reduction in value of Asset of Corporate Debtor instead of Maximisation of value of Corporate Debtor." 82. The Learned Counsel for the 3rd Respondent adverts to the decision of Hon'ble Supreme Court in Sushil Kumar v. Rakesh Kumar, reported in (2003) 8 SCC at Page 673 at spl. Pg.: 676, wherein at paragraphs 61, 64, 65 and 63, it is observed and held as under: "A person is not expected to take false grounds regarding his age or to make a statement that he had been reading in a school. No presumption in this behalf can be raised as such allegations would be subject to judicial scrutiny. (Para 61) Even otherwise making a false statement before the court whether on affidavit or not is not to be treated lightly. The court acts on the basis of the statement made by a party to the lis. Whether such defence has been accepted or not is not of much importance but whether a false statement to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fer on 24.05.2019. Thus on the date of the submission of offer, the Petitioner was aware of modified condition and inspite of the same he did not raise any demure to modified condition and participated in auction. 37. It is now well settled law that the conditions of tenders cannot be challenged once participated. In the cases of Montecarlo Ltd., M/s. Michigan Rubber Ltd., D.G. Road Safety Pvt. Ltd. and Saj Enterprises (supra) the Hon'ble Supreme Court has held that the tender conditions cannot be allowed to challenge once participated. In the given facts and circumstances of present case the said well recognized principle is suarely applicable to the present case. Thus we hold that it is not open for the Petitioner in Writ Petition No. 7784/2019 to challenge the conditions of auction in question, particularly when he participated in auction process without any demur." Fraud: 84. It is relevantly pointed out by this 'Tribunal' that 'Fraud' and 'Collusion' vitiates the 'solemn proceedings' in any 'Civilised System of Jurisprudence'. 'Fraud' emanates from a deception committed by the 'disclosure of an incorrect facts knowingly and deliberately to invoke the exercise of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....place of 2nd Respondent or such E-Auction Service Provider, as the Adjudicating Authority, may direct. 91. The Appellant/Applicant in I.A. No. 74 of 2021 in CP/508/IB/2017 before the Adjudicating Authority had also prayed for a 'Relief' appointing an Independent Forensic Expert, to conduct a Forensic Audit of the entire 'Bidding Process' / 'Portal' and other computer systems of the 2nd Respondent. 92. According to the Appellant / Applicant during the course of 'Liquidation Proceedings' the 1st Respondent/Liquidator had issued an 'Expression of Interest' and the 'EOI', inviting 'Investors' to acquire Assets of the Corporate Debtor had included the 'Tender' document, terms and conditions ('Process Memorandum') for participating in the 'Eauction Sale' for the Corporate Debtor, which were made available to the 'Bidders' on 24.12.2020. 93. It is represented on behalf of the Appellant/Applicant that the 1st Respondent/Liquidator had issued the 'Process Memorandum' for the purpose of 'Auctioning of Leasehold Land', Building, Plant and Machinery, Furnitures and Fixtures and Vehicles at the Haldia of the Corporate Debtor as mentioned in Clause 7 of the 'Process Memorandum'. In fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the 1st Respondent/Liquidator were not transparent and an arbitrary one. In this connection, the Learned Counsel for the Appellant/Applicant submits that the 'Auctions' have to maximize the value by a transparent manner and in the instant case, the Electronic Records were manipulated to prop up the 3rd Respondent, as the 'Highest Bidder' while none of the same was visible in the 'E-Auction Portal' because the 'Portal' showed that the 'E-Auction Process' was closed at 17:42:32 hours. 98. The Learned Counsel for the Appellant/Applicant comes out with a plea that the actions of the 1st and 2nd Respondents altering the 'Digital EAuction Result' are in violation of the 'Information Technology Act, 2000' and is an 'offence', committed as per Section 464 of the Indian Penal Code. Furthermore, the 1st Respondent/Liquidator action by inserting the entry of the 3rd Respondent much after the 'Bidding' was closed, is a manipulation of Electronic Records made by the Respondents No. 1 and 2 and they have committed fraud and the selection of the 3rd Respondent was a malafide one. 99. The 1st Respondent/Liquidator in his 'Reply' to IA/74/2021 in CP/508/IB/2017 had inter alia averred that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... do one thing, try to change your system. Applicant : I have attached Internet from wifi to wire. lip1 : even after changing (internet) you are still facing the same issue? Applicant : Yes. lip 1: Are you still logged out after changing? Applicant : Yes it is happening right now." 103. It is projected on the side of the 2nd Respondent that the 'Appellant/Applicant' has chosen not to refresh the System / Screen during the active 'Auction' (goes to the Server back and forth) and the translated version of the transcript (in English) is as follows: "Translated version of the transcript (in English) : APPLICANT : I DID NOT REFRESH AGAIN AND AGAIN THIS TIME. THE AUCTION GET EXPIRED BEFORE I COULD START. I am the highest bidder. LIP1: From your log in credentials, you did not get logged out thereafter. Applicant : May be It has happened from my system, now when will I receive the E-mail for E-auction sir? 104. The Learned Counsel for the 2nd Respondent brings it to the notice of this 'Tribunal' that the Appellant/Applicant had simultaneously logged in from multiple browser as admitted by it and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....possible for them to know that the 3rd Respondent had put in a higher 'Bid' and was successful in the 'E-auction Process'. 109. According to the 3rd Respondent, it is a matter of record that after the 'E-auction' was closed, the 'Successful Bidder' shall get a system generated confirmation mail declaring him as the highest 'Bidder', and in fact, the 3rd Respondent was intimated by such System Generated Email at about 18.30 hours dated 21.01.2021. 110. It is projected on the side of the 3rd Respondent that the Appellant/Applicant was reluctant to increase its 'Bid' after submitting the 'Bid' for Rs.17,80,00,000/- at 17:37:34 hours and further that the 'Appellant' had not adhered to the instructions of the 2nd Respondent for such 'E-auction Process' and therefore, it was not aware of the highest 'Bid' submitted by the 3rd Respondent, after the Applicant had logged out from the System, while 'Bidding Process' was continuing. 111. The Learned Counsel for the 3rd Respondent submits that the 3rd Respondent had denied the allegation of the 'Appellant/ Applicant' that Respondents No. 1 and 2 are committed fraud or manipulated the 'E-Auction Results' for choosing the 3rd Respondent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons. To put it succinctly, in the absence of Certificate evidence / material and oral version / evidence is unworthy of acceptance by this 'Tribunal'. 116. In the present case, it is brought to the fore from the System generated 'Log Report' that the 'Appellant' had logged in at 17:37:20 hours. It placed its 'Bid' at 17:37:34 hours. The 'Appellant' logged in at 17:57:59 and for nearly 20 minutes and 25 seconds, had logged out for a considerable time (there being no 'activity' on its part), of course in breach of the 'E-auction' terms and conditions. 117. One cannot ignore the important fact that as per the 'E-auction' conditions, the 'Auction' screen ought not be 'shared with any Third Party' and in fact, the Third Party Application 'ZOOM' was 'active' / 'operated' at the time of 'Auction Process' and also that various other 'Applications' were running at the same time during 'active' Auction. During the period of inactivity for about 20 minutes, the 3rd Respondent had increased the 'Bid' by Rs.10,00,000/- to Rs.17,90,00,000/-. The 3rd Respondent had placed its 'Bid' at 17:41:01 hours. Indeed, the 'Appellant's last 'Bid' at 17:37:34 hours for Rs.17,80,00,000/-. 118. On beh....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... completion of 'Auction' over and above the 'Auction Price', one cannot by any stretch of imagination come to a conclusion that any 'Fraud' had taken place in the 'E-auction Sale'. A conclusion of a 'Sale in Auction', as per Clause 13 Schedule I of Regulation 33 of the Liquidation Regulations unequivocally points out that on payment of the full sum, the sale shall stand completed, the Liquidator shall execute the 'Sale Certificate' or 'Sale Deed' to transfer such 'Assets' and the 'Assets' shall be delivered to him in the manner specified in the terms of 'Sale'. 125. As a matter of fact, the term 'Material' means 'Real' and not merely 'Formal' and 'Academic', as opined by this 'Tribunal'. An 'Irregularity' which may be termed as 'Material', ought to be such as it affects the ultimate decision of the given 'Proceedings' or 'Case'. 126. As far as the present case is concerned, the 'Appellant/Applicant' had admitted that 'Yes, I am getting logged out frequently' (vide Vol. II Page 237 - translated version of the Transcript from Hindi in Preliminary Reply Affidavit of R2 / Linkstar Infosys Private Limited to I.A. No. 74/2021 in CP/508/IB/2017), which is certainly an unfavorable ci....