TaxTMI 
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2023 (11) TMI 907
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.... No.490/MB/2018. The Adjudicating Authority by the impugned order has allowed the IA No.1585/MB/2022 filed by Successful Auction Purchaser (Respondent No.1 herein) praying for certain reliefs and concession consequent to going concern sale in the liquidation proceeding of Corporate Debtor - Sterling Biotech Limited. The Appellant, who is a stake holder in the Corporate Debtor has come up in this Appeal, challenging order of the Adjudicating Authority, allowing the Application filed by Successful Auction Purchaser. 2. The brief facts of the case necessary to be noticed for deciding this appeal are: (i) On an Application filed by Andhra Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC"), the Corporate Insolvency Resolution Process ("CIRP") was initiated against the Corporate Debtor by order dated 11/06/2018. (ii) The Resolution Professional ("RP") made publication inviting Expression of Interest ("EoI") from the interested Applicants. No Resolution Plan could be approved in the CIRP of the Corporate Debtor. (iii) An Application under Section 12A was filed by the Promoters to withdraw the CIRP. The Adjudicating Authority vide....
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....e the Corporate Debtor as a going concern. The Liquidator responded vide letter dated 27.05.2022 requesting the Applicant to approach the NCLT. The Successful Auction Purchaser filed an IA No.1585 of 2022, praying for reliefs and concessions. (v) The Appellant with reference to auction held on 04.04.2022 wrote letter dated 26.05.2022 to the Liquidator, asking for certain information which was replied by the Liquidator vide letter dated 01.06.2022. (vi) The Successful Auction Purchaser as well the Liquidator were heard by the Adjudicating Authority in IA No.1585 of 2022 and orders were reserved on 02.08.2022/ (vii) After the Respondent namely - Perfect Day INC was declared as a Successful Auction Purchaser and the orders were reserved in IA No.1585 of 2022, the Appellant filed an IA No.3138/MB/2022 before the Adjudicating Authority dated 21.10.2022, where the Appellant prayed for following reliefs: 1. Stay the e-Auction process/ sale process of the Sterling Biotech Ltd. (corporate debtor) till fresh bids are invited for re-auction; 2. Direct liquidator to maintain status quo till the liquidator clarifies the issue of re-auction for better price; 3. Direct Respondent No....
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....porate Debtor was much higher than the one mentioned in the e-Auction notice. It is submitted that the reserved value of e-Auction dated 04.04.2022 as held was only Rs.548.46 crores, whereas, as per the Valuation Report, which was obtained by Andhra Bank from Gajjar Techno-Economic Consultant Pvt. Ltd., the value was more than three times. The learned Counsel for the Appellant has referred to the Valuation Report obtained by Andhra Bank, which has been brought on record along with the Rejoinder affidavit and submits that Corporate Debtor has been sold on inadequate value, which is not in accord with the object of the IBC, i.e. maximization of the value of the Corporate Debtor. The Liquidator neglected to fetch the maximum price and auctioned the Corporate Debtor at a throwaway price. The Valuation Report prepared by the Registered Valuers appointed by the Liquidator was never supplied to the Appellant. The Appellant vide email dated 26.05.2022 has called for various information from the Liquidator, which letter was also replied, but requisite information was not supplied. The Appellant was not informed about the IA No.1585 of 2022 filed by the Successful Auction Purchaser. The reli....
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....llant was kept pending and impugned order was passed in IA No.1585 of 2022 filed by the Successful Auction Purchaser, whereas IA No.3138 of 2022 filed by the Appellant came to be dismissed on 17.02.2023 by the Adjudicating Authority, which rejection having become final, cannot be questioned any further. Thus, the very purpose of filing of Appeal by the Appellant is knocked out. It is further submitted that in pursuance of auction held on 04.04.2022, the Sale Certificate has already been issued by the Liquidator on 17.11.2022 and the entire amount under the auction has been received and distributed to the Financial Creditors including the Appellant. There being no challenge to the auction sale and Sale Certificate issued, the Appeal deserves to be dismissed. The challenge of the Appellant on the basis of valuation of the Corporate Debtor while fixing reserve price is also misconceived. The Appellant has relied on the Valuation Report obtained in 2018 when Corporate Debtor was not undergoing CIRP. The Valuation Reports were obtained by the Resolution Professional as per CIRP Regulations, 2016. The Liquidator had obtained Valuation Reports and the reserve price was fixed as per the Va....
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....aluation of securities and latest financials of Sterling. PNBIL was not provided with requisite information and even the minutes of the said meeting were not shared. 15. Therefore, it is only reasonable that you provide us with the following details: a. the valuation of the assets and liabilities of Sterling, including whether fresh valuation was required, the appointment of registered valuers, subsequent assessment of realizable value, whether an average of two sale assessments was considered and the final asset sale report; b. the basis for concluding the auction as a going concern and the group of assets and liabilities so identified; c. the basis for selection of successful/ final from the list of bidders, ref your email dated 30 March 2022, including any marketing strategy, information memorandums, advertisements and pre-bid qualifications; d. the basis of setting the reserve price for the auction and related terms and condition of the auction/ sale; and e. insolvency resolution process costs and the liquidation costs." 6. From the statement made in the letter it is clear that the Appellant has filed its claim in the liquidation of the Corporate Debtor whic....
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.... a slump sale and sale of the Corporate Debtor as a going concern, in the manner as laid down in Chapter III under Part II of the I & B Code, 2016. The maximum period applicable for trying the sale on a going concern basis of the Corporate Debtor will be only six months from the date of the order. In case the efforts to sell the company as a going concern fails during the stipulated period of six months, then the process of the sale of assets of the Company will be undertaken by the liquidator as prescribed under Chapter-III of IBC, 2016 and the relevant regulations of IBBI." c) It is stated that the undersigned had called a meeting of the secured financial creditor(s) who have relinquished their security interests under section 52 of the Code on 21.06.2021 to nominate their representatives in the proposed Stakeholder Consultation Committee of Corporate Debtor (hereinafter referred to as "SCC") which was being constituted voluntarily on the basis of list of stakeholders updated version 1 dated 07.06.2021. It is relevant to state here that in the said meeting secured financial creditors, who have relinquished their security interest had nominated (1) Indian Overseas Bank (ii) ....
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.... the other financial creditors as well. Thereafter, no email has been issued/ sent by the Indian Bank. For clarity, our email dated 30.03.2022 addressed to Indian Bank and other lenders is reproduced hereinbelow for ease of reference: "Kindly note that the Corporate Debtor is being sold as a whole on a going concern basis, on as is where is basis and what is basis and the present reserve price does include the cash component and the same is in the complete knowledge of the Stakeholders Consultation Committee (SCC). Very humbly, at this point in time, when the e-auction is up and the qualified bidders have been declared, it cannot be distributed now please. However, the distribution and revision of the reserve price can be relooked by the SCC, depending on the fate of the present e-auction which is on the cards." This has always been expressly mentioned in all the public notices/ process documents/ relevant communications issued in this regard. It is relevant to state here that all the information qua liquidation process of Corporate Debtor has been duly uploaded on the official website of Corporate Debtor (including the successful e-auction which was held on 04.04.2022). D....
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....the insolvency resolution process cost and liquidation cost is concerned, you may refer to the List of Stakeholders (Version 2 dated 14.02.2022, pursuant to claims received up to 14.02.2022). The List of Stakeholders (Version 2 dated 14.02.2022, pursuant to claims received up to 14.02.2022 is available on the website of the Corporate Debtor (http://www.sterlingbiotech.in/liquidation.html). The undersigned hopes that this reply will clarify all your doubts and seeks your cooperation to complete the liquidation process of the Corporate Debtor. The undersigned shall provide all information as may be required and as permissible under the applicable provisions of the Code. Thanking you Warm Regards Dr. (h.c.) CS Adv Mamta Liquidator In the matter of Sterling Biotech Limited ...." 7. The Application which was filed by Successful Auction Purchaser before the Adjudicating Authority for reliefs and concessions was filed on 28.05.2022. The Application was heard by the Adjudicating Authority and orders were reserved on the said Application on 02.08.2022. The IA No.3138 was filed by the Appellant only on 22.10.2022, which Application came to be dismissed by subsequent....
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....urrency of the different processes under the Code Sl. No. Particulars Fair Value (In INR) Liquidation Value (In INR) I. Corporate Insolvency Resolution Process A. Crest Capital Group Pvt. Ltd. 610,05,63,251/- 435,88,09,501/- B. Adroit Technical Services Pvt. Ltd. 397,58,68,616/- 311,00,89,131/- Sl. No. Particulars Realisable Value (in INR) II Liquidation process: Valuation for mode of sale under Regulation 32(e) A. Crest Valuations 579,33,00,000/- B. Adroit Appraisers and Research Pvt. Ltd. 517,60,00,000/- Average Realisable Value as per Regulation 35 of the Liquidation Regulations as reported in the Asset Memorandum dated 15.07.2021 548,46,00,000/-" 9. The reserve price of the auction has been fixed as per the Valuation Report received by Liquidator in the liquidation process. There being no challenge to the said reserve price, inspite of several auction notices, which were issued as early in July 2021, the challenge to the Valuation raised by the Appellant in this Appeal as well as in the IA No.3138 of 2022 filed before the Adjudicating Authority is unsustainable. The Corporate Debtor has been ....
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....nce to state that the Appellant holds merely 0.73% share in the pool of secured financial creditors who have relinquished their security interest and the other 23 banks including the largest public sector bank of the country like State Bank of India, Union Bank of India, Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank etc. and financial institutions like Life Insurance Corporation of India, have never raised any objections whatsoever whether in respect of the reserve price or the manner in which the liquidation process has been conducted. On the other hand, they have from time to time appreciated the efforts and endeavours made by the Liquidator to conduct the liquidation process of the Corporate Debtor including the steps taken towards marketing of the liquidation estate which was a subject of the auction process." 10. A stakeholder, who only holds 0.734% share in the pool of Secured Financial Creditors is complaining about the entire liquidation process, when public sector Banks and other Financial Creditors have not raised any objection, which itself is sufficient to repel the objections raised by the Appellant. We, thus, are satisfied that there is no substan....
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....he above are market leaders in the pharmaceutical industry. Extensive efforts were made by the Liquidator to propagate, market and publish on numerous digital platforms having national and international reach to invite and bring the ongoing auction process with the knowledge of international leaders in the industry. Discussions were held in detail in the Second and Third Meeting of the SCC held on 06.09.2021 and 11.10.2021, respectively. In furtherance of the same the following appointments were made: i. Digifox Advertising India Private Limited: hired for the task of marketing by the means of programmatic advertising on various applications and websites including www.wsj.com, www.economictives.indiatimes.com, www.money.cnn.com, www.nytimes.com, www.usatoday.com, www.forbes.com, moneycontrol - markets and news, CNBC TV 18, ET Markets, National Stock Exchange India, Bombay Stock Exchange India, www.ft.com etc. ii) Leo Marcom Private Limited: for marketing through dedicated email marketing in India/ Russia USA and Germany, leaderboard banner advertisement in weekly enewspapers, etc. d) All these endeavours were made with the ultimate objective to maximise the value of....
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....titlement under Section 53 of the IBC. At no point of time, prior to holding of auction, i.e., 04.04.2022, any kind of objection was raised by the Appellant to the reserve price or against valuation obtained in the liquidation process by the Liquidator. It was only after the auction was over and Successful Bidder was declared, for the first-time letter dated 26.05.2022 was written to the Liquidator by the Appellant calling for relevant information. Relevant information was provided by the Liquidator by letter dated 01.06.2022. We have already noted above the I.A. No. 3138 of 2022 filed by the Appellant was on 22.10.2022, i.e., much after completion of acquisition proceedings and filing of Application by the Successful Auction Purchaser on which orders were reserved on 02.08.2022 and as noted above, the I.A. No.3138 has also been rejected on 17.02.2023 by the Adjudicating Authority, which order has become final and has not been questioned. When we look into the prayers made in I.A. No.3138 of 2022, it is clear that all that Appellant wanted was to stay the process of auction and sale of the Corporate Debtor. Auction having already completed on 04.04.2022, there was no occasion to st....