TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 18
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....24, which was rendered by the Hon'ble NCLT, Hyderabad Bench in IA (Dissolution) No. 02/2024 in CP (IB) No. 11/10/HDB/2017, by virtue of which Ld. NCLT ordered dissolution of the Corporate Debtor (CD) M/s. 1. Kamineni Steel & Power India Private Limited and discharged the liquidator. The connected appeal, being Company Appeal (AT) (CH) (Ins) No.187/2022, arises from the final Judgment and Order dated 18.04.2022 which was passed by the Hon'ble NCLT, Hyderabad Bench in IA (IBC) No. 727/2021 and IA (IBC) No. 114/2022, as preferred in CP (IB) No. 11/10/HDB/2017, by virtue of which the prayer of the Appellant to grant extension of time to pay the balance amount of Rs. 346 Crores and to direct the liquidator not to forfeit the Earnest Money Deposit (EMD) of Rs. 5 Crores paid by him was rejected and the liquidator was directed to invoke the EMD and to Comp App (AT) (CH) (Ins) No.387 & 187/2022 Page 3 of 21 start the bidding process afresh and to complete the liquidation process in 6 months. 2. In these two appeals, the subject matter is related to the process of the Corporate Insolvency Resolution Process (CIRP) which was carried as against the Corporate Debtor M/s. Kamineni Steels & Powe....
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....t, are hereby being narrated chronologically. They are as follows:- i. On 10.02.2017, the Corporate Debtor was admitted into the CIRP proceedings as it stood initiated against the corporate Debtor in a proceeding drawn under Section 10 of I & B Code. ii. The Resolution Plans were invited, and in the said process, the Corporate Debtor too had submitted the resolution plan which was approved by Ld. NCLT on 27.11.2017. iii. As against the order of approval of the resolution plan on 27.11.2017, the appeals were preferred before the Hon'ble NCLAT and they were taken up together and adjudicated by the common Judgment of 06.09.2018. iv. By a common judgment dated 06.09.2018, the Ld. NCLAT remitted the matter back to the Ld. Adjudicating Authority, with the direction to initiate the liquidation proceedings of the Corporate Debtor, in terms of the provisions contained under Section 33 to be read with Section 34 of the I & B code. v. Aggrieved against the Judgment of the Ld. NCLAT dated 06.09.2018, appeal was filed before the Hon'ble Apex Court, which dismissed it, by a Judgment of 13.10.2018, resulting in affirmation of the direction of the Hon'ble NCLAT, directing the Adjudicating ....
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....ing to sell the CD as going concern had failed. xii. For bids thus invited by the publication of 27.07.2020, the liquidator had fixed 23.08.2020, as the last date for submission of Expression of Interest. xiii. In the fourth e-auctioning process as referred to above, only one successful bid of Rs. 351 Crores (Three Hundered and Fifty One Crores) was received and that was from the Appellant on 26.08.2020. xiv. As against the reserve price of Rs. 350 Crores fixed, the Appellant had offered the bid of Rs. 351 Crores (Three Hundered and Fifty One Crores) and being the highest bidder, was declared as to be the successful bidder. The bid offered by the Appellant on 26.08.2020 Comp App (AT) (CH) (Ins) No.387 & 187/2022 Page 8 of 21 was accepted and the letter of intent was issued by the liquidator to the Appellant on 28.08.2020. xv. As per stipulations, of the bid document and the letter of intent issued, the Appellant was required to pay the bid amount of Rs. 351 Crores in full within a period of 90 days from the date of Letter of Intent, that is, on or before 26.11.2020. The Appellant had already paid Rs. 5 Crores as EMD along with submission of bid and thus he had to pay the ba....
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...., seeking a direction for the liquidator not to proceed with the cancellation of the bid dated 26.08.2020 not to forfeit the EMD and to refrain from calling a fresh bid for the sale of the Corporate Debtor till, the disposal of IA No. 260/2021, Ld. NCLT, moved by his prayers, had granted him opportunity to prove his bonafide by paying a portion of the balance on six occasions, that is, on 16.06.2021, 14.07.2021, 25.08.2021, 07.10.2021, 21.01.2022 and 01.03.2022, Despite such opportunity given and despite of the extensions being granted, the admitted fact is, that the Appellant, was unable to deposit the amount and there was an admitted default, despite the extensions granted for depositing the amount under the Letter of Intent (LoI). xx. We have to bear in mind, that the auction was confirmed as back as on 26.08.2020. The amount was to be deposited within 90 days. The extensions were granted by the Hon'ble NCLT, but despite of the extensions and assurance extended, the amount was not deposited. Instead, the Appellant filed yet another IA being IA No. 114/2022 for extension of time to deposit the amount till 28.02.2022, stating that they are not seeking reduction or re-negotiation....
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.... and IA No. 114/2022 filed by the Appellant, by a common order, and directing the liquidator to forfeit the EMD amount of Rs. 5 Crore to start the bidding process afresh, so as to complete the whole process within a period of 6 months thereafter. xxiv. Aggrieved against the said order, and faced with the threat of fresh bidding process, the Appellant herein preferred the appeal being CA No. 387/2024, by e-filing the same on 09.06.2024, but failed to get an interim under in his favour. During the intervening period the change of the liquidator was effected vide order passed on IA No. 1637/2023 dated 08.11.2023, appointing Mr. Kallat Vatsa Kumar as a liquidator, upon assuming the role of the liquidator, on 08.11.2023, Mr. Kallat Vatsa Kumar took official custody of the assets of Corporate Debtor assets through execution of a Panchnama on 16.11.2023, received the possession of the original title deeds, along with the other relevant documents on 17.11.2023 and took steps to conduct the sale bidding process afresh. xxv. Further, in compliance of the Hon'ble NCLT's Order dated 18.04.2022, which is the order under challenge in the instant appeals, the liquidator issued the sixth s....
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....ess having been confirmed in their favour, and after the sale certificate having been issued on 10.02.2024, it will not be the appropriate stage at which the clock could be permitted to be put back, in favour of the Appellant by permitting him to deposit the amount in the extended period, which they have failed to do a number of times despite numerous opportunities given as detailed in para 5 above resulting in non-compliance of clause 11 of the confirmation of bid as made on 26.08.2020. Hence, we make it clear, that the plea of extension of time made by the Appellant cannot be considered, and be granted because of the following:- (a) The bid of the Appellant has been cancelled and it has not been challenged (b) The Appellant violated terms of the bid conditions (c) Subsequent sale of the Corporate Debtor (CD) as a going concern has been confirmed and the sale consideration which was of much higher amount has been accepted (d) This subsequent sale is fully paid for, still valid and remains unchallenged. 8. The Respondents' Counsels have argued, that in the light of the various judgments which have been rendered by the principal bench as well as, by the Hon'ble Apex Court, ....
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....the funds due to financial crunch faced by him and due to the restrictions imposed by Covid pandemic and hence he could not deposit the amount within the prescribed time frame, that he had tried to mobilize the required investment from the foreign investors, and that it got obstructed because of the procedural issues faced from the Financial Investment Unit (FIU), of the Reserve Bank of India, whose clearance was needed to bring the money to India and this obstruction was caused partly due to Covid restrictions because he could not liaise with them properly and that owing to the lack of clearance, by the Financial Investment Unit (FIU), the amount could not be infused to be deposited and as such, he should not be faulted with for lack of efforts and that he being a bonafide purchaser, at least the earnest money, which he has deposited, deserves to be refunded back to him because his inability to deposit the required amount was on account of force majeure conditions prevailing at that time. 12. The Ld. Counsel for Appellants has further submitted, that refund of the earnest money as deposited by them, will not at all prejudice the rights of the Respondent, owing to the fact that in....
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.... auction sale consideration, however, subsequently she could not deposit balance 75% due to COVID-19 pandemic. It is required to be noted that subsequently the fresh auction has taken place and the property has been sold. It is not the case of the respondents that in the subsequent sale, lesser amount is received. Thus, as such, there is no loss caused to the respondents. 4. Considering the aforesaid facts and circumstances, we allow these appeals and set aside the order of forfeiture of 25% of the amount of auction sale consideration and direct the respondent Bank to refund/return the amount earlier deposited by the appellant, deposited as the part auction sale consideration (minus 50,000/- towards the expenditure which were required to be incurred by the respondent Bank for conducting the fresh auction) within a period of four weeks from today." 13. This argument of the Ld. Counsel for the Appellant appears to be reasonable. It cannot be ruled out, that inability of the Appellant to deposit the amount, as it has been explained in the different Interlocutory Application preferred by him and the grounds taken by him in the appeal, for the reasons, which are beyond his control; ....