TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1275
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....12.2023 passed by the Adjudicating Authority in I.A. No. 1577 of 2021 in Company Petition IB No. 69 (MB) of 2017 by which sale of assets of the Corporate Debtor by way of a private sale to a related party was allowed without considering the objections raised by the Appellant objecting to the sale by way of its I.A. No. 2117 of 2021 and despite better offers being under consideration by the Adjudicating Authority. 2. The Corporate Insolvency Resolution Process ("CIRP") of Neelkanth Township & Construction Pvt Ltd. ("NTCPL") commenced on 21.04.2017. Subsequently, NTCPL was directed to be liquidated vide an Order dated 03.09.2018. The immoveable property at Alibaug, forming subject-property of the present dispute is an undivided parcel of land of about 80.6 acres. Out of the entire parcel of land, the title of about 30 acres (appx. 24%) of land is with CD-NTCPL while 50.6 acres (appx. 76%) of land stands in the name of Urban Rupi Infrastructure Pvt Ltd ("URIPL") and the same is not demarcated. 3. It appears that 76% of land is in the name of URIPL and is purchased from the funds of the Corporate Debtor which was loaned to URIPL as per the Balance Sheet of F.Y. 2013-14. URIPL is a wh....
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....tion 23.11.2018 The Respondent No. 1 filed a list of stakeholders. Respondent No. 1 admitted the claim of UITL for a sum of Rs. 296.31 Crores, despite the Adjudicating Authority having called upon UITL to limit its claim to Rs. 51 Crores on the same documents. The Appellant challenged the claims of UITL admitted by the Respondent No. 1 vide MA No. 2184 of 2019, which is pending. The Appellant contends that the claim of UITL is only Rs. 51 Crores. December 6, 2018 Final Order was passed Company Appeal (AT) (INS) No. 182 of 2018 (against Order passed in Section 19) wherein Bhavik Bhimjyani's statement is recorded stating that he does not have signed copy of any MoU executed by CD and one Lighthouse, which pertains to the property forming subject matter of present proceedings (Annex. R-2 Pg 34-39) February 1, 2019 Uday Shah (now Liquidator) challenged Order dated December 6, 2018, in Civil Appeal No. 1716 of 2019 before SC July 18, 2019 1st Auction Notice was published for Reserve Price of Rs 23.70 crores (land) (Annex. R-8 Colly Pg 59-62) December 10, 2019 2nd Auction Notice was published for Reserve Price of Rs 20.16 crores (land) (Annex. R-8 Colly Pg 63-....
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....the offer stands cancelled July 27, 2021 IA No. 1577/2021 was taken up for the first time for hearing. NCLT, after hearing the Liquidator directed that a valuation be conducted by the Ld. Collector, Raigad District Maharashtra. Advocate for Bhavik Bhimjyani also appeared and sought time to file intervention/ impleadment. Adjudicating Authority passed an order in IA No. 1577 of 2021 recording that an application is made under Regulation 33 of the Liquidation Regulations seeking permission for private sale of the said Lands to a related party of NTCPL. September 19, 2021 Appellant filed IA No. 2117/2021 seeking impleadment in IA 1577/2021 on the ground that the subject property is being sold for a lesser value September 21, 2021 IA No. 1577/2021 was listed. However, the Valuation Report of the Collector, Raigad, was not on record and therefore the matter was adjourned September 29, 2021 IA No. 2117/2021 was listed when the Appellant submitted that he has offers from buyers for more than Rs 100 crores. NCLT granted opportunity to the Appellant to bring forth such buyer October 4, 2021 Liquidator called for a meeting of the stakeholders of the Corporate Debtor. Upon ....
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....nt against passing a formal order allowing IA No. 1577 of 2021 as the objections of the Appellant as raised in IA No. 2117 of 2021 continued to subsist. March 19, 2022 Appellant filed Additional Affidavit in IA No. 2117/2021 along with offers from Myron Realtors March 21, 2022 Appellant filed IA No. 1322/2022 repeating contents of the Additional Affidavit in IA No. 2117/2021 and placing on record the offer of Myron Relators March 28, 2022 IA No. 2117/2021 was listed when the Hon'ble NCLT was informed of the developments before the Hon'ble Bombay High Court and informed the Tribunal that process for listing IA No. 1577/2021 is underway May 12, 2022 Vivek Talwar withdrew his offer June 8, 2022 IA No. 1577/2021 was revived and placed before the appropriate Special Bench in NCLT. Special Bench directed Liquidator to give notice of hearing to the Appellant in view of I.A. No. 2117/2021 June 14, 2022 Appellant filed IA No. 1617/2022 seeking removal of liquidator citing undervaluation of the property despite having the valuation by Collector, Raig....
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....pendent person. September 11, 2023 IA No. 1577/2021 was heard at length when submissions were also made in terms of IA No. 2117/2021 and IA No. 1617/2022. All Applications were reserved for Orders September 14, 2023 IA No. 4212/2023 was numbered and automatically listed. Although the Application was infructuous, NCLT issued notice to give another opportunity to the Appellant to get a better buyer. Matter was adjourned to October 4, 2023. October 3, 2023 Gewortal, by an email of October 3, 2023 withdrew its offer. Email was also marked to the Appellant (Annex. R-25 Pg 128) 04.10.2023 Appellant also made an offer to buy the said Lands at Rs. 72.45 Crores. The Appellant is at par with Mr. Anand Jain/ Leisure Enterprises LLP in its relationship with NTCPLAppellant filed Additional Affidavit in IA No. 4212/2023 putting forth his own offer. October 5, 2023 IA No. 4212/2023 was listed when Bench enquired if Leisure Enterprises LLP would be willing to better their offer October 16, 2023 One Ankit Wadhwa of Wendt Corporate Services Pvt Ltd put forth an offer by email. 18.10.2023 IA No. 4212 of 2023 was listed before the Adjudicating Authority wherein the Respondent No. 1 infor....
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....of 2023 and IA No. 4212 of 2023 were dismissed as infructuous by the Ld. Adjudicating Authority. January 8, 2024 Advocate for the Appellant submitted that the Application under Section 66 being IA No. 179/2019 cannot be heard citing Order of the Hon'ble NCLAT of December 6, 2023. Hon'ble NCLT directed Advocates for Liquidator to seek clarification from the Hon'ble NCLAT as to whether the Order dated December 6, 2023 would apply to the proceedings under Section 66 being IA No. 179/2019 September 2, 2024 IA No. 179/2019 (Section 66) was finally argued over a span of two days and reserved for Orders October 11, 2024 Order pronounced in IA No. 179/2019 (Section 66) and inter alia Respondent No. 1 was declared to have engaged in fraudulent activities. Submissions of the Appellant - 6. The Appellant is challenging the approval given by the NCLT to the undervalued sale of lands of Neelkanth Township & Construction Pvt Ltd (in liquidation) ("NTCPL") by way of private treaty to a related party vide the Impugned Order dated 05.12.2025 contrary to requirements of Regulation 33 of IBBI (Liquidation Regulations), 2016 ("Regulations"). NTCPL owns a total of 80.6 acres of prime non-agric....
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....f the proposed private sale. Admittedly, in the present case, the buyer and creditor is the same person and is directly affected by the bar under Regulation 33(3). 10. Appellant places reliance on State Bank of India vs Bhuvee Stenovate (2023 SCC Online NCLAT 71) State Bank of India vs Bhuvee Stenovate (2023 SCC Online NCLAT 71), which lays down requirements for private sale, which has been ignored by the Adjudicating Authority. 11. The Impugned Order does not consider compliance with Regulation 33 at all. It is submitted that a sale tainted by collusion cannot be sustained in law. Permitting an application seeking prior permission for private sale is not a mere formality and the NCLT ought to consider the mandatory parameters of Regulation 33 before permitting such sale. In the present case, Application appears to be an empty formality. 12. The Liquidator has filed IA No. 1577 of 2021 secretly and unilaterally, without prior notice or information to the stakeholders, on a misleading premise that there were four failed auctions and, hence, he attempted a private sale, without highlighting that 2019 auction was only for 30 out of 80.6 acres. Auctions dated 18.07.2019 and 10.12.20....
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....% value in 2021. Reliance in placed by the Appellant on Indian Bank vs Charu Desai (Company Appeal AT (Ins) No. 644 of 2021), wherein this Appellate Tribunal permitted consideration of a better valuation. 17. The claim of UITL is Rs 51 crores. The sale amount is deliberately kept Rs 58.59 crores. Essentially the transaction is putting the money from one pocket to the other by defrauding the Corporate Debtor of the actual value of the assets of Corporate Debtor. It is exactly for this reason that Regulation 33(3) of the Regulations bars such a sale. This attempt to make a circular transaction may also be considered in light of the fact that in the offer dated 10.06.21, the offer is made in the interest of investors in UITL and to give them an exit. It may be noted that the same purchaser Mr Anand Jain is being investigated by CBI for fraud in UITL with regard to the investors under the orders of the Bombay High Court. [Judgment in Shoaib Richie Sequeira vs State of Maharashtra and Ors dated 31.01.2025 reported in 2025: BHC- AS:5208-DB - para (x)]. This judgment was upheld by the SC on 17.03.2025. Thus, it is claimed that the transaction was not an arm's length commercial deal but a....
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....sition or the objections of the Appellant at any stage. Further even the provisions of law are not considered. The only reason to permit sale is at para 3.9 i.e. EMD is deposited by the Respondent No. 2. The Appellant submits that the NCLT committed a serious error in procedure and law by not addressing the merits of the objections and alternate higher offers placed before it. The Appellant's grievance that the sale process was collusive and not in the interest of creditors was left unanswered, which is an error apparent on the face of the record. 22. By the Order dated 05.10.2023 in IA No. 4212 of 2023, the NCLT put up a query whether the Leisure LLP intends to increase its offer. The response is recorded at para 3.6 of the Impugned Order where it has threatened to walk out of the process and seek refund of EMD. Clearly, there was no finality in the offer made. 23. The Appellant is the 60% shareholder of the Corporate Debtor and is a recognized stakeholder. The Appellant stands to gain 60% of the sale proceeds above Rs 51 crores. Evidently, the Appellant has locus to challenge the private sale. Further, it has been held that suspended management and shareholders have the locus. ....
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....r the first time the manner in which the process had been conducted. A copy of IA No. 1577 of 2021 was only shared by Affidavit dated 17.04.2025 i.e. after commencement of final hearing before this Tribunal. This shows the opaque nature in which the entire liquidation process was being carried out. 28. The claim that the Appellant benefits from delayed proceedings due to an alleged rise in property prices is unfounded. The Appellant's case has consistently relied on valuations and offers from 2018 and 2021, demonstrating the property's higher value at that time. The consistent suppression of value through collusion between the Liquidator and the related party purchaser is evident. 29. The Impugned Order of the NCLT approving the sale is ex-facie unsustainable, having been passed in the teeth of the Liquidation Regulations and without judicious consideration of the facts. The Appellant has demonstrated that the sale was conducted at an unconscionably low price, in a non-transparent and collusive manner, causing loss to the stakeholders. It is humbly submitted that this Tribunal ought to set aside the illegal sale and direct a proper third-party auction to ensure that the true valu....
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....head of SALE OF PROPERTY DOES NOT COMPLY WITH REGULATION 33) in its withdrawal letter dated December 1, 2023 has laid down the following reasons insofar as the present matter is concerned: a. Land parcels are fragmented and non-contiguous. b. No designated/proper entry point to any land parcel c. Electric poles existing on the land parcel d. Gas pipeline is passing through the land parcel e. Concerns relating to Coastal Regulation Zone. 34. Consequent to the non-cooperation of the Appellant and not having provided the requisite documents, the Liquidator preferred an Application under Section 19 of the Code and the same was allowed vide an Order dated April 26, 2018. Appellant preferred an Appeal against the Order dated April 26, 2018 vide Company Appeal (AT) No. 182 of 2018, wherein this Appellate Tribunal directed that the Liquidator may inspect the documents of URIPL, however the Liquidator shall not have any jurisdiction to take over any asset of URIPL including the 76% of parcel of land above-named by its Order dated December 6, 2018. Liquidator challenged the said Order before the Hon'ble Supreme Court vide Civil Appeal No. 1716 of 2019 and by an Order dated Februar....
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....he pandemic and passed necessary orders from time to time since its first Order passed on March 23, 2020 in Suo Moto Writ Petition (Civil) No. 3 of 2020. It is submitted that while earlier auctions were conducted in the year 2019. No auctions were conducted in the year 2020 due to the Covid pandemic. However, when the lockdown was being lifted and the situation was going back to normalcy, the Liquidator sought to act on the duty cast upon him under the Code and its Regulations and therefore initiated the process to conduct the next round of auction. Vide an Order passed on March 8, 2021 in Suo Moto Writ Petition (Civil) No. 3 of 2020, the Hon'ble Supreme Court relaxed its earlier decisions while observing that "Though we have not seen the end of pandemic, there is considerable improvement. The lockdown has been lifted and the country is returning to normalcy. Almost all the Courts and Tribunals are functioning either physically or by virtual mode.". This itself suggests that the Liquidator was prompt in conducting his duty as a Liquidator since the Liquidation Process ought to be conducted in a time bound manner as stipulated under the Code and its Regulations. 39. It was also con....
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....tion 'Raigad Times'. Additionally, the Appellant has failed to point out that Raigad District also falls within the list of Districts under the MMR Region. 40. It was also contended that Property was sold at a lesser value than market rate. At the cost of repetition, in the interest of maximizing the value of the property and since almost 75% of the land parcel was in the name of URIPL, being the wholly owned subsidiary of the Corporate Debtor, the Liquidator sought to sell the immoveable property of 30 acres in the name of the Corporate Debtor along with 100% shares held by the Corporate Debtor in URIPL which claimed ownership of 50 acres of contiguous land parcel. In view thereof, the Liquidator conducted a fresh valuation of the property in or around the month of February, 2021 wherein the Average Market Price of the property (land and shares) was Rs. 67.41 crores and the highest valuation was Rs. 68.01 crores. Accordingly, the third auction (first auction in the year 2021) was conducted for a Reserve Price of Rs. 68.47 crores, i.e higher than the highest valuation received by the Liquidator. Since the property could not be sold, the Liquidator sought to reduce the auction pric....
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....cess will be based on Order of the Adjudicating Authority. 42. The Appellant vehemently argues that there is purported collusion between the Liquidator and the Successful Buyer without any logical and/or cogent basis and evidence to such allegations. Having canvassed such allegations even before the NCLT, the NCLT has categorically observed that there is no adverse material suggesting collusion. On the contrary, buyers who initially conveyed their interests in the property, did not make any effort even to deposit EMD, much less put forth an actual offer. Offers by such buyers were also placed before the NCLT and the same was considered prior to approving the private sale under I.A. No. 1577 of 2021. 43. Details of such buyers, the corresponding Applications and the details of their expression of interest and subsequent withdrawal are provided below : 44. In the light of the above, the NCLT (@ para 3.8 of Impugned Order in Appeal No. 23/2024) also observes as under : "The value maximization proposition has to (be) put to and end at some point of time and it cannot be made an unending process. We are of the considered view that the realizable value is a value, which other willin....
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....on of the proceedings before the Hon'ble Supreme Court. Thus, only the land was put to auction in the year 2019 and whereas no auctions could be conducted due to the unprecedented Covid-19 pandemic in the year 2020. Thus, having left with little choice, the Liquidator subsequently put to auction the Land in the name of Corporate Debtor and its shares held in the Wholly Owned Subsidiary. i.e URIPL such that any buyer would benefit the right, title and interest in the entire parcel of land, directly and/or indirectly thereby aiding in value maximisation of the property at Alibaug. It is contended that the Liquidator has opposed higher offers by other prospective buyers. While such contention is far from truth (elaborated herein below) the Hon'ble Supreme Court has established that there is no such principle laid down by a Court that whenever a higher offer is received in respect of the sale of a property of a company in liquidation, the Court would be justified in reopening the concluded proceedings (Vedica Procon Pvt. Ltd. vs Balleshwar Greens Pvt. Ltd. - para 47 (2015) 10 SCC). 47. Further, the Respondent relies on the judgement of Hon'ble Supreme Court, recently in the matter of ....
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....ord before any Fora as per the submissions of the Liquidator. 51. Two more auctions were conducted in the year 2021 pursuant to carrying out fresh valuation. Both auctions failed since no bidders came forth. The last public auction was conducted for a Reserve Price of Rs 58.20 crores. R2 - Leisure Enterprises has offered an amount of Rs 58.51 crores and has paid 10% EMD (Non-Refundable) against their offer. As per the Terms and Conditions of sale, Clause 23 explicitly states that it is an 'Invitation to Offers'. Subsequent thereto, R2 has placed its offer before the Liquidator vide letter dated July 1, 2021. The Offer placed by R2 was conditionally accepted by the Liquidator vide a letter dated July 2, 2021. Last paragraph of the said letter explicitly states that all necessary process will be based on Adjudicating Authority Order and as per the satisfaction of Order, the possession of abovementioned property will be handed over to R2 only upon receipt of full sale consideration by NTCPL. Therefore, the subject-sale under Regulation 33 of the Liquidation Process Regulation is subjected to approval of the Adjudicating Authority, being Application under I.A. No. 1577 of 2021. 52. W....
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....enged by the Appellant before the Hon'ble High Court vide a Writ Petition and the Order dated December 24, 2021 was set- aside vide an Order dated December 30, 2021. It is pertinent to note that the Order dated December 24, 2021 was set-aside on account of a technical and administrative flaw which does not relate to the sale and/or its validity and merits in any manner. Thereafter, upon revival of I.A. No. 1577 of 2021 before the NCLT, the Appellant time and again brought forth offers from buyers claiming that such buyers were purportedly willing to offer a better price. However, all the buyers as purportedly claimed by the Appellant was withdrawn their offers more so without paying a single dime. 57. As against the conduct of such buyers as claimed by the Appellant, R2 has already paid a Non-Refundable EMD to the Liquidator in the year 2021 and till date R2 has abided by its offer for purchase of the subject property. Even as R2 has kept available the balance amount towards its offer of Rs. 58.51 crores, R2 is already facing a loss of opportunity cost merely on account of the delay caused in the present matter which is purely attributed only to the conduct of the Appellant wh....
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....sing confirmation (para 40 of (1969) 3 SCC 537)). It is notable to consider that even in the case of Navalkha (supra.), an auction was conducted albeit between only two persons (re: (para 35 of (1969) 3 SCC 537)) and as such the facts of the matter are well-fitting in the present case and thus the ratio as laid down in the matter of Navalkha (supra.) can be applied as is. The principles laid down in the matter of Navalkha are reiterated by the Hon'ble Supreme Court in the matter of Vedica Procon Pvt. Ltd. vs Balleshwar Greens Pvt. Ltd. (2015) 10 SCC 94. 61. The issue pertaining to the adequacy of the consideration for the subject property was examined in detail by the NCLT vide a Common Order dated November 21, 2023 passed in IA No. 2117 of 2021, IA No. 1617 of 2021 and IA No. 1322 of 2021. The said Order is impugned vide Appeal No. 1584 of 2023 and Appeal No. 1585 of 2023 forming a part of the present batch of tagged matter. R2 is not arrayed as a party to the said proceedings. 62. It is an undisputed and admitted fact that the Appellant did not participate in the sale of the subject property, either at the time of having placed the public auction and/or during the pendency ....
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.... more particularly stated in the submission to Company Appeal No. 23 of 2024, the Liquidator is guilty of misleading the NCLT in its pleadings in IA no. 1577 of 2021. The IA seeks permission for a private sale to a related party on the basis that there were 4 failed auctions but there was no genuine auction conducted at any stage for the entire lands. Further, the IA No. 1577 of 2021 further fails to disclose that various alternate offers were received by the Liquidator for much higher value. The true value of the property was thus wilfully supressed from the NCLT while making an Application to permit the undervalued private sale in favour of Leisure Enterprises LLP, a related party. It is evident that NTCPL's assets could fetch a significantly higher price in an open, transparent process. The Liquidator's insistence on the sale of assets at Rs. 58.51 crores suggests a design to benefit the related party buyer at the cost of the stakeholders of the NTCPL. It is contended that the control of corporate Debtor and its 100% subsidiary was handed over to UITL by appointing their employees as directors. The Liquidator is ex facie hand-in-glove with the UITL and its associates. Th....
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....10.2021, no information was provided with respect to the private sale. The Appellant has raised queries with respect to the sale process and compliance of Regulation 33, which have remained unanswered till date. All of which are recorded and are uncontroverted. Instead of dissipating information on the prospective buyer, the Liquidator instead recorded false allegations against the Appellant in the minutes of meeting. The Appellant has protested the same in its communication dated 19.10.2021. The meeting had been carried out on a hybrid platform and was recorded but despite assurances by the Liquidator in emails dated 09.10.2021, 14.10.2021, 27.10.2021 and 05.01.2022, no recording has been shared by the Liquidator till date. The Liquidator's conduct is a blatant breach of Regulation 31A and the Liquidator's duty of transparency. Essentially, the liquidation process has been treated as a private affair between the Liquidator and UITL, which is against both the letter and spirit of the IBC. 70. It is also contended that there is a collusion between the liquidator and UITL-Financial Creditor in undervaluation. The Liquidator is duty bound to conduct the liquidation proceeding....
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....ditional Affidavit only shared by Affidavit dated 16.04.2025 during final hearing, after submissions of suppression by the Liquidator were made before this Tribunal. 72. It is also claimed that there has been Breach of confidentiality. The record shows that the Liquidator has been divulging confidential information of the Corporate Debtor to UITL. In fact, the Liquidator was found sending confidential papers of the Corporate Debtor to UITL as the same were accidently delivered to the office of the Appellant. This clearly shows that UITL has complete control over the Liquidator and he was not acting in non- partisan and neutral manner. 73. It is also contended that liquidator has acted contrary to the code. Actions of the Liquidator are ex-facie contrary to Code. The Liquidator has completely ignored the requirements of Regulation 33 of the Liquidation Regulations to support an undervalued and illegal private sale. The Liquidator has admitted time-barred and inflated claims of the Corporate Debtor in contravention of the Orders of the NCLT, without any scrutiny and despite objections raised by the Appellant and the Committee of Creditors. The claims of UITL admitted by the Liquida....
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.... IA 4212 of 2023 in CP (IB) No. 69 of 2017 qua considering better offers/ fresh auction rejected as infructuous. It is claimed that the Appellant's IA No. 4212 of 2023 was being considered by the NCLT as evident from the Orders dated 05.10.2021 and 18.10.2021 of the NCLT. In the said Orders the NCLT had called upon the proposed buyer Leisure Enterprises LLP to increase its offer and was also contemplating better offers which were placed by the Liquidator. The Order dated 18.10.2023 calling upon one Wendt Corporation to make an EMD was only uploaded on 05.12.2023 after the Order in IA 1577 of 2021 allowing the private sale was pronounced. The NCLT erroneously lost sight of the proceedings pending in the said IA 4212 of 2021 and incorrectly allowed the private sale dismissing the Appeal as infructuous. Company Appeal (AT) (Ins.) No. 528 of 2024 80. In Company Appeal (AT) (Ins.) No. 528 of 2024, the Appellant is assailing impugned order in IA No. 1393 of 2024. I.A. No. 1393 of 2024 which was filed by the Liquidator had the prayer that Respondents to pay property tax of Rs. 8.65 lakhs. In the Order dated 06.12.2023, directions were issued in IA No. 1393 of 2023, directing the pur....
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.... by all parties CA(AT)(Ins.) No. 23/2024 is taken as a lead case along with other related matters as noted hereinafter. 85. The brief sequence of events - from admission into CIRP under Section 7 of the Code and thereafter into liquidation is captured as below: 01.03.2017 Urban Infrastructure Trustees Limited (UITL) filed Company Petition No. 21 of 2017 under Section 7 of the IBC seeking admission of NTCPL under CIRP claiming financial debt to the tune of Rs 226.16 crores. NCLT dismissed the petition filed by the Petitioner claiming Rs 226.16 crores and restricted the claim of the Petitioner to an amount of Rs 51 crores. 29.03.2017 UITL after accepting the order dated 01.03.2017, filed Company Petition No. 69 of 2017 seeking admission of NTCPL under CIRP for an amount of Rs 51 crores, which is the only amount which could be claimed. 21.04.2017 Adjudicating Authority admitted the Company Petition against NTCPL for a sum of Rs 51 crores. The order of admission was upheld by the Hon'ble Supreme Court. May 4, 2017 NCLAT stayed the Orders dated April 21, 2017, admitting the above Company Petition and May 1, 2017 appointing the IRP in Company Appeal (AT)(INS) No. 44 of 2017 ....
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...., is purchased from the funds of the Corporate Debtor, which was loaned to URIPL as per the Balance Sheet of FY 2013-14. 90. Before proceeding any further, it will be instructive to note all the Appeals before this Tribunal which are tabulated as follows : Sr. No. Company Appeal (AT) (Ins) Nos. Company Appeal (AT) (Ins) Nos. Impugned Order 1. 1584 of 2023 I.A. No. 2117/2021 (Filed by Bhavik Bhimjyani) (a) Allow impleadment in IA. 1577/2021 (private sale) (b) Provide copy of IA 1577/2021. (c) Call meeting of SCC (d) Provide copies of all IAs in CP 69/2017 (e) (Interim) No orders to be passed in IA 1577/2021 (f) Interim and ad-interim reliefs in terms of prayer clause (a) to (e) November 21, 2023 rejecting IA 1577/2021 2. 1585 of 2023 I.A. No. 1617/2022 (Filed by Bhavik Bhimjyani) (a) Investigate Liquidator under Section 218 of IBC (b) Replace Liquidator. (c) Initiate proceedings of professional misconduct and such other offences (d) Stay IA 1577/2021 (e) Interim and ad-interim reliefs in terms of prayer clause (a) to (d) November 21, 2023 rejecting IA 1617/2022 ....
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....er in purchase of the said property, the Applicant issued a letter dated June 24, 2021 to the proposed Buyer intimating the proposed Buyer of the terms and conditions of the said sale. Alongside, the Applicant also issued a formal Invitation to Offer to proposed Buyer on the same day. Hereto annexed and marked as Exhibit "G" is a copy of the said letter dated June 24, 2021. 15. As per the said Invitation to Offer document, the sale of the said property was made subject to the payment of a non-refundable Earnest Money Deposit ("EMD") along with a declaration that the said Leisure Enterprisers LLP, being the proposed Buyer, is not barred under Section 29A of the Code. 16. Accordingly, the proposed Buyer provided all requisites, including the declaration under Section 29A of the Code on July 1, 2021. Hereto annexed and marked as Exhibit "H" is a copy of the said Invitation to Offer document along with the declaration under Section 29A of the Code. 17. Upon being satisfied of the bonafides of the proposed Buyer and having complied with the necessary provisions of the Code, the Applicant issued a letter dated July 2, 2021 to the proposed Buyer thereby confirming the sale of the pr....
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....dure which has been prescribed for private sale, which is assailed and which is being analysed hereinafter. 94. The Appellant has relied on the regulations governing private sale and particularly for a related party of the Corporate Debtor. It is vehemently argued that this is a private sale and is contrary to the statutory requirements of Regulation 33 of Liquidation Regulations. We note that the liquidation sale is required to be carried out in terms of Regulation 33 read with Schedule I of the Regulations. The relevant Regulation No. 33 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016 is as extracted below: "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 reserve price of a failed auction; or (d) the prior permission of the Adjudicat....
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.... NCLT ought to have considered the mandatory parameters of Regulation 33 before permitting such sale, which is missing in the Impugned Order. In the present case, Application appears to be an empty formality. 97. Liquidation Regulations as noted above provide that Liquidator shall not auction the asset without prior permission of the Adjudicating Authority by way of private sale to a related party. As per materials on record Leisure Enterprises LLP- R2 has confirmed that they are related party as per Section 5 (24) of IBC. It was, therefore, necessary that prior permission of the Adjudicating Authority is obtained by the Liquidator for private sale. It was not done. Furthermore, the way transactions happened so swiftly defy any logic in the background that the auction was pending for a long time, price was nowhere close to the valuation and the assets were not going to deteriorate and the statutory Liquidation Regulations were not being followed. 98. Liquidator has set out a case before the Adjudicating Authority that, subsequent to the last Auction Notice dated March 25, 2021, one Leisure Enterprisers LLP sent a letter dated June 10, 2021, expressing their interest in purchase o....
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....pellant claims that the Liquidator also did not inform the Stakeholders Consultation Committee (SCC) of the proposed private sale. This is being defended by the Liquidator on the ground that the Regulations relating to the SCC came into existence later on and they were not applicable on these proceedings. It is contended by the Liquidator that the liquidation proceedings herein commenced on September 3, 2018 and whereas Regulation 31A mandating formation of an SCC was inserted by way of notification dated July 25, 2019. IBBI issued a circular dated August 26, 2019, stating that the provisions of the aforesaid amendment would not be applicable to the liquidation processes which had commenced before coming into force of the said amendment. The prospective applicability of the said provisions was specifically inserted into the Liquidation Regulations vide an amendment carried out on or about April 28, 2022. 102. In the present case we note that Respondent No. 1- Liquidator had filed IA No. 1577 of 2021 for seeking permission under private sale to a related party. The relevant portion of the IA is extracted below : "4. The Applicant has preferred the present Application interalia se....
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.... worse on account of the 2nd wave, the Respondent attempted 2021 auctions and then approved a private sale in June 2021. It is to be noted that the Alibaug lands are neither perishable nor likely to deteriorate if not sold immediately-conditions which might warrant a swift private sale did not exist. Sudden hurry in the month of March 21 is inexplicable. On the issue of undue haste in conducting back- to-back auctions within a three-week period in March, 2021, the Liquidator has sought protection of Schedule 1 (1B). However, the provision was only introduced on 16.09.2022. Section 35 (1) (f) of the Code obligates the Liquidator to sell the assets of the Corporate Debtor "in a manner specified by the Board (IBBI) and to maximise recovery. In the present case, the Liquidator has failed on this count. We, therefore, find that the Liquidator in IA No. 1577 of 2021 has pleaded on misleading premises that there were four failed auctions and, hence, he attempted a private sale. 105. Appellant has vehemently argued that wide publicity to auction was not given. Even though we may not rely upon all the arguments of the Appellant that the auction notices were issued in newspapers with limite....
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....ent the Liquidator did not conduct genuine public auction before resorting to a private sale. 106. Now we delve into the issue of valuation of the assets. We note that the proposed private sale to the related party at a Rs 58.59 crores is grossly undervalued on all valuations placed on record. The Liquidator has attempted to provide a defense on the valuation and claims that the Liquidator conducted a fresh valuation of the property in or around the month of February, 2021, wherein the average market price of the property (land and shares) was Rs 67.41 crores and the highest valuation was Rs 68.01 crores. Accordingly, the 3rd auction (1st auction in the year 2021) was conducted for a reserve price of Rs 68.47 crores, i.e higher than the highest valuation received by the Liquidator. Since the property could not be sold, the Liquidator sought to reduce the auction price by about 10% and the fourth auction (2nd in the year 2021) was conducted for about Rs 58.20 crores. The Liquidator claims that the Regulations permit him to reduce the auction price by 25% after every failed auction. However, in the present case, the Liquidator only reduced the price by about 15%. Even then, no bidde....
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....idator claims that while earlier auctions were conducted in the year 2019, yet no auctions were conducted in the year 2020 due to the Covid pandemic. However, when the lockdown was being lifted and the situation was coming back to normalcy, the Liquidator sought to act on the duty cast upon him under the Code and its Regulations and, therefore, initiated the process to conduct the next round of auction. Liquidator claims that this itself suggests that the Liquidator was prompt in conducting his duty as a Liquidator since the liquidation process ought to be conducted in a time-bound manner as stipulated under the Code and its Regulations. From the records in the case, we do not find the justification to be satisfactory. We find that very limited circulation was done for two back-to-back public auctions for March 2021, when 3rd and 4th auction notices were issued. And, in the month of June 2021, private sale was finalised without prior approval of the Adjudicating Authority, which was in contravention of Regulation 33. 109. Leisure Enterprises LLP claims that, as per the terms and conditions of sale, Clause 23 explicitly states that it is an 'invitation to offers'. Subsequent theret....
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....der of the Corporate Debtor. Even though we may not rely on these pleadings by the Appellant, since they have remained uncontroverted it provides an indication to the relationship between Mr Anil Jain both as Financial Creditor and as a shareholder of Corporate Debtor (in liquidation). 111. Appellant claims that Mr Anand Jain is being investigated by CBI for fraud in UITL with regard to the investors under the orders of the Bombay High Court. [Judgment in Shoaib Richie Sequeira vs State of Maharashtra and Ors dated 31.01.2025 reported in 2025: BHC- AS:5208-DB - para (x) at pg. 28]. This judgment was upheld by the Hon'ble Supreme Court on 17.03.2025. Per contra, it is denied by Leisure Enterprises LLP-R2 and claims that R2 is not barred under Section 29A of the Code. On the contrary, Liquidator claims that Appellant herein is declared to have engaged in fraudulent activity under Section 66 of the Code. We are not going into the merits of the claims and counter claims with respect to the criminal background of both the Appellant and the Respondent. It is sufficient for us to note that there has been deviation in the statutory process, which should have been followed by the Liquidato....
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.... events submitted by the Liquidator. The approval of private sale for the subject property, for reason as stated above, was pending before the NCLT since June, 2021, until December, 2023, and, subsequently, before this Tribunal from December, 2023, until date. Anyway, without prior approval of the Adjudicating Authority, the private sale could not have proceeded any further and in such a situation the deposit of EMD doesn't give any preferential right to the R2. 114. Both the Liquidator and the Leasure Enterprises LLP have relied upon various judgments, the relevant ones are being taken up hereinafter. 115. Appellant places reliance on State Bank of India vs Bhuvee Stenovate (supra), which lays down requirements for private sale and has been ignored. The relevant extract of this judgement is as follows: " .... 12. In the Application, the Respondent No. 2 was praying for a direction to liquidator to accept the offer of the Respondent No. 2 and transfer the Corporate Debtor through a private sale on a going concern basis in accordance with the provisions of the Code. The manner and procedure of conducting the private sale is governed by Regulations and the liquidator is empower....
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.... certain procedural norms to ensure value maximisation and fairness. Schedule I, paragraph 2 requires the Liquidator to prepare a strategy to approach interested buyers and allows private sale by directly liaising or any means likely to maximise realisation. In the case at hand, the Liquidator has failed to explore or approach other potential buyers in an effort to get the best price. However, the Liquidator claims that the facts of this judgment [State Bank of India vs Bhuvee Stenovate (supra)] are not applicable in the present case. In the said case, the Liquidator had rejected offers under private sale and, whereas, the Adjudicating Authority surpassed the commercial decision of the Liquidator and permitted a private sale thereunder. It was in light of facts as such that the observations thereunder were made and the sale was set-aside. The Appellant has vehemently argued that the sale has been completed by the Liquidator in the absence of the permission of the Adjudicating Authority in contravention to Regulation 33 of the Liquidation Process Regulations. 117. Appellant has also relied upon the judgement of R K Industries vs HR Commercials (2024) SCC 166 and the relevant extrac....
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....cating authority (NCLT) for appropriate orders/directions, including the decision to sell the movable and immovable assets of the corporate debtor in liquidation by adopting a particular mode of sale and the adjudicating authority (NCLT) grants approval to such a decision, there is no provision in IBC that empowers the appellate authority (NCLAT) to suo moto conduct a judicial review of the said decision. The jurisdiction bestowed upon the adjudicating authority (NCLT) and the appellate authority (NCLAT) are circumscribed by the provisions of IBC. and borrowing a leaf from Essar Steel India Ltd. (CoC) v. Salish Kumar Gupta, they cannot act as a court of equity or exercise plenary powers to unilaterally reverse the decision of the liquidator based on commercial wisdom and supported by the stakeholders. The Court has also observed in the captioned case that "from the legislative history, there is contra-indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority". 80. The aforesaid view will apply with equal force to any commercial or business decision taken by the liqui....
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....llowing observations, which are reproduced as under: ".... 39. No doubt, the penultimate statement of the paragraph recognises the discretion of the Company Court either for accepting or refusing the highest bid at the auction, it also emphasizes the obligation of the Court to see that the price fixed at the auction is adequate price even though there is no irregularity or fraud in the conduct of the sale. However the penultimate sentence restricts the scope of such discretion in the following words: (Navalkha case, SCC p. 541, para 6) "6. it is well to bear in mind the other principle which is equally well settled, namely that once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sake or offer already received (See: the decision of the Madras High court in Roshan & Co. case (S Soundararajan v Roshan & Co. (1939 SCC Online Mad 205). 40. In other words, in Navalkha case, this Court only recognized the existence of the discretion in the Company Court either to accept of reject the highest bid before an order of confirmation of the sale is made. This Court also emphas....
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.... also erode credibility of the auction process itself. That apart, post auction it is not open to the Liquidator to act on third-party communication and cancel and auction, unless it is found that fraud or collusion had vitiated the auction...." [ emphasis supplied ] 124. The above judgments cited by the Respondents are not applicable in the facts of the present case as it is not the question of adequacy of the price found in the auction, but it is the procedure which needs to be followed Liquidation Process Regulations for private sale and which has not been followed and which raises questions of lack of transparency and also non- discovery of maximum recovery. 125. On the contrary the Liquidator claims that the judgments are based upon auction conducted by the Liquidator. The Liquidator had sought to auction the property and, subsequently, when the auctions failed, the Liquidator proceeded to conduct a private sale thereof in compliance with Regulation 33 of the Liquidation Regulations. As such, the principles of sale laid down in the judgments relied herein above are as valid and applicable to the present matter. We have gone through all the judgments placed before us. We do....
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....ectors of 100% subsidiaries of NTCPL in the light of orders hereinafter. Further, the registered address of TCPL and the registered email ID of NTCPL has been changed to the address and email ID of UITL, which is under the control of Mr Anand Jain, the related party, that has placed the distressed offer to purchase the lands of NTCPL through M/s Leisure Enterprises LLP. These acts were done behind the back of stakeholders and without permission of NCLT. The Liquidator appointed the said persons as directors to give them control, even though the proposed private sale transaction was being challenged by the Appellant. It is pertinent to note that the private sale is challenged before this Tribunal in Company Appeal No 23 of 2024 and the same is not confirmed. We are not going into the merits of these claims as the orders relating to validity of the private sale are being noted herein after. 127. In Company Appeal (AT) (Ins.) No. 1585 of 2023, the prayers which were rejected related to investigation of Liquidator under Section 218 of the IBC and also to replace him and initiate proceedings of professional misconduct and such other offences. By common order this Appeal is also dispose....