TaxTMI 
TaxTMI 
2025 (6) TMI 1275
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....es the Impugned Judgment and Order dated 05.12.2023 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 ....
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.... Company Appeal (AT) (INS) No. 182 of 2018 September 9, 2018 Corporate Debtor was set into liquidation 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 ....
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....isure, a purported related party. July 15, 2021 Liquidator informed Vivek Talwar that since 3 months, no further steps were taken by Vivek Talwar and since EMD is also not paid, 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 ....
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....63,000/-, which is much higher than the offer which forms basis of IA No. 1577 of 2021, proposing sale to the related party at Rs. 58.51 crores. 15.03.2022 Adjudicating Authority allowed IA No. 63 of 2022 despite the oral objection of the Appellant 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....
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....ught to the knowledge of Liquidator for the first time only through service of IA No. 4212 of 2023 08.09.2023 The Appellant filed IA No. 4212 of 2023, wherein the Appellant has inter-alia prayed that the subsisting offer of M/s Gewortel Developers be accepted, else the said Lands be put to a fresh auction through an independent 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. ....
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.... 6, 2023 Company Appeal (AT) (Ins) No. 1584 of 2023 and Company Appeal (AT) (Ins) No. 1585 of 2023 were listed before this Hon'ble Tribunal whereby this Hon'ble Tribunal issued notice to the Respondent No. 1 and directed the Respondent No. 1 to not take any further steps. IA No. 5021 and IA No. 4212 of 2023 were listed before the Ld. Adjudicating Authority for hearing. Both IA No. 5021 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 -....
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....iquidator appears to have actively participated in it. 9. In the present facts, no prior permission from the Tribunal was taken by the Liquidator an as required under Regulation 33 of the Code. The Liquidator filed IA No. 1577 of 2021 after agreeing to an undervalued price and after accepting a deposit from the related party. The Liquidator also did not inform the Stakeholders Consultation Committee (SCC) of 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....
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....d to (i) Resolution Plan proposed by UIVCL (sister concern of UITL and entity controlled by Mr Anand Jain) (pg. 450); (ii) Valuation by experts such as Colliers; (iii) Circle rates; valuation given by the Collector; (iv) adjacent land sales; (v) Liquidation value arrived in 2018. 16. In the plan of UIVCL 19.04.2018 be noted, the same entity has valued property at Rs 103 crores in 2018 and is attempted to be brought at 50% 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 no....
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....substantially more value if an open, competitive sale process had been pursued. 21. The Appellant's case has not been considered by the NCLT at any stage. By the Order dated 21.11.2023, the IA for intervention made by the Applicant is rejected but the Order records that the objections will be considered in the Order pertaining to Application for private sale. The Order dated 05.12.2023 for private sale does not consider the legal position 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....
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....d no responses provided on issues raised till date. Despite this, the Impugned Orders record that information would be provided to the Appellant under SCC meetings, which have till date not been held. The record has been completely ignored by the NCLT. 27. The Liquidator deliberately avoided filing replies in IA Nos. 2117/2021 and 1613/2021. It was only after the issuance of Notice in the present Appeals that a response was filed, disclosing for 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....
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....21 since September, 2021. Appellant, himself being a Real Estate Developer has better contacts and has brought forth several buyers during the pendency of IA No. 1577 of 2021. The Liquidator has never opposed the offers by such buyers. Even so the proposed buyers have eventually withdrawn their interests without having paid any EMD. The Appellant was given multiple opportunity by the NCLT to get a better offer. 33. Further Wendt Corporation Pvt. Ltd. (Re: Table under the 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....
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....nd/or through the Appellant ought to be seen and confirmed with a higher degree of scrutiny. 36. Public notices for auction were duly published and are shown as below in a Chart : 37. The Appellant has objected to the sale on various grounds and they are considered hereinafter. 38. The first ground is that Auctions were conducted during Covid pandemic. The Covid pandemic started in or around the month of March, 2020 and a nationwide lockdown was declared. The Hon'ble Supreme Court took suo moto cognizance of the 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....
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....s also as a part of the Annexures to I.A. No. 1577 of 2021, which was primarily placed before the Tribunal. The Appellant also contends that Raigad Times (regional newspaper used for publication of the Auction Notice) does not have circulation in Mumbai. This statement is factually incorrect. Moreover, the statement was made orally as at the time of hearing and whereas pleadings do not contain any such reference. That being said, the subject-property is situated in District Raigad that has a vast circulation of the publication '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 pa....
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.... (supra). However, the facts in the matter of Bhuvee Stenovate (supra.) are completely different to that of the present matter. It is pertinent to note the Terms & Conditions as provided by the Liquidator to R2. As regards the approval for a sale to a Related Party, the Liquidator has been waiting for the confirmation by NCLT and sale has not been completed. Moreover, the Confirmation Letter issued by the Liquidator while being in consonance and accordance with the Terms and Conditions, explicitly states that all necessary process 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 th....
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....e CD were not put to auction in the year 2019 and the Liquidator has failed to engage in value maximisation. At the cost of repetition, the Liquidator had preferred an Application under Section 19 before the NCLT inter alia seeking further details and documents pertaining to the loan advanced by Corporate Debtor to URIPL in the interest of value maximisation of the very property in question. However, the Liquidator is not permitted to take on the property of a sister concern, being a third party which was subsequently established upon conclusion 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 ....
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.... vide an Order dated December 6, 2018. Subsequent thereto the Liquidator challenged the said Order dated December 6, 2018 vide Civil Appeal No. 1716 of 2019 and the same was finally decided on or about February 24, 2020 thereby restoring the Order of NCLT, which established that the Appellant is hiding information. The remarks of the NCLT that the Appellant is 'hiding information' is purportedly expunged vide an Order dated July 20, 2020 subject to filing of a certain Affidavit of undertaking of compliance. No such Affidavit has been placed on record 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 ....
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....ediate context thereof is therefore misleading and flawed. The Appellant has failed to realise that property prices are always fluctuating and are subject to market forces and ancillary issues arising thereof, such as change in government rules, coastal regulations and clarity in terms of the title to the property. 56. R2 made its offer on or about July 1, 2021 and alongside paid a non- refundable EMD as at the time of placing its offer for the subject property. The sale was first approved by the NCLT vide an Order dated December 24, 2021. The said Order was challenged 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 claime....
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....ale of the assets of the corporate debtor". 60. The Hon'ble Supreme Court, in its landmark judgment of Navalkha & Sons vs Ramanya Das (1969) 3 SCC 537) has established that even the Hon'ble Supreme Court has only recognised the existence of the discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of the sale is made. The hon'ble Supreme Court has also emphasized on the well-settled principle that once the Company Court recorded its conclusion that the price is adequate, subsequent higher offer cannot be a ground for refusing 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 adequa....
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....after going through the validity, propriety and correctness thereof, be pleased to quash and set aside the same. b) Pending the hearing and final disposal of the present Appeal, this Hon'ble Tribunal be pleased to stay further proceedings in Company Petition No. 69 of 2017 and more particularly IA No. 1577 of 2021 in Company Petition No. 69 of 2017 which is pending adjudication before the Ld. Adjudicating Authority, Mumbai. 66. It is contended that Liquidator is guilty of misleading NCLT by way of pleadings in IA No. 1577 of 2021 in seeking permission for a private sale of the property in favour of a related party, as 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 t....
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.... IA 1577 of 2021 was also denied is as evident from emails dated 30.08.2021, 04.09.2021 and 06.09.2021. After receipt of IA 1577 of 2021, it is learnt that the private sale was concluded in terms of the offer made in June 2021 and in July 2021. Thus, the entire transaction was entered during the 2nd wave of the pandemic for reasons which are not far to seek. 69. In fact, it is only after the Appellant filed IA no. 2117 of 2021 inter alia praying for intervention to oppose the private sale with a prayer for directions to carry out the SCC and notice was issued on 29.09.2021, did the Liquidator hold a SCC meeting. In the SCC dated 04.10.2021, 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 w....
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....correct facts/records before the Tribunal. In the present case notice was issued in IA Nos. 2117/2021 and 1617/2021. However, no Reply was filed by the Liquidator at any stage despite notice being issued. In fact, none of the allegations made/issues raised by the Appellant were answered by the Liquidator at any stage before the NCLT as such the case of the Appellant was uncontroverted. It was only after the issuance of notice in the present Appeals that a response was filed. Despite filing replies, copy of IA No. 1577 of 2021 (seeking private sale to Leisure Enterprises LLP) was not filed and was only filed before this Tribunal by of an Additional 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 com....
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....peal was filed by Appellant Bhavik Bhimjyani impugning the order dated 06.12.2023 which had made I.A. No. 4212 of 2023 to be infructuous in view of the order passed in I.A. No. 1577 of 2021. It is to be noted that prayers in I.A. No. 4212 of 2023 were as follows: "(a) Conduct fresh auction (b) In an alternative to prayer clause (a), allow the sale to Gewortal Development (c) Sale proceeds be subject to outcome of IA 2184/2019 (for change of Liquidator) (d) Stay IA 1577/2021 (e) Interim and ad-interim in terms of prayer clause (d)" The prayers in this Appeal are same as in CA (AT) (Ins.) No. 1584 of 2023. 79. The Appellant prays to quash and set aside the Order dated 06.12.2023 passed in 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 Li....
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.... the same on 18.01.2024 after this Tribunal was seized of the matter and had granted interim protection on 09.01.2024. The Application was moved without notice and the Appellants protest was rejected by the NCLT, while allowing the modification of the order. Appraisal 83. The Appellant is challenging the approval given by the NCLT to the sale of lands of Corporate Debtor (in liquidation) - Neelkanth Township & Construction Pvt Ltd - NTCPL on undervalued rates and also by way of private sale to a related party vide the Impugned Order dated 05.12.2025, which is assailed to be contrary to the requirements of Regulation 33 of IBBI (Liquidation Regulations), 2016 ("Regulations"). 84. Heard Learned Counsels for both sides and perused material placed on record. As agreed 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 N....
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....Partner in Leisure Enterprises LLP, being R2 in the present matter. One Anand Jain was the Chairman of Urban Infrastructure Venture Capital Ltd is also the partner in Leisure Enterprises LLP, being R2 in the present matter. 88. NTCPL is in course of its business, purchased non-agricultural land ad- measuring about 80.6 acres in Alibaug, Maharashtra. These lands are contiguous and are held in the name of NTCPL and its 100% subsidiary period. The said lands are located in the prime area in Alibaug, which is a part of the Mumbai Metropolitan Region (MMR) and is the only asset of NTCPL. 89. Admittedly, out of the entire parcel of land, the title of about 30 acres (appx. 24%) is with CD-NTCPL (now in liquidation) while 50.6 acres (appx. 76%) stands in the name of Urban Rupi Infrastructure Pvt Ltd ("URIPL") and the same is not demarcated. 76% of land, in the name of URIPL, 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....
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.... the same day. 6. 528 of 2024 (a) Direct Respondents to pay property tax of Rs 8.65 lakhs December 6, 2023, observing IA No. 1393/2024 to be infructuous in view of the Order passed in IA No. 1577/2021. 91. Since all Appeals are inter-related, they are being taken up together. For our analysis it will be useful to extract the pleadings before NCLT in IA No. 1577 of 2021, which was filed before us by the Respondent Liquidator on 22nd April 2025 in an Additional Affidavit and the relevant extracts are as below : "13. Subsequent to the last auction notice dated March 25, 2021, one Leisure Enterprisers LLP ("proposed Buyer") issued a letter dated June 10, 2021 to the Applicant expressing their interest in purchase of the said property for an amount of Rs. 58.51 crores. Hereto annexed and marked as Exhibit "F" is a copy of the said letter dated June 10, 2021. 14. In view of the interest expressed by the proposed Buyer 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....
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....t submits that it is just and equitable that the present Application be allowed as prayed. 23. The Applicant submits that no harm, loss or prejudice would be caused if the present Application is allowed as prayed." 92. It is to be noted that the Liquidator had issued confirmation letter dated 2nd July 2021, which confirms the receipt of Rs 58.51 crores from Respondent No. 2 and it further states that the offer to purchase the property of NTCPL has been accepted. The confirmation letter is extracted as below : 93. It is to be noted that on 10th June 2021 Leisure enterprises LLP addressed a letter of interest to the Liquidator proposing to purchase the land and shares at Rs 58.51 crores. It was replied by the Liquidator on 24th June. Thereafter, on 1st July 2021 Leisure Enterprises LLP confirmed the purchase of the land. In turn, Liquidator was confirmed it on 2nd July 2021. It is to be noted that things moved very swiftly after a long hiatus in auction proceedings from Sept. 9, 2018 till June 2021. They were not moving forward as per the procedure which has been prescribed for private sale, which is assailed and which is being analysed hereinafter. 94. The Appellan....
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....rough an auction in the manner specified in Schedule I". A private sale is meant to be an exception, allowed only in specific circumstances enumerated in Regulation 33 (2). In the present case, the Liquidator deviated from the normal auction route without any legitimate justification. Regulation 33 (2) (d) mandates prior permission from the NCLT in case the Liquidator intends to approach buyers for a private sale. Prior permission for private sale from the Adjudicating Authority implies prior to approaching and negotiating with buyers. Further prior permission is all the more required in case sale of assets is intended to be made to a related party. In the present facts, no prior permission from the Tribunal was taken by the Liquidator as is required under Regulation 33 of the Code. The Liquidator filed IA No. 1577 of 2021 after agreeing to an undervalued price and after accepting a deposit from the related party. Admittedly, in the present case, the buyer and creditor is the same person and is directly affected by the bar under Regulation 33 (3). Permitting an application seeking prior permission for private sale is not a mere formality and the NCLT ought to have considered the ma....
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.... of the Corporate Debtor and also the proposed buyer is a related party of the Corporate Debtor as per Section 5 (76) of the Companies Act, 2013. 99. 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 also. 100. We also find that when a private sale is undertaken, the Schedule I (Private Sale Requirements) imposes certain procedural norms to ensure value maximisation and fairness. Schedule I, para 2 requires the Liquidator to prepare a strategy to approach interested buyers and allows private sale by directly liaising or by 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, which indicates a bias of the Liquidator towards R2. 101. The Appellant claims that the Liq....
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....tes to a private sale under Liquidation Regulations and that too to a related party and will be governed by the statutory provisions under Regulation 33 of Liquidation Regulations, which has been noted earlier by us. In the facts and circumstances of the case we need to test the tenability of the argument of the Liquidator that "since the Applicant is in the process of selling the said property under private sale to a related party of the Corporate Debtor, not barred under Section 29A of the Insolvency & Bankruptcy Code, 2016." 104. From the material placed on record, we also find that the Liquidator has not presented the facts in proper perspective before the Adjudicating Authority, particularly without highlighting that auction dated 18.07.2019 and 10.12.2019 were only for 30 acres out of 80.6 acres and the shares of subsidiary holding 50.6 acres of land were not put to auction in 2019. The auctions held on 01.03.2021 and 25.03.2021 were carried out during the 2nd wave of Covid 19 despite a relaxation in timelines granted under Regulation 47A. The Liquidator has pleaded that no auction was conducted in 2020 due to COVID. However, despite the circumstances getting worse on acco....
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....ibunal etc. It also claims that Free Press Journal is one of the most sought-after publications for the purpose of advertisement of tenders and auction notices in the State of Maharashtra. The Appellant also contends that Raigad Times (regional newspaper used for publication of the auction notice) does not have circulation in Mumbai. This statement is factually incorrect. Moreover, the statement was made orally as at the time of hearing and whereas pleadings do not contain any such reference. That being said, the subject-property is situated in District Raigad that has a vast circulation of the publication 'Raigad Times'. Additionally, the Appellant has failed to point out that Raigad District also falls within the list of districts under the MMR Region. Even though we may not rely on the argument of the Appellant with respect to wide publicity of auction, but the way and timing of auction notices raises eyebrows. In the facts and circumstances of this case, we find that even small deviations are very glaring omissions, which will may indicate a bias liquidation proceeding and which may not be towards the maximisation of recovery. We are inclined to agree with the argument the Liqu....
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....irstly, the liquidation is being decided by private sale instead of public auction. The Liquidator was to prepare a strategy as contained in Schedule I for private sale to interested buyers by directly liasing or by any other means which will maximise the realisation. In this case, we have not even realised the rates which were assessed and which were on record with the Liquidator. Most importantly, the private sale value is very low compared to any other valuation. It could have been acceptable in case of public auction limit in case of private sale. Therefore, we find that this is a clear case of undervalued private sale and cannot be accepted. 107. The Appellant has vehemently argued that there is a purported collusion between the Liquidator and the successful buyer, which is being countered by the Liquidator. We are not going into the allegations but we are looking into the issue of compliance of liquidation process Regulations and we find that they have not been followed. The whole liquidation process gets tainted by non-compliance of the Regulation, as has been noted by us earlier. 108. Appellant has claimed that auctions were conducted during Covid pandemic. Liquidator....
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....in. It is claimed that the SEBI proceedings were with respect to breaches by the managers of Urban Infrastructure Ventures Capital Fund UIVCF to act in compliance with the relevant SEBI Venture Capital Regulations, 1996, applicable to the Fund. It is important to note that UIVCF was held by a Trust, in which UITL, a shareholder of the Corporate Debtor, was the Trustee. As such, the UIVCF was controlled by Mr Anand Jain through his entities. It is also claimed that UIVCF has been bought over by Mr Anand Jain and his family members. Therefore, the entire beneficial interest of UITL in the Corporate Debtor is held by Mr Anand Jain. Therefore, the proposed sale is a well thought out scheme designed to effectively become a book transaction so that proceeds from the sale of land amounting to Rs 58.51 crores can be transferred by Mr Anand Jain to NTCPL and taken away by him against repayment of the debentures outstanding in NTCPL, making him the beneficiary on both sides of the transaction. In the event sale goes through, Mr Jain, will receive the sale proceeds in UITL as Financial Creditor and, also, the entire land of 80.6 acres, thereby leaving barely any money for any other stakeholde....
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....ly 1, 2021, and alongside paid a non-refundable EMD as at the time of placing its offer for the subject property. The sale was first approved by the NCLT vide an Order dated December 24, 2021. The said Order was challenged 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. Thereafter, upon revival of IA 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, withdrew their offers. 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 which is evident from the list of dates....
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....rom the Adjudicating Authority. From the record, it is also clear that the liquidator did not file any application for obtaining any permission from the Adjudicating Authority for private sale and the Adjudicating Authority, on an application submitted by the Respondent No. 2 making an offer and another intervenor-'M/s. Jindal Stainless Limited', directed both to submit their bids in a sealed cover. The Adjudicating Authority on being satisfied that two bidders have come up before the Court showing their interest to acquire the Corporate Debtor, the Adjudicating Authority could have directed the liquidator to conduct the private sale so that apart from Respondent No. 2 and 'M/s. Jindal Stainless Limited' if any other interested person wanted to participate, opportunity ought to have been given. The liquidator under the statutory Scheme of the IBBI (Liquidation Process) Regulations, 2016 have been empowered to take a decision regarding sale of the assets of the Corporate Debtor. It is relevant to notice that the offer of the Respondent No. 2 was rejected by the Liquidator. " [ emphasis supplied ] 116. When a private sale is undertaken, the Schedule I (Pri....
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....old immediately; (iii) the asset is sold at a higher price than the reserved price of the failed auction; and (iv) the adjudicating authority (NCLT) must grant prior permission for such a sale. The proviso appended to Regulation 33(2) of the Liquidation Regulations places yet another embargo to the effect that when the liquidator intends to sell the assets of the corporate debtor by way of a private sale to a related party of the corporate debtor, his related party or any professional appointed by him, it is mandatory to obtain prior permission of the adjudicating authority (NCLT). Even the mode of sale has been regulated under the Liquidation Regulations for both, a public auction and a private sale. All the above dos and don'ts have been inserted to protect the assets of the corporate debtor and safeguard the interest of the stakeholders." [ emphasis supplied ] 118. On the other hand, the Leisure Enterprises LLP questions the authority of NCLAT by citing few paragraphs from the same judgement as extracted below: "79. The powers vested in and the duties cast upon the liquidator have been made subject to the directions of the adjudicating authority (NCLT) u....
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....en the Liquidator has taken the approval of the Adjudicating Authority to be granted and has presented a fait accompli before the Adjudicating Authority. The conduct of the Liquidator is depreciable and is not unbiased. 120. Leisure Enterprises LLP has relied upon the judgment of Hon'ble Supreme Court in R.K. Industries (supra) and also on Navlakha Industries & Sons (supra). It has also relied on judgment of Hon'ble Supreme Court in the matter of Vedica Procon (supra). 121. Leisure Enterprises LLP-R2 claims that Hon'ble Supreme Court, in its landmark judgment of Navalkha & Sons vs Ramanya Das (1969) 3 SCC 537) had set out the existence of the discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of the sale is made. The Hon'ble Supreme Court has also emphasised on the well-settled principle that once the Company Court recorded its conclusion that the price is adequate, subsequent higher offer cannot be a ground for refusing confirmation. 122. Leisure Enterprises LLP-R2 also relies on the Hon'ble Supreme Court in the matter of Vedica Procon Pvt. Ltd. vs Balleshwar Greens Pvt. Ltd. (2015) 10 SCC 94, wherein the....
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....t is not a relevant consideration in determining the legality of the order dated 17-12-2013. Imagine, if instead if increasing the floor space index for construction from 1.0 to 1.8 the State of Gujarat had decided to reduce it below 1.0 subsequent to 17-12-2013, could the appellant be heard to argue that it would be legally justified in resiling from its earlier offer which was accepted by the court and not bound by the contractual obligation flowing from such an offer and acceptance?" [ emphasis supplied ] 123. Respondent Liquidator also relies upon the above judgment and contends that Hon'ble Supreme Court has established that there was no such principle laid down by a Court that whenever a higher offer was received in respect of the sale of a property of a company in liquidation, the Court would be justified in reopening the concluded proceedings. Further, the Respondent Liquidator has relied upon Hon'ble Supreme Court, in the matter of Eva Agro Feeds Pvt. Ltd. vs Punjab National Bank & Anr. - (2023) 10 SCC, wherein it was held as under: "79. Thus, mere expectation of the Liquidator that a still higher price may be obtained can be no good ground to cancel a....
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....tion conducted at any stage for the entire lands. Further, the IA No. 1577 of 2021 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. Furthermore, 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. This is inter alia evident from the fact that the Liquidator has already appointed Mr Nirav Dholakia and Mr Raju Tanna, both associates/employees of the promotors of UITL, as the directors of 100% subsidiaries of NTCPL, which owns 50.6 acres of land belonging to the NTCPL. We are not giving specific f....
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....o be noted that as per the Interim Order in Company Appeal (AT) (Ins.) No. 1584/2023 issued on 06.12.2023 we had noted that "in the meantime, no further steps shall be taken by the Liquidator". Furthermore, this Tribunal had taken up all the related matters together and on 09.01.2024 had ordered that "we make it clear that Interim Order passed in Company Appeal (AT) (Insolvency) No. 1584 of 2023 shall not preclude Adjudicating Authority in proceeding to hear other applications pending before the Adjudicating Authority". In this backdrop of orders, we do not see any infirmity in the order of Adjudicating Authority. In any case, by common order this Appeal is also disposed of as noted hereinafter. Orders : 131. In the light of above facts and circumstances and the legal precedents, we find that the proposed sale in the form of a private sale in favour of Leisure Enterprises LLP-R2, as approved by the Adjudicating Authority in IA 1577, is not in conformity with the statutory provisions, particularly Regulation 33. The Order of the Adjudicating Authority is therefore set aside. Moreover, for a transparent and unbiased liquidation process, a new Liquidator should be appointed imme....