TaxTMI 
TaxTMI 
2025 (9) TMI 200
X X X X Extracts X X X X
X X X X Extracts X X X X
....dia) Private Limited/ Corporate Debtor, which was under liquidation. Alleging irregularities, collusion, and unfair conduct on the part of the Liquidator Mr. Satyendra Prasad Khorania/ Respondent No. 1, in the conduct of the e- auction dated 06.09.2023, the Appellant approached the Adjudicating Authority seeking to set aside the auction. However, the Adjudicating Authority dismissed his application vide the impugned order. The Appellant has now approached this Appellate Tribunal against the impugned order. Brief Facts of the Case 2. The brief facts of the case are as given below: i. The Appellant, Jai Agarwal, is a young businessman, who participated in the auction proceedings of a property belonging to M/s Atlas Alloy (India) Private Limited/ Corporate Debtor (CD) under liquidation. Mr. Satyendra Prasad Khorania/Respondent No. 1 was appointed the Liquidator of the CD by the Adjudicating Authority upon initiation of liquidation proceedings. The Punjab National Bank/Respondent No. 2 here is the financial creditor, which had instituted proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'Code') against the Corporate Debto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly, without addressing the allegations in substance. viii. Subsequently, the Appellant filed IA No. 522/JPR/2023 before the NCLT, Jaipur, under Section 60(5) of the IBC, praying for quashing of the e- auction dated 06.09.2023; confirmation of the Appellant's bid; or in the alternative, re-auction of the assets. ix. The said application was heard by the Adjudicating Authority on 22.09.2023, when arguments were advanced by both sides. However, the Liquidator did not file a detailed reply to the Appellant's pleadings, but admitted that the Appellant's representative had visited his office on the date of auction and that his computer was used for handling the Appellant's bid account. x. The Adjudicating Authority, however, by its order dated 06.10.2023, dismissed the application of the Appellant. It held that the auction had been conducted as per the process document and that the Appellant had the opportunity to revise his bid but failed to do so within the stipulated time. xi. The Appellant, feeling aggrieved by the aforesaid order, initially filed a writ petition before the Hon'ble Rajasthan High Court, but subsequently withdrew it on 13.10.2023 to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the date of the auction. Acting on this assurance, the Appellant's father attended the Liquidator's office. However, despite this assurance, during the course of the auction held on 06.09.2023 through the official portal ncltaucti.auctiontiger.net, the Appellant continued to remain the only bidder till just before 3:00 p.m., revising his bid in increments of Rs. 25,000/- at the instance of the Liquidator and his staff. In the last few minutes, suddenly and without any prior intimation, another bid surfaced on the portal, creating serious suspicion of collusion and manipulation. Screenshots of the auction portal, placed on record, clearly demonstrate that the Appellant remained the only participant for the entire duration, until the questionable last-minute intervention. 5. Ld. counsel further submits that the Appellant promptly raised his grievances by way of an email dated 08.09.2023 to the Liquidator, protesting against the illegality and unfairness of the process. Instead of addressing the grievance transparently, the Liquidator furnished only a cryptic reply and deliberately avoided giving any satisfactory explanation, as to how another bid could suddenly appear at the last....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uspicion. 8. Summing up his arguments, Ld. Counsel has prayed that this Appellate Tribunal be pleased to (i) quash and set aside the e-auction dated 06.09.2023, (ii) confirm the Appellant's bid as the rightful successful bid, or in the alternative, (iii) direct the conduct of a fresh re-auction under the supervision of this Tribunal. Such relief is necessary to ensure justice, prevent abuse of process, and restore confidence in the liquidation mechanism envisaged under the IBC. Submissions on behalf of Respondent No. 1 - Liquidator 9. Learned counsel for the Respondent No.1/Liquidator submits that it is the Appellant's case that he was the only bidder on 06.09.2023 at 3:00 PM, and that the Liquidator wrongfully introduced another bidder. Learned counsel submits that this contention is completely false and dehors the record. Another bidder, namely M/s Novelty Textiles, had duly deposited the Earnest Money (EMD) on 04.09.2023, well before the date of auction. This deposit stands verified from the bank statements, which were annexed along with the progress report filed by the Liquidator before the Ld. NCLT. Hence, the claim of the Appellant being the sole bidder is a concocte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t had no intention to maximize the value of the assets of the Corporate Debtor, but instead deliberately placed a wrong bid so as to later claim irregularity in the auction. The mala-fide conduct of the Appellant is thus writ large and stands established from his own documents. 13. Summing up his arguments, Ld. Counsel stated that the only purpose of the present Appeal is to blackmail and malign the Liquidator. The Appellant never intended to participate bona fide in the auction, but entered the process only to obstruct liquidation and drag the Liquidator into vexatious litigation. Such conduct deserves to be deprecated. Ld. Counsel submitted that the Appeal, being frivolous and malicious, be dismissed with exemplary costs in order to curb such mischievous attempts to derail the liquidation process and tarnish the reputation of the Liquidator, who has acted strictly in accordance with law. Submissions on behalf of Respondent No. 3/ Successful bidder 14. Learned counsel for Novelty Textiles, the Successful Bidder in the auction and Respondent No. 3 submits that the answering respondent duly participated in the e-auction conducted by the Liquidator in respect of Plot No. G-7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r executed a Sale Deed dated 13.10.2023, which was duly registered on 17.10.2023 in favour of the answering respondent. A copy of the registered Sale Deed has been enclosed as Annexure R/2 of his reply. Thus, the auction process stood lawfully concluded in favour of the answering respondent. 17. Learned counsel further submits that after registration of the sale deed, possession of the property was handed over to the answering respondent, who thereafter established a workshop on the premises for its business activities. The answering respondent commenced manufacturing material relating to tent house products and has made substantial investments on the said property in good faith, with the legitimate expectation of deriving returns. However, due to the interim orders passed by this Appellate Tribunal, the answering respondent has been unable to secure financial facilities from banks or institutions, thereby severely affecting smooth running of its business. This has caused serious financial prejudice to the answering respondent who, despite being a bona fide auction purchaser, is suffering due to frivolous litigation. Photographs evidencing the workshop established on the premise....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rticipant was introduced by the Liquidator in collusion with external parties. We examine this contention against the documentary record. The Liquidator has produced proof that the other bidder, viz. Novelty Textiles, deposited the earnest money deposit (EMD) on 04.09.2023, two days prior to the auction. The bank entry confirming such deposit and the portal's acknowledgment of registration have been filed. The extract from Bank statement of the CD has been extracted below for reference: 23. We can see from the entry dated 04.09.2023 that Mr. Abdul Khalid had transferred an amount of Rs. 15,60,500/- in the account of CD. It is the submission of Liquidator and Respondent No.3 that the aforesaid amount was paid on behalf of 2nd bidder Novelty Textiles and is the exact amount of EMD. It is seen from the affidavit filed by the Liquidator that the Successful Bidder viz. Novelty Textiles had submitted its documents to the Liquidator on 29.08.2023 and thereafter they deposited the EMD of Rs. 15,60,500/- on 04.09.2023. These details including the bank statement of the CD were submitted to Adjudicating Authority in one of the progress reports of Liquidation of the CD filed by the Liquidat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n to login from the Liquidators office when the first bid was placed by the appellant father. These logs show that the Appellant logged into the portal at 12:54 p.m. on 06.09.2023 and remained continuously logged in until 3:06 p.m., after the auction had concluded. The same logs have been produced and are extracted below for reference: 28. These technical records conclusively establish that the Appellant's login was active from his own computer system and not from any external source. The mere fact that his father was physically present in the Liquidator's office does not translate into evidence that the Liquidator accessed or interfered with the Appellant's portal credentials. No contemporaneous complaint was made in this regard either. Hence, this allegation is without foundation. 29. The third allegation is that the Liquidator demanded illegal gratification from the Appellant's father to allow the Appellant to succeed in the auction. There is no material on record to sustain this allegation. No complaint been lodged with the Insolvency and Bankruptcy Board of India (IBBI) against the Liquidator, nor any police complaint been filed against the Liquidator. These are mer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onstraints. This feature existed in the present auction, thereby ensuring fairness. The Appellant having been logged in throughout this period, could have availed of the time extension facility by placing a valid higher bid even at the last second which option he failed to exercise. His grievance of being deprived of the opportunity is therefore clearly unsustainable. 33. Another argument advanced by the Appellant is that the Liquidator acted in collusion with the rival bidder to depress the bidding and thereby harm the stakeholders. We find no material on record to support this assertion. On the contrary, the rival bidder's participation was based on a valid EMD deposit made two days earlier. The bidding amounts are clearly reflected in the system logs and screenshots. No irregularity has been demonstrated either in the sequence of bids or in the manner of their acceptance by the platform. The process remained transparent throughout, as reflected in the very documents produced by the Appellant. 34. The material on record clearly demonstrates that the auction was conducted fairly and transparently; that the rival bidder was validly registered; that the Appellant was continuou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5,530.00(Cr) 23KBUJAIPUR 04-09-2023 RTGS HOFCR$2023000484800401 RTGSINW. 1,560,500.00 3.296.030.00(Cr) ABDUL KHALID HDFCOO 0064295557 06-09-2023 RTGS HDFCR52023090685665741 RTGSINW. 2,353.250.00 5.649.280.00(Cr) NOVELTY TEXTILES HO 0064410580 13-09-2023 TO CLG C PROCUREMENT 33 4,130.00 5,545.150.00(Cr) TECHNOLOGI ICICI BANK 13-09-2023 RTGS HOFCR52023091387367103 RTGSINW. 4,000,000.00 9.645.150.00(Cr) NOVELTY TEXTILES HD 0064628995 13-09-2023 Sent RTGS 34/000351734631 1,560.500.00 8.084,650.00(Cr) KKSKR52023091300785142/JAJ AGARWAL For Atlas Alloy (India) Private Limited Liquidation Liquidator Document 2 Typed copy of page no. 76 Welcome Ganesh Industries Contact US FAQ Logout 06/09/2023 14:57:43 IST Last Login info Settings AUCTION TIGER Mail Box View English auction RFX/Tender Department : Satyendra Prasad Officer : Authorised Officer - Khorannia- Liquidator ATLAS ALLOY India PRIVATE LIMITED Auction ID : 277720 Auction Auction no. Search auction Sale of Property by Liquidator of ATLAS ALLOY (INDIA) PRIVATE LIMITED (In Liquidation) Auction brief Briefcase Auction detail Repor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utes - 10 Seconds Start date and time :06/09/2023 12:00:00 End date and time : 06/09/2023 15:00:00 Current extension (s) in no. : 0 Online forward Auction I Increment: 25,000.00 | Bid date :06/09/2023 12:19:01 I Last accepted bid : 1,56,30,000.00 Start price : 1,56,05,000.00 1,56,55,000.00 I Your rank: 2 | Next possible bid : 15680000.00 or higher (in multiple) H1 bid: Sr. Item Description Rate [IN Rs. In Fig) Rate (In Rs. In Words) No 1 Sale of Property by Liquidator of ATLAS ALLOY (INDIA) PRIVATE 15630000 LIMITED (In Liquidation) ONE CRORE FIFTY-SIX LAKH THIRTY THOUSAND You are advised not to wait til last minute or last few seconds to submit your bid to avoid complication related to internet connectivity. network problems, system crash down, power failure, etc. Neither department nor e-Procurement Technologies Ltd. (Service provider) are responsible for any unforeseen circumstance. Auction ID : 277720 Auction no. : Sale of Property by Liquidator of ATLAS ALLOY (INDIA) PRIVATE LIMITED (in Liquidation) Auction brief Department : Satyandra Prasad Khoranla Authorised Officer ATLAS ALLOY Officer Document 4 97 ....