TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1200
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....ue Space Pvt Ltd.,['NDR'] and directed respondent No. 1 - liquidator [respondent in the writ petition] to receive the balance sale consideration in terms of the auction dated 20.03.2023 from NDR. IBBI was not a party to the writ petition. 2. The admitted fact situation can be stated to be as under: i. The Corporate Insolvency Resolution Process ['CIRP'] with respect to Base Corporation Ltd., ['BCL'] was admitted by the National Company Law Tribunal ['NCLT'] vide order dated 2.8.2019. Pursuant to the CIRP proceedings initiated against BCL an Interim Resolution Professional ['IRP'], was appointed and subsequently confirmed to be the Resolution Professional ['RP']; ii. An e-auction notice dated 9.9.2021 was issued under the provisions of the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 [SARFAESI Act] auctioning the immovable properties belonging to one of the promoters of BCL located at Hosur, comprising a factory building and machinery was issued by a creditor of the promoter. The said property was situated abutting the property of BCL; iii. BCL, represented by its RP filed IA No. 373/2021 before th....
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....a-wise reply along with supporting documents with respect to the complaint made. Respondent No. 1 submitted his reply on 20.4.2023; xii. The Investigating Agency submitted a detailed investigation report to IBBI stating, inter alia, that respondent No. 1 had contravened the provisions of the Insolvency and Bankruptcy Code, 2016 ['IBC'], Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 ['Liquidation Process Regulations'] as well as the Code of Conduct as specified in Schedule I of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 ['Insolvency Professionals Regulations']. The conclusions of the Investigating Agency were, inter alia, that the valuator appointed by respondent No. 1 to value the property of BCL had expertise only in the valuation of securities/financial assets categories; Respondent No. 1 failed to reconstitute the SCC and that, only financial creditors were made constituents of the 4th and 5th SCC meetings, while operational creditors, such as workmen, shareholders, etc., did not participate in the said meetings; Respondent No. 1 submitted three progress reports to the IBBI vide its e-mail....
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.... wherein the Hosur unit of BCL was auctioned as a going concern and that NDR had paid 25% of the total bid amount in a sum of Rs.16,53,50,000/-. That the sale of the assets of BCL was done pursuant to Regulation 32A and 33 of the Liquidation Process Regulations, wherein Clause 1(12) of Schedule I states that the highest bidder ought to pay the total sale consideration within 90 days, failing which the sale was to be cancelled. Hence, NDR was required to pay the entire sale consideration within 90 days from 20.3.2023 i.e., on or before 19.06.2023. It was further contended that although NDR had addressed a letter dated 31.03.2023 to respondent No. 1 - liquidator (respondent in W.P. No. 12140/2023) seeking certain clarifications, the liquidator filed an application under Sections 34 and 60(5) of the IBC on 05.04.2023 seeking permission to register the sale certificate and convey the property in favour of the NDR subject to the reliefs and exemptions sought for and although NDR had filed an affidavit before the NCLT stating its willingness to purchase the property without any waivers and by paying the balance sale consideration, no orders were passed by the NCLT on the said application....
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....ed in and also the fact that it would involve re-doing the exercise of bringing about sale of properties, the writ petition is taken up for disposal on concession made by the petitioner and the consent of the learned counsel for the respondent. 3. The facts are not in dispute. One Base Corporation Limited was treated as a Corporate Debtor and the CIRP proceedings came to be initiated by the NCLT on 02.08.2019 and as the resolution plans did not find favour with the NCLT, the application for liquidation of the Corporate Debtor came to be allowed on 26.04.2022 and at which time the respondent was appointed as the liquidator. Consequently the assets of the Corporate Debtor including the asset at Hosur was put up for e-auction under the sale notice published on date 13.02.2023. The date of e-auction was fixed as 20.03.2023. Pursuant to the same the petitioner turned out as the highest bidder and in terms of the conditions of auction 25% of said amount i.e. totaling to Rs. 16,53,50,000/- was deposited and the sale was to be concluded within 90 days thereafter. It appears that the petitioner thereafter entertained certain doubts and also sought for certain clarifications/concess....
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....nt writ petition can be disposed of by directing the respondent to receive the balance sale consideration, if the same is made within 18.06.2023, subject to payment of cost. 10. Accordingly there shall be a direction directing the respondent to receive the balance sale consideration if the same is made by the petitioner on or before 18.06.2023. 11. In the event payment is not made within the stipulated date i.e., 18.06.2023, then the petitioner shall not have the benefit of this order. 12. In view of our above observation, learned Senior counsel on behalf of the petitioner submits that the petitioner volunteers to deposit a sum of Rs. 2,00,000/- (Rupees Two Lakh only) into the account of the Karnataka State Legal Services Authority. That the deposit shall be made within two weeks. 13. It is made clear if the balance sum as indicated in the letter of intent is deposited within the stipulated date, the liquidator shall issue a sale certificate within a week thereafter. 14. Petition stands ordered accordingly." 5. It is forthcoming that this Court considered the submissions of NDR that since the sale was required to be concluded within 9....
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....and correct facts before this Court in W.P. No. 12140/2023, as a result of which the order dated 15.06.2023 is liable to be reviewed; iii. That if the true and correct facts were placed on record by the parties in WP No. 12140/2023, this Court would not have passed the order dated 15.06.2023; iv. IA. No. 373/2021 was filed by the then RP, who was the predecessor of respondent No. 1 - liquidator to cancel the e-auction dated 19.10.2021 auctioning the immovable property of the promoter of BCL, which was conducted under the provisions of the SARFAESI Act. That the said IA No. 373/2021 was dismissed by the NCLT vide order dated 05.01.2023. Being aggrieved, respondent No. 1 - liquidator preferred an appeal in CA(AT)(INS) No. 73/2023 on 15.02.2023, before NCLAT. The respondent No. 1 issued sale notice dated 13.02.2023 for sale of the assets of BCL including the land at Hosur, wherein NDR was the highest bidder. Hence, it is contended that respondent No. 1, having filed the appeal before the NCLAT ought not to have brought the property of BCL at Hosur for auction, which resulted in the assets of BCL being sold for a price far below than the price that it ought to have fe....
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....r is vehemently contested; iv. The SCC as well as the adjudicating authority, which is the NCLT have not found fault or any irregularity in the sale process conducted by respondent No. 1 pursuant to the auction notice dated 13.02.2023 and hence, IBBI has no locus standi to question the same; v. Even if the factum regarding the pendency of the appeal before the NCLAT where the order dated 05.01.2023 passed on IA No. 373/2021 was challenged, was placed on record in W.P. No. 12140/2023, the same would not have resulted in a different order, as has been passed vide order dated 15.06.2023 (order under review); vi. That respondent No. 1 - liquidator has followed the requisite procedure and has complied with all the stipulations under the IBC during the liquidation process; vii. That since an interim order of stay was granted by a learned Single Judge of this Court vide order dated 30.5.2023 passed in W.P. No. 11056/2023, there was no impediment for respondent No. 1 - liquidator to proceed further with the liquidation process and hence, there was no wrong doing on the part of the liquidator in accepting the balance sale consideration and issuing the Sal....
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.... by it. 16. The assertion made by IBBI alleging wrongdoing by respondent No. 1 along with NDR, is vehemently contested by the respondents. 17. Various judgments/citations have been relied upon by the learned counsels for the parties in the course of their submissions, which shall be referred, to the extent that the same is required for the purpose of adjudicating upon the question that falls for consideration in the present review petition. The questions that would arise are: i) Whether IBBI has locus standi to file the present petition? ii) Whether the order dated 15.06.2023 passed in WP No. 12140/2023 (GM-RES) is liable to be reviewed? Reg. question No.(i): 18. In this context, it is pertinent to note that the present review petition is filed under Section 114 read with Order XLVII Rule 1 of the CPC. It is a settled proposition of law that a review petition will lie only if the order under review is passed by the Court having exercised the jurisdiction not vested in it by law; if the Court failed to exercise jurisdiction; or the Court has acted in exercise of its jurisdiction illegally or with material irregularity. Further, IBBI is required to demon....
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....er Chapter III of the IBC. The following provisions of the Liquidation Process Regulations are required to be noticed: i. Chapter V (Regulations 16 to 31A) deals with claims during the liquidation process; a. Regulation 16 deals with submissions of claims; b. Regulations 17 to 20 deal with claims by various persons; c. Proof of a claim is stipulated under Regulations 21 to 29; d. Regulation 31 stipulates that a liquidator shall prepare a list of stakeholders, category-wise on the basis of proof of claims submitted and accepted. Regulation 31A stipulates that "the liquidator shall constitute a Consultation Committee consisting of Creditors of the Corporate Debtor within 60 days from the liquidation commencement date based on the list of stakeholders permitted under Regulation 31", which consultation committee is known as the SCC; ii. Chapter VI (Regulations 32 to 40) deals with realization of assets; a. Regulation 35 contemplates valuation of assets or business intended to be sold in the liquidation process; b. Regulation 32 specifies regarding sale of assets; c. Regulation 33 specifies regarding mode o....
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....lue. The process/manner of e-auction was also discussed and agreed upon. In the 5th SCC meeting held on 28.3.2023, the action taken by the liquidator with regard to sale of the property of BCL was noticed and it was also noticed that in the auction conducted on 19.10.2021 the highest bidder (NDR) had quoted a sum of Rs.66,18,00,000/- with respect to the unit of BCL at Hosur, which was auctioned as a going concern. A sum of Rs.16,53,50,000/- was deposited in terms of the said auction. The balance sale consideration of Rs.49,64,50,000/- was to be paid within 30 days from 20.3.2023. It was placed on record of the said meeting the request made by the bidder. In the 13th meeting of the SCC held on 18.3.2024, it is noticed that the aspect regarding the appeal filed before the NCLAT was discussed. Subsequently, vide order dated 26.4.2024 the appeal before the NCLAT was dismissed as withdrawn. In the 17th meeting of the SCC held on 22.7.2024 the action regarding withdrawal of the appeal pursuant to the 13th SCC meeting was noticed, as also the withdrawal of the said appeal on 26.4.2024 and the consent of the SCC was accorded to the same. 23. It is also pertinent to note here that in W.P....
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....operty without any waivers and by paying the balance sale consideration and sought for completion of the sale. Both respondent No. 1 - liquidator and NDR auction purchaser jointly prayed for the application to be allowed and also informed the NCLT of the urgency to dispose of the application having regard to the timeline of the completion of the same, despite which the said application was not considered. In the said context, NDR filed the writ petition (WP No. 12140/2023). 26. It is placed on record by NDR that consequent to the order dated 15.06.2023 passed in WP No. 12140/2023, NDR paid the balance sale consideration along with interest on 17.6.2023 and respondent No. 1 issued a sale certificate on 17.6.2023 conveying the property as also issued a possession certificate. It is also stated that consequent to the purchase of the property, NDR has developed the said property by availing loans in a cumulative sum of Rs.1,70,00,00,000/-. The loan sanction letters have also been placed on record. It is also stated that the property, which was in a dilapidated and neglected condition has been repaired, refurbished and developed and NDR is carrying on its business of providing wareho....
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....s under: "11. The appellant has been unable to raise the funds. The fact of the matter, as it emerges from Mr Viswanathan's submissions, is that the appellant will be unable to raise funds from the term lenders who are insisting that the status of the Company should change from a company under liquidation to an active status. The order of liquidation has not been set aside. Ultimately, what the request of the appellant reduces itself to, is that it would raise funds on a mortgage of the assets of the Company and unless the Company is brought out of liquidation, it would not be in a position to raise the funds. This is unacceptable. At this stage, the order of liquidation has only been stayed, but a final view was, thus, to be taken by this Court. Sufficient opportunities were granted to the appellant earlier during the pendency of the proceedings both before the NCLT and NCLAT. The orders of the NCLT and NCLAT make it abundantly clear that despite the grant of sufficient time, the appellant has not been able to comply with the terms of the resolution plan. Since 9-10-2020, despite the passage of almost five months, the appellant has not been able to deposit an amount of Rs....
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..../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 motu 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. Satish Kumar Gupta (2020) 8 SCC 531, 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". A similar reasoning has prevailed with the respondent in K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150, AMTEK Auto Ltd. (CoC) v. Di....