TaxTMI 
TaxTMI 
2026 (2) TMI 536
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....ode') against the Order dated 23.04.2024 ("Impugned Order") passed by the National Company Law Tribunal, Jaipur Bench ("Adjudicating Authority") in Interlocutory Application (IBC) No. 340/JPR/ 2020 in Company Petition (IB) No. 79/7/JPR/2019. Mr. Prashant Agrawal, who is the Liquidator of M/s Global Syntex (Bhilwara) Limited, is the Respondent No.1 herein. M/s Bharkha Synthetics Private Limited, who is one of the financial creditors, is the Respondent No.2 herein. M/s Ahinsa Infrastructure Limited, who is one of the financial creditors, is the Respondent No.3 herein. M/s Bhilwara Spinners Limited, who is one of the financial creditors as well as Successful Auction Purchaser of the immovable properties of the Corporate Debtor, is the Respondent No.4 herein. 2. The appellant submitted that it is an operational creditor of the Corporate Debtor, Ms Global Syntex Bhilwara Limited, with an admitted operational debt of Rs. 2,17,04,875/-. The appellant contended that Respondents No. 2, 3, and 4 are the financial creditors, interrelated as Respondent No. 4 is a subsidiary of Respondent No. 3, with directors of Respondent No. 2 interested in Respondent No. 3, and the Corporate ....
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....that Respondents No. 2, 3, 4 inflated claims from principal Rs. 4.66 crores to over Rs. 15.70 Crores via extortionate interest, admitted by Respondent No. 1 without scrutiny; the Adjudicating Authority noted this and directed the Respondent Nos.2, 3, 4 to refund of excess interest of the liquidation proceeds. 9. The Appellant submitted that the impugned order erroneously disregarded undisputed facts that Respondents Nos. 2, 3 and 4 are related to the Corporate Debtor, as per Respondent No. 2's Balance Sheet stating the Corporate Debtor as an entity in which its Directors are interested. 10. The Appellant submitted that the impugned order erroneously disregarded undisputed facts that, per registered government valuer's report, market value was Rs. 15.4 Crores and distressed sale value Rs. 13.86 Crores, yet sold to Respondent No. 4 for Rs. 7.51 Crores. 11. Concluding arguments, the Appellant requested this Appellate Tribunal to set aside the Impugned Order and allow this appeal. 12. Per contra, the Respondent No.1 denied all averments made by the Appellant as misleading and baseless. 13. The Respondent No.1 contended that post CIRP of the Corporate Debtor initi....
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.... were received, out of which one bidder withdrew. Consequently, Bhilwara Spinners emerged as the successful auction purchaser, and the same was duly communicated by emails dated 01.09.2020 and 02.09.2020. 19. The Respondent No.1 submitted that at no stage did the Appellant challenged the market value, liquidation value, or reserve price during the liquidation process. It was further submitted that the values mentioned in the Asset Memorandum were comparable with the valuation report obtained by the Appellant itself from a registered valuer. It was contended that since the auction proceeds were insufficient even to satisfy the claims of financial creditors, the Appellant, being an operational creditor, was not entitled to any distribution under Section 53 of the IBC. 20. The Respondent No.1 contended that all decisions relating to the auction were taken unanimously by the SCC members, and the Appellant raised objections only after completion of the sale, vide email dated 03.09.2020. It was submitted that the Appellant is barred by the doctrine of estoppel and the principle of acquiescence, having participated in the SCC proceedings without protest, and reliance was placed on s....
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....wholly misconceived, misleading, and frivolous. The Respondent Nos. 2 to 4 submitted that the said heading is a broad and generic accounting description and is not restricted to, nor does it conclusively establish, a related party relationship as alleged by the Appellant/Operational Creditor. It was further contended that the related party disclosures contained in the said balance sheet do not reflect any relationship whatsoever with the Corporate Debtor or its erstwhile directors. 28. The Respondent Nos. 2 to 4 pointed out that the erstwhile directors of the Corporate Debtor were Mr. Nitin Singhvi, Mr. Balwantsingh Ranka, Mr. Nathu Tailor, and Mrs. Maya Devi. However, the related parties disclosed in the balance sheet at page 412 of the present appeal make no reference to any of the aforesaid individuals and instead mention only Chandra Singh Kothari, Bhanwar Singh Kothari, and Chandra Singh Kothari (HUF). The Respondent further submitted that even the related party transactions disclosed therein do not evidence any transaction with the Corporate Debtor. 29. The Respondent Nos. 2 to 4 contended that, in terms of the settled principle, a document must be read holistically to ....
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....ed law on delay and laches, the Appellant cannot reopen the CIRP at this belated stage. 33. The Respondent Nos. 2 to 4 submitted that the Appellant has failed to establish any violation of the statutory provisions of the Code or the Liquidation Process Regulations in relation to the auction conducted by the Liquidator. The Respondents contended that the Adjudicating Authority has exhaustively dealt with the auction process in paragraphs 25 to 39 of the Impugned Order. It was submitted that the CoC, in its 3rd meeting dated 18.01.2020, resolved to liquidate the Corporate Debtor, pursuant to which the liquidation order dated 24.01.2020 was passed and remained unchallenged. Thereafter, the Asset Memorandum was prepared on 22.06.2020 and the Liquidator proceeded to conduct e-auctions strictly in accordance with Regulation 33 read with Schedule I of the Liquidation Process Regulations. 34. The Respondent Nos. 2 to 4 further submitted that three public e-auctions were conducted on 31.07.2020, 18.08.2020, and 31.08.2020 with complete disclosures. The reserve price was reduced first by 25% and thereafter by 10%, strictly in terms of Schedule I of the Liquidation Regulations as applic....
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....ion of reserve price or auction timelines at the relevant time. Accordingly, the belated objections are barred by the principles of acquiescence. 40. The Respondent Nos. 2 to 4 submitted that all auction notices duly disclosed the details of the immovable properties, contained links to the Asset Memorandum, and clearly specified that the e-auction would be conducted through the designated service provider. Therefore, no procedural irregularity or regulatory violation has been established by the Appellant, and the findings of the Adjudicating Authority on this issue do not warrant any interference. 41. Concluding their arguments, the respondents requested this Appellate Tribunal to dismiss the present appeal. Findings 42. At the outset we note that an application under Section 7 was filed by Shree Bharkha Synthetics Limited i.e., Respondent No. 3 herein against the Corporate Debtor which was admitted and CIRP was initiated on 21.08.2019 and Respondent No. 1 was appointed as Resolution Professional. We further take into consideration the fact that Respondent No. 1 constituted the CoC consisting of Respondents No. 2, 3 & 4 herein and further Respondent No. 1 invited EoI. H....
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....ard, the CIRP is concerned, in terms of the Section 7 of the Code, the Adjudicating Authority is required to establish the debt and default and once this is established, the Adjudicating Authority ought to have to allowed the CIRP of the Corporate Debtor. We note that in present case, an application under Section 7 of the Code, in CP (IB) No. 79/7/JPR/2019, was initiated by Respondent No. 2 and the Adjudicating Authority after being fully satisfied, passed an order initiating CIRP of the Corporate Debtor vide its order dated 21.08.2019. Thus, we do not find any logic in the Appellant's contention that CIRP was illegal. Despite the fact that prima facie, the loans were not required by the Corporate Debtor at that stage, since its operation was shut way back and also keeping into consideration that no due process of CIRP governance was followed by Corporate Debtor including non-registration of charge or passing any resolution of the BoD while taking loans from the unsecured Financial Creditors/ the Respondent No.2, 3, & 4, however the fact remain that the transaction did happen between the Financial Creditors and the Corporate Debtor. No one has disputed this fact nor anyone has not ....
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....lso taking into account the judgement passed by this Appellate Tribunal in the case of Sunil S. Kakkad v/s Atrium Infocom [(2020) SCC OnLine NCLAT 1160] where it was held that: "Thus, it is clear that the decision of CoC to liquidate the Corporate Debtor without taking any steps for Resolution of the Corporate Debtor is covered under explanation to sub- clause (2) of Section 33 of the I&B Code and the same being decision on commercial wisdom, is non-justiciable given the law laid by Hon'ble Supreme Court of India in case of K. Sashidhar (supra). Thus, it is clear that there is no illegality in the decision of CoC in liquidating the Corporate Debtor before taking any steps for inviting Expression of Interest for submission of Resolution Plan." (Emphasis supplied) Thus, we reject contention of the Appellant on this issue. 54. Further, as regard the alleged fraudulent nature of loans, the Adjudicating Authority has correctly recorded that the transactions indeed happened between the Financial Creditor and the Corporate Debtor albeit at much higher rate interest of 24% per compounded monthly. We are aware that the Adjudicating Authority held that the loan was not ....