The Indore Bench of the National Company Law Tribunal ( NCLT ) directed the liquidator to re-conduct bidding as private sale conducted in non-transparent manner.
In the process, all the prospective applicants namely Samyak International Ltd, Umang Enterprises, Crown Steels, Labhanshi Agritech Pvt Ltd who had submitted their bid application were considered disqualified on the ground such as that they failed to submit the evidence of sources of liquid funds available with them to meet the reserve price.
Thereafter, the liquidator proceeded with the private sale considering the E-auction to sale the corporate debtor as a going concern has failed as none of the bidders were eligible as qualified bidder. Thereupon the liquidator made a public announcement in two newspapers namely Times of India & Raj express on 30.11.2022 for the sale of corporate debtor as a going concern by way of private sale and finally declared M/s Radheshyam Dairy as H-1 bidder ( having offered Rs. 15.91 crore ), whereas the SCC was in favour of Labhanshi Multitrade Pvt Ltd, H-2 bidder ( having offered Rs. 15.71 crore ).
The counsel for Labhanshi Multitrade Pvt Ltd submitted that That the Liquidator in undue haste and in an arbitrary manner precluded all bidders from the E- auction process with an intent of forcing the process to become unsuccessful. As basis the disclosure made by the Liquidator in the public announcement dated 2911.2022, on 26.11.2022 itself the Liquidator in 3rd meeting of SCC submitted to have disqualified all bidders and induced the SCC to proceed with sale through private sale.
It was also contended that the Liquidator, in the private sale process acted in oppose to the SCC, without recording the reasons in its minutes and moreover it also failed to report the same to the Adjudicating Authority and the Board within the prescribed time period, as mandatorily required under the Regulation 31A(10) of the IBBI ( Liquidation Process ) Regulations.
The senior counsel Mr. Sukumar Pattjoshi appearing for the liquidator as well as the liquidator present-in-person ( through video conferencing ) referred to E-auction process document publication, the SCC minutes whereby the prospective bidders in the E-auction process were disqualified, the decision of the SCC for going ahead through private sale, public announcement for private sale and the relevant minutes reflecting the process of bidding and negotiations to arrive at H-1 bidder.
A Two-Member Bench comprising Kaushalendra Kumar Singh, Technical Member and P Mohan Raj, Judicial Member observed that “We find that herein too, the liquidator not only had acted in undue haste but had also not given fair chance to the other bidders particularly Labhanshi Multitrade Pvt Ltd for bidding and offer higher amount, if any, over and above Rs. 15.91 crore offered by Radheshyam Dairy. We also take note of the fact that a lot of time has already been gone into process of the liquidation and the litigation thereof.”
“We are of the view that end of justice would be achieved if the bidding is again ordered between two parties namely Radheshyam Dairy and Labhanshi Multitrade Pvt Ltd. For this purpose, we direct the liquidator to call for a meeting of the SCC giving notice at least five days prior to the date of meeting so that other SCC members could also attend the said meeting for further negotiations and bidding by the aforesaid two parties” the Bench concluded.
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