The National Company Law Tribunal (NCLT), Mumbai Bench, in a recent case dismissed an application filed under section 60(5) of the Insolvency and Bankruptcy Code (IBC) by a prospective bidder in which e-auction sale of the corporate debtor in liquidation was challenged. The Tribunal observed that the sale was conducted in accordance with Liquidation Regulations, 2016 and objections raised by the applicant were belated and without merit.
The corporate debtor in liquidation was purchased by Sherisha Powertech Pvt. Ltd. (Respondent No. 2) as a going concern in an e-auction conducted by the liquidator (Respondent No. 1). In an order passed by the NCLT on September 9, 2022, some reliefs and concessions were provided to successful bidder with respect to the corporate debtor.
JSK Estate Pvt. Ltd. , the Prospective bidder (applicant) filed this application under section 60(5) of the IBC to challenge the sale in favour of respondent no 1. It was argued that e-auction was conducted in an opaque manner as no advertisement related to the sale was published which made it difficult for prospective bidders to participate in the auction. Further contended that the liquidator failed to follow the required marketing strategy under IBBI regulations. The applicant challenged the reserved price as no formula for its determination was provided and it offered more price than the successful bidder offered.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
Per Contra, the respondent liquidator submitted that the applicant did not have locus standi to file this application as it had not taken part in the auction process. It was contended that the auction was conducted in a proper manner and in accordance with IBBI regulations and multiple advertisements were published in various newspapers. It further submitted that there was no fraud or misrepresentation in the auction process as it was conducted on an as is where is basis which is the standard practice in liquidation sales.
The NCLT analysed various documents and observed that advertisement notices were published in various newspapers as prescribed by the IBBI regulations. The Tribunal rejected the argument of the applicant and held that publication of notice of auction was proper and in line with the regulations.
The tribunal held that reliefs and concessions were standard practice in liquidation sales which are granted to the successful bidder and they do not tantamount to any fraud or misrepresentation. The tribunal observed that reserve price was set in consultation with various stakeholders and proper practices were followed by the liquidator. It further held that no objections can be entertained after the sale was confirmed.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
The NCLT observed that the challenge of the applicant was too late as the sale had already been completed and executed. Concluded sale cannot be reopened on the ground that the applicant was offering higher price than the successful bidder. There was a delay and laches on the part of the applicant the benefit of which cannot be given now.
The bench comprising shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member),held that the applicant was not entitled to reopen the confirmed sale as the sale had already been confirmed and executed. Besides, the sale was conducted in accordance with the regulations and there was no fraud or misrepresentation in conducting the entire process. Accordingly, the application was dismissed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
