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2020 (9) TMI 990 - Tri - Insolvency and BankruptcyValidity of e-auction - submission of cunter-bid - declaration of earlier auction as illegal and bad - HELD THAT:- The liquidator under Regulation 33(3) can deal with the aspect of collusion between various parties which ultimately effects the maximization of value of all assets of the corporate debtor adversely. No doubt, the sanctity of auction process has to be maintained i.e., once it is closed, normally it should not be reopened as generally understood. As stated earlier, generally the same can be done only on two grounds i.e., fraud or material irregularity occurred in the process of auction. However, another ground is added by IBC, 2016 i.e., maximization of value of assets of corporate debtor. Thus, when a situation of challenge to auction process arises on the ground of assets are not being sold at the maximum possible value, then, also in our considered view, auction process can be enquired into and such process can be set aside on this ground also. Another aspect which needs to be considered is that a person who is ready to pay more cannot be debarred or legal technicalities cannot be allowed to come in its way. Further, when liquidator is having an opportunity to approach this Authority in case of collusion, but when the maximization of value of assets is apparently not happening, though may or may not exist, any other interested party can certainly approach this Authority under sections 60(5)(a) / 60(5)(c) of IBC, 2016. Such person, in our considered view, cannot be rendered remedyless. It is apparent that there is a departure from the earlier concept of supremacy of Committee of Creditors as the decisions of Committee of Creditors now can be looked upon in the light of preamble to IBC, 2016 and Committee of Creditors may be required to reconsider the resolution plan to achieve such objectives. In our considered view, this rationale also applies to the decisions of liquidator - the decisions of the liquidator can certainly be looked upon by this Authority when such decisions are not in consonance with the stated objectives of IBC, 2016. In the present case, as stated earlier, e-auction was taken only once. Only one bidder has participated and that too, bid at a reserve price. This bid has been accepted by the liquidator. No reason has been brought on record by the liquidator as to why multiple rounds of auctions were not required as mandated in clause 1 of part 1 of Schedule I. Further, this situation is also violative of Regulation 39 of Liquidation Process Regulation Rules, 2016 as the maximization was not endeavoured - Further, as per notice inviting for expression of interest, balance consideration was to be deposited within 7 days from the date when any bidder is declared successful. However, in the present case, such condition has also been relaxed by taking a bank guarantee for an amount of ₹ 10 Crores approx. Thus, there exists not only contravention of the preamble to the Code and Regulations made thereunder but also an irregularity/deviation. As evident from the various provisions of the Code as well as Liquidation Process Regulations discussed herein before, maximization of value of the assets of the corporate debtor is a key factor / prime consideration and in the present case this object has not been achieved by accepting the bid of the applicant at the reserve price which has been now outbid by a substantial higher amount. Much higher Earnest money has also been deposited - it is a simple case of sale of immovable property, hence, no complexities are involved and, therefore, the only criteria which needs to be applied here is higher bid in monetary terms as well as having regard to time value of money should exist and on this criteria new bid gets through. The old e-auction is cancelled and set aside. The proposal of applicant is accepted subject to the condition that the balance amount of total bid of ₹ 15.50 Crores for the impugned asset parcel shall be deposited within six weeks from the date of receipt of this order failing which the amount of ₹ 3.875 Crores so deposited shall stand forfeited - Application allowed.
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