TMI Blog2022 (1) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... e main case of the Appellant having communicated to the Liquidator prior to the e-Auction date; they had participated in the Bid process with the bona fide intention to comply the sale process as the second Respondent/SBI had accepted the payment terms. Since the liquidator did not assist the Appellant in clarifying the liabilities of the Corporate Debtor, the Appellant informed the Liquidator that if their Bid is not accepted with its terms they would seek to withdraw from the Bid. Applicant has accepted all the terms and conditions and cannot revise the same. The Bid Document also specifies under the heading Costs, Expenses and Tax Implications that payment of all statutory and non-statutory dues, taxes, rates, assessments, charges, fees, owed by the Corporate Debtor to anybody in respect of the subject property shall be the sole responsibility of the Successful Bidder. It is also significant to note that an email dated 06.09.2019; the Liquidator has clearly mentioned that legal issues pertaining to e-Auction cannot be changed after public notification . By paying the EMD amount and accepting the Bid, the Successful Bidder cannot now say that it was not a concluded contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents : Mr. Sanjeev Kumar and Mr. Anshul Sehgal, Advocates for R-1. Mr. Om Narayan Rai, Advocate for R-3. JUDGEMENT [Per: Shreesha Merla, Member (T)] 1. The Present Appeal has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as Code ), by M/s. Visisth Services Limited (Hereinafter referred as Appellant ) against the Impugned Order dated 07th August, 2020 passed by National Company Law Tribunal, Kolkata Bench, Kolkata, in CA (IB) No. 1313/KB/2019 connected with C.P.(IB) No.-898/KB/2018. By the Impugned Order, the Adjudicating Authority has dismissed the Application preferred by the Appellant and also disposed of the Application CA (IB) No. 1313/KB/2019 filed by the Liquidator with the following directions: i). The Liquidator shall issue fresh invitation to the bidder to provide balance sale consideration within such time as per clause (12) of Schedule I of Regulation 33; ii). In case of payment of the full amount the liquidator shall execute certificate of sale or sale deed to transfer the assets in the manner specified in the terms of sale as per bidding document following clause (13) of the Schedule I of Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idator before the Adjudicating Authority seeking direction for Approval of the Sale as a Going Concern , and sought for approval without transfer of any liabilities and if there exists any impediment, the Appellant sought for withdrawing from the Bid and the refund of the amount paid. 3. Submissions of the Learned Counsel appearing on behalf of the Appellant: Learned Counsel strenuously contended that there was no valid contract between the parties. On 04.09.2019, a detailed email was addressed to the Liquidator seeking clarifications to facilitate the Appellant s participation and e-Auction Process. The Learned Counsel submitted that these queries pertain to the claims and liabilities of the Corporate Debtor such as charges over the assets, outstanding statutory dues to the Tax Authorities, Electricity Authorities, etc. It is submitted that the Appellant made it amply clear that it could be willing to participate in the e-Auction only if the liabilities attached to the units of the Corporate Debtor, both statutory and non-statutory in nature, were clarified and dispensed with and/or extinguished on the completion of the liquidation process. Different payment terms were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the Liquidator shall identify and group the assets and liabilities to be sold as a Going Concern in consultation with the Consultation Committee of Creditors. In the present case, the Liquidator has failed to exercise his duty of assisting the Appellant with information and documents pertaining to the liabilities of the Corporate Debtor. If the earnest money deposited is forfeited, the Corporate Debtor will be permitted to make unlawful gains and unjustly enrich at the expense of the Appellant. 4. Submissions of the Learned Counsel appearing on behalf of the first Respondent /Liquidator: It is contended that the Appellant after payment of EMD, wrote a letter to the Liquidator on 06.09.2019 that the sale of the Corporate Debtor Company should be transferred without any liabilities. The Appellant was aware of the fact that the sale of the assets of the Corporate Debtor included its liabilities as the sale was on an as is very basis . Learned Counsel to buttress his arguments placed reliance on the Judgement of this Tribunal in Tarun International Ltd. Vs. Mr. Vikram Bajaj , Company Appeal (AT) Ins. No. 1194 of 2019 dated 03.03.2021. The e-Auction Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be bifurcated. The Bid Document duly clarifies that the assets in Liquidation were being sold as a Going Concern . The Appellant had accepted conditions or forfeiture of the EMD as mentioned in the Bid Document. The amount deposited by the Successful Bidder accounts for 10 percent for the Reserve Price and if there is forfeiture, the loss is indeed enormous. The Appellant has no right to make any claim in as much as it has failed to put in the subsequent due, less EMD deposit towards the sale consideration within the time frame of 90 days as per clause 12 of Schedule 1 of the Liquidation Process Regulations, 2016. The Learned Counsel drew our attention to the Bid Document amount and the terms and conditions of the proposed sale in support of his arguments. Assessment: 6. The Issues which arise in this Appeal for consideration are: a. Whether sale of Corporate Debtor as a Going Concern, in Liquidation Proceedings includes its liabilities; b. Whether the Appellant herein can withdraw from the Bid after payment of the EMD and seek for refund of the amount paid on the ground that the offer made by the Bidder was a conditional offer . 7. Regulation 32A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business, assets and liabilities, including all contracts, licences, concessions, agreements, benefits, privileges, rights or interests to the acquirer. The consideration received from sale will be split into share capital and liabilities, based on a capital structure that the acquirer decides. There will be an issuance of shares by the CD being sold to the extent of the share capital. The existing shareholders will become claimants from liquidation proceeds under section 53 of the Code. 3.2.2 Sale under regulation 32(f): The business(s) along with assets and liabilities, including intangibles, will be transferred as a going concern to the acquirer, without transfer of the CD, and therefore, the CD will be dissolved. The existing shares will be extinguished. The remaining assets, other than those sold as part of business will be sold and the proceeds thereof will be used to meet the claims under section 53 of the Code. ........ 4.2 Should Going Concern Sale be defined? 4.2.1. The term is well understood in legal parlance. The jurisprudence in this regard is fairly well-developed out of the erstwhile liquidation regime under the Companies Act, 1956. The Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... email is reproduced as hereunder: .The Company shall have no liabilities towards the persons currently classified as promoter or promoter group (including the Existing Promoter Group), persons acting in concert with promoters, holding companies, subsidiary companies, associate companies, group companies and/or their respective affiliates /associates). However, it is clarified that all claims of the Company against such related parties (and all Liabilities of such related parties towards the Company) shall remain outstanding due and payable to the successful bidder in accordance with their terms. Any Liabilities, claims, demands, capital contributions or any other form of financial commitment; including but not limited to pledge of shares or any security interest created or provided, whether guaranteed or contractually agreed in writing or otherwise by the Company on behalf of or for its subsidiary companies, associate companies, Group companies and / or their respective Affiliates, shareholders/associates; as the case may be, which are in existence prior to the Closing Date and which may be invoked prior to the Closing date or at any time thereafter, shall stand irrev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........... 12. The Applicant should thoroughly satisfy itself about the nature, conditions and quality of the assets. The Liquidator gives no guarantee or warranty as to title of assets or the conditions of the assets/material or/its quality for any specific purpose or use. It should be clearly understood that no claim/complaint about the quality/conditions/fitness for use will be entertained by the Liquidator. 13. The submission of the bid means and implies that the Applicant has read carefully and unconditionally and irrevocably agreed to and accepted all the terms and conditions laid herein. 14. Bids once submitted cannot be withdrawn or revised. 15. The Liquidator reserves the right to accept or reject any/or all the bids or adjourn, postpone or cancel the auction sale anytime without assigning any reason thereon. Any notice of such adjournment/ postponement/ cancellation of the auction sale shall be published on the website https://ncltauction.acutiontigernet. ........ (Emphasis Supplied) 15. Clauses detailed above show that Applicant has accepted all the terms and conditions and cannot revise the same. The Bid Document also specifies under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Bid at this stage and seek refund on the ground that their conditional offer has not been accepted, then the liquidation process would be a never ending one, defeating the scope and objective of the Code. In the declaration signed, the Appellant-Bidder unconditionally agreed to abide by the terms of the e-Auction which is inclusive of forfeiture of the EMD, in the event the Bidder did not perform their part of obligation after the acceptance of the Bid in their favour. The acceptance was conveyed to the Bidder on 25.09.2019. Clearly noting the terms and conditions that the Company was being sold as a Going Concern in an as is very basis , the Bidder cannot now be permitted to turn around and plead that their offer was conditional. The Hon ble Supreme Court of India in Pawan Kumar Agarwal Vs. Association of Management Studies and Anr.; Meerut Development Authority 2009(6) SCC 171 has observed in Paragraph 26 as follows: 26. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e answer to the various contentions raised by the respondents. We may reiterate that after having accepted the offer of the commercial plots in a public auction with a superimposed condition i.e. on as-is-where-is basis and after having accepted the terms and conditions of the allotment letter, including instalment facility for payment, the respondents cannot say that they are not bound by the terms and conditions of the auction notice, as well as that of the allotment letter. On facts, we have found that there was no inordinate delay on the part of PUDA in providing those facilities. 18. We are of the view that the High Court was not justified in holding that the respondents are not liable to pay the interest, penal interest and penalty for the period commencing from 1-6-2001 to 31-12-2002 for the belated payment of instalments. Consequently, the judgments of the High Court are set aside and the writ petitions would stand dismissed and the appeals would stand allowed as above. There will be no order as to costs. (Emphasis Supplied) 18. Keeping in view the ratio laid down by Hon ble Supreme Court of India in a catena of Judgments that the Bidder cannot wriggle out ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
