TMI Blog2022 (8) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... tect and preserve the assets of the Corporate Debtor in liquidation and proceed to sell them at the best possible price. Towards this object, the provisions of the IBC have empowered the Liquidator to go in for a public auction or a private contract as a mode of sale - Regulation 8 of the Liquidation Regulations refers to the consultative process with the stakeholders, as specified in Section 35 (2) of the IBC and states that they shall extend all necessary assistance and cooperation to the Liquidator for completing the liquidation process. Regulation 31A has introduced a Stakeholders Consultation Committee that may advise the Liquidator regarding sale of the assets of the Corporate Debtor and must be furnished all relevant information to provide such advice. Though the advice offered is not binding on the Liquidator, he must give reason in writing for acting against such advice. In the instant case, the first Swiss Challenge Process did not succeed as the highest offerer failed to deposit the EMD. In the second round of the Swiss Challenge Process, as against the base price of ₹460 crores fixed for the Dahej Material and scrap, the appellant made a bid of ₹431 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Adjudication Authority (NCLT) under Section 35 of the IBC. Once the Liquidator applies to the Adjudicating Authority (NCLT) for appropriate orders/directions, including the decision to sell the movable and immovable assets of the Corporate Debtor in liquidation by adopting a particular mode of sale and the Adjudicating Authority (NCLT) grants approval to such a decision, there is no provision in the IBC that empowers the Appellate Authority (NCLAT) to suo motu conduct a judicial review of the said decision - The Appellate Authority cannot don the mantle of a supervisory authority for overseeing the validity of the approach of the respondent No.2 Liquidator in opting for a particular mode of sale of the assets of the Corporate Debtor. It is thus noted that the Core Committee constitutes 70.3% of the financial creditors and when they have weighed in to support the stand taken by the respondent No.2 Liquidator to continue the bid process commenced on 24th August, 2021, there are no reason to foist the view of the NCLAT on the respondent No.2 Liquidator that he ought to restart the process for sale of the composite assets of the Corporate Debtor from the scratch after is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Professional For short IRP . As no Resolution Plan was approved during the CIRP, an application was moved by the IRP for initiating liquidation proceedings. Vide order dated 25th April, 2019, the Adjudicating Authority ordered liquidation of the Corporate Debtor and appointed Mr. Sundaresh Bhat as the Liquidator. The respondent No.2 - Liquidator made efforts to sell the assets of the Corporate Debtor through an eauction process, as contemplated in Sections 33 and 35 of the IBC read with Schedule-I of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 For short Liquidation Regulations . Five e-auctions were conducted by the respondent No.2 - Liquidator to sell the consolidated assets of the Corporate Debtor on 17th September, 2019; 27th September, 2019; 22nd October, 2019; 11th November, 2019 and 5th August, 2020. When the first four e-auctions were unsuccessful, in the fifth eauction, the respondent No.2 - Liquidator offered sale of the assets on a stand-alone basis or singly or in smaller lots, besides compositely. Except for the sale of two residential assets, no purchasers stepped forward to purchase the other assets. 2.2. Faced with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commenced on 27th March, 2021 when the respondent No.2 - Liquidator published an advertisement inviting bidders to participate in the Swiss Challenge Process and submit their bids against the Anchor Bid. In response thereto, the appellant, respondents No.1, 3, 4, 5 and 6 submitted their bids. On 2nd April, 2021, the respondent No.1 HR Commercials Private Limited proposed to bid in a consortium comprising of itself and the respondents No.3 to 6. The said consortium also submitted an EMD in the second stage of the Swiss Challenge Process. COMMENCEMENT OF LITIGATION ORDER OF THE ADJUDICATING AUTHORITY (NCLT) 3. On 6th April, 2021, respondent No.1 HR Commercials Private Limited filed an application before the Adjudicating Authority (NCLT), being IA No.273 of 2021, challenging the bid process in the second Swiss Challenge Process wherein, the appellant was selected as the Anchor Bidder. The NCLT passed an interim order on the aforesaid application on 7th April, 2021 directing the respondent No.2 - Liquidator to complete the second Swiss Challenge Process only upto the stage of announcement of the highest bidder and for deferring the rest of the process to a date after 12t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the respondent No.7 Welspun before the NCLT. It is the stand of the respondent No.2 Liquidator that in the hearing conducted on 9th August, 2021, the NCLT had orally directed him to place the offer made by the respondent No.7-Welspun before the stakeholders. 7. Pursuant to the aforesaid direction, a Meeting of the SCC was conducted on 13th August, 2021 and it was decided that it would be beneficial if the Dahej Material and the Shipyard are sold as composite assets to maximize realization to the stakeholders in the shortest possible time and for quick disposal of the assets. In other words, the stakeholders were of the view that a composite sale of the Dahej Material and the Shipyard would be more beneficial vis- -vis the sale of the Dahej Material alone, subject matter of the second Swiss Challenge Process. 8. On 16th August, 2021, the respondent No.7 Welspun sent an e-mail to the respondent No.2 Liquidator once again increasing its offer for the consolidated assets of the Corporate Debtor from ₹650 crores to ₹675 crores. It also offered to pay a sum of ₹67.50 crores as EMD with an assurance that full payment would be made on or before 30th S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be adopted without any qualification or reservation and all prospective bidders should get sufficient notice and time to enable them to participate in the bidding in an effective manner. The process should be taken up after proper notice to prospective buyers and not limited to chosen few. 40. The impugned order directs the Liquidator to complete the entire private sale (relating to the assets contained in the WSRPL offer) within three weeks from the date of Adjudicating Authority's order. It additionally directs the Liquidator to allow the parties who are involved in the hearing of CP(IB) No. 53 of. 2017 and related IAs to participate in the sale process. We are of the opinion that rushing into the sale of composite assets with only such parties participating who had earlier not evinced keen interest in the five failed rounds of eauction may not achieve the value maximization objective. The process should be restarted with adequate preparation and after giving open notice to prospective buyers. We also hope liquidator will take steps to initiate and complete the sale process in accordance with the provisions of IBC and Liquidation Regulations without any favouriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was submitted on behalf of the appellant that the aforesaid observations run contrary to Regulation 31-A of the Liquidation Regulations and Section 35(2) of the IBC that state in clear terms that the views of the SCC are not binding on the Liquidator. It was urged that the NCLT and the NCLAT ought not to have permitted the respondent No.2-Liquidator to terminate the Swiss Challenge Process when it was at the final stage as the said termination will lead to a further delay and huge financial losses for all the concerned parties. In support of the submission that sale through the Swiss Challenge Process has been recognized by courts as a fruitful method of maximisation of value, reliance has been placed on Ravi Development v. Krishna Parishthan Others (2009) 7 SCC 462 . 12. It was next submitted by learned counsel for the appellant that the respondent No.20-Liquidator having failed to succeed in the e-auction process that was undertaken by him on five occasions, he had himself supported the Swiss Challenge Process for liquidating the assets of the Corporate Debtor and therefore, he could not have been permitted to drop the said process halfway through and approach the NCLT fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the value of the assets of the Corporate Debtor, it was stated that the intention of the respondent No.2 - Liquidator all through was to sell the consolidated assets of the Corporate Debtor and towards this direction, five e-auctions were conducted by him. In the first two e-auctions, attempts were made to sell the assets of the Corporate Debtor compositely but that was to no avail. Left with no other option, respondent No.2 - Liquidator decided to offer the assets of the Corporate Debtor for sale singly or in smaller lots, besides compositely. Despite adopting the aforesaid route in the third, fourth and fifth e-auction processes, the auction sales failed to take off and none of the assets of the Corporate Debtor could be liquidated except for two residential apartments situated in Mumbai and Ahmedabad. It was only after five failed auctions that the respondent No.2 - Liquidator moved an application before the NCLT for permission to sell the assets of the Corporate Debtor by way of Private Sale, in terms of Regulation 33(2)(d) of the Liquidation Regulations, which was duly allowed. 15. Arguing that the appellant has no right to insist that the respondent No.2 - Liquidator oug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretion, the sale process or any part thereof. To bring home the said point, reliance has been placed on Clause 11.6 of the Swiss Challenge Process and Clause 12.3 of the Anchor Bid Document. To buttress the argument that the entity issuing the tender is well empowered to cancel the process if the tender documents so permit, learned counsel has cited CWE-Soma Consortium (supra); Tata Cellular v. Union of India (1994) 6 SCC 651 and Air India v. Cochin International Airport Limited and Others (2000) 2 SCC 617. The decisions in Montecarlo Limited v. National Thermal Power Corporation Limited (2016) 15 SCC 272 and Agmatel India Private Limited v. Resources Telecom and Others (2022) 5 SCC 362 have been relied on in support of the submission that courts should show restraint in matters relating to the interpretation of the tender document and the Agency floating the tender is best placed to decide its requirements. 18. Refuting the submission made on behalf of the appellant that the respondent No.2 - Liquidator has adopted an unfair process for conducting Private Sale of the assets of the Corporate Debtor, learned counsel asserted that there are no malafides on the part of the Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not restarted having regard to the fact that it has taken almost three years to find a buyer and the same is at the stage of being brought to a closure. A copy of the minutes of the Core Committee held on 15th December, 2021, has been enclosed with IA No.34322/2022 (application for permission to file additional documents) filed by the respondent No.2 Liquidator. SUBMISSIONS OF THE RESPONDENT NO. 7 - WELSPUN 20. Arguments advanced by Mr. Aman Raj Gandhi, learned counsel for Welspun, respondent No.7 in Civil Appeal No. 7722 of 2021 and appellant in Civil Appeal No. 7731 of 2021 are broadly on the same lines as those advanced on behalf of the respondent No.2 Liquidator. It was submitted that the appellant was involved in the bidding process since March, 2021 and had all the opportunity to conduct site visits and undertake due diligence to come up with a bid for the consolidated assets offered for sale by the respondent No.2 Liquidator, but it failed to do so that even as on date, the appellant has not evinced any interest in bidding for the consolidated assets of the Corporate Debtor; that the entire effort of the appellant is to resort to dilatory tactics and stal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akeholders. It was urged that as the respondent No.2 - Liquidator has taken a decision to sell the assets of the Corporate Debtor on a composite basis by Private Sale in consultation with the Stakeholders Consolidation Committee, the NCLAT ought not to have replaced the commercial wisdom of the SCC with its own view, without offering any justification for doing so. SUBMISSIONS OF RESPONDENT NO.8 M/s KANTER STEEL INDIA PRIVATE LIMITED 21. Mr. Gaurav Mathur, learned counsel for the respondent No.8 M/s. Kanter Steel India Private Limited has also supported the submissions made on behalf of the respondent No.7 - Welspun and contended that the private sale process initiated by the respondent No.2 - Liquidator has the potential of fetching greater value for the larger good of the stakeholders of the Corporate Debtor and deserves to be continued. Referring to the offer of ₹431 crores made by the appellant under the Second Swiss Challenge Process, it was stated that the same was evidently below the base price of ₹460 crores declared by the respondent No.2 - Liquidator and the appellant was also in clear breach of the timelines fixed in the Sale Process Documents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Challenge Process for the sale of a part of the assets of the Corporate Debtor wherein the appellant R.K. Industries was declared as an Anchor Bidder and opting for a Private Sale Process through direct negotiations in respect of the composite assets of the Corporate Debtor? If so, was the NCLAT justified in directing the respondent No.2 Liquidator to restart the entire process of Private Sale after issuing an open notice to prospective buyers instead of confining the process to those parties who had participated in the process earlier? 24. To begin with, it is considered necessary to have an overview of the IBC and its relevant provisions along with the Liquidation Regulations for a better understanding of the manner in which a Liquidator is expected to proceed for conducting the sale of the assets of the Corporate Debtor in liquidation. 25. Conscious of the inadequate and ineffective framework of the insolvency and bankruptcy resolution, the Government decided to overhaul the insolvency regime. Towards this end, there were several rounds of deliberations and consultations, followed by presentation of Committee Reports, prominent among them being the Report of the Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r timely resolution of insolvency and bankruptcy would support development of credit markets and encourage entrepreneurship. It would also improve Ease of Doing Business, and facilitate more investments leading to higher economic growth and development. 3. The Code seeks to provide for designating NCLT and DRT as the adjudicating authorities for corporate persons and firms and individuals, respectively, for resolution of insolvency, liquidation and bankruptcy. The Code separates commercial aspects of insolvency and bankruptcy proceedings from judicial aspects. The Code also seeks to provide for establishment of the Insolvency and Bankruptcy Board of India (Board) for regulation of insolvency professionals, insolvency professional agencies and information utilities. Till the Board is established, the Central Government shall exercise all powers of the Board or designate any financial sector regulator to exercise the powers and functions of the Board. Insolvency professionals will assist in completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged in the Code. Information Utilities would collect, collate, authenticate and disseminate financial inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. The Code is first and foremost, a Code for reorganisation and insolvency resolution of corporate debtors. Unless such reorganisation is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximisation of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme-workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximise their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittee observed that the BLRC has designed the CIRP to be driven by creditors of the Corporate Debtor, the liquidation process is met to be driven by the Liquidator. Therefore, the act does not contemplate a Creditors Committee in the liquidation process. The creditors have a limited role of participation in the decision making during the said process. In fact, UNCITRAL Legislative Guide on Insolvency Law also acknowledges that it is generally not important for creditors to intervene in proceedings or participate in decision making during the liquidation process as the said process is driven by the Liquidator. The suggestion made by the UNCITRAL Legislative Guide is that in instances such as sell of assets in the context of liquidation proceedings, the creditors may be given a more significant role to play to boost the value of returns from such sale. 32. That time is the essence of the insolvency and the liquidation process and one of the paramount factors that weighed with the legislature for introducing the new insolvency regime through the IBC, has been referred to by the BLRC that has observed that the swiftness with which the liquidation face can be completed with the mos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right from the stage of initiation of liquidation, till the stage of dissolution of the Corporate Debtor. Section 33 of the IBC states as follows : 33. Initiation of Liquidation - (1) Where the Adjudicating Authority- (a) before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under section 12 or the fast track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub-section (6) of section 30; or (b) rejects the resolution plan under section 31 for the noncompliance of the requirements specified therein, it shall- (i) pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter; (ii) issue a public announcement stating that the corporate debtor is in liquidation; and (iii) require such order to be sent to the authority with which the corporate debtor is registered. 34. The circumstances in which liquidation can be triggered by the Adjudicating Authority (NCLT) under Section 33, have been spelt out in Arcelormittal India Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consult any of the stakeholders entitled to a distribution of proceeds under section 53: Provided that any such consultation shall not be binding on the liquidator: Provided further that the records of any such consultation shall be made available to all other stakeholders not so consulted, in a manner specified by the Board. 40. Coming next to the Liquidation Regulations, Regulations 8, 31A, 32 and 33 need to be highlighted and state as follows: 8. Consultation with stakeholders. (1) The stakeholders consulted under section 35(2) shall extend all assistance and cooperation to the liquidator to complete the liquidation of the corporate debtor. (2) The liquidator shall maintain the particulars of any consultation with the stakeholders made under this Regulation, as specified in Form A of Schedule II. xxx xxxx xxxx 31A. Stakeholders Consultation Committee. (1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on the matters relating to sale under regulation 32. xxxx xxxx xxxx (5) Subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Authority, by way of private sale to- (a) a related party of the corporate debtor; (b) his related party; or (c) any professional appointed by him. (3) The liquidator shall not proceed with the sale of an asset if he has reason to believe that there is any collusion between the buyers, or the corporate debtor s related parties and buyers, or the creditors and the buyer, and shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties. 38. Schedule-I under Regulation 33 lays down the procedure to be followed by the Liquidator for selling the assets of the Corporate Debtor. The relevant clauses of Schedule-I are extracted as below: SCHEDULE I MODE OF SALE (Under Regulation 33 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016) 1. AUCTION (1) Where an asset is to be sold through auction, a liquidator shall do so the in the manner specified herein. (2) The liquidator shall prepare a marketing strategy, with the help of marketing professionals, if required, for sale of the asset. The strategy may include- (a) releasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant information to provide such advice. Though the advice offered is not binding on the Liquidator, he must give reason in writing for acting against such advice. 40. When it comes to the mode of sale of the assets of the Corporate Debtor, whether immovable or movable and other actionable claims, Regulation 33 of the Liquidation Regulations comes into play and states that ordinarily, the Liquidator will sell the said assets through auction, as specified in Schedule-I(1). Sub-section (2) of Section 33, IBC gives an option to the Liquidator to sell the assets of the Corporate Debtor through a Private Sale, in the manner set out in Schedule-I (2). Regulation 33 of the Liquidation Regulations is couched in a language which shows that ample latitude has been given to the Liquidator, who may ordinarily sell the assets through auction thereby meaning that in peculiar facts and circumstances, the Liquidator may directly go in for a Private Sale. To avoid the pitfalls of disposing of the assets by conducting a Private Sale for the Pittance, Regulation 33 has prescribed some stringent conditions that the Liquidator is under an obligation to comply. The said pre-conditions are that (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing a bid higher than the H1 bid. In the event the Anchor Bidder fails to exercise the ROFR, the said right stands extinguished and H1 bidder would then be declared as successful. 42. In the instant case, the first Swiss Challenge Process did not succeed as the highest offerer failed to deposit the EMD. In the second round of the Swiss Challenge Process, as against the base price of ₹460 crores fixed for the Dahej Material and scrap, the appellant made a bid of ₹431 crores that was accepted. Thereafter, the respondent No.2 Liquidator did publish an advertisement inviting bidders to submit their bids against the Anchor Bid in response whereto, the appellant, respondents No.3, 4, 5, and 6 submitted their bids, but before the process could be taken further, on an application moved by the respondent No.1, the Adjudicating Authority (NCLT) passed an order directing the respondent No.2 Liquidator to carry forward the stage upto announcement of the highest bidder, while deferring the rest of the process. 43. When the matter was still pending before the NCLT, the respondent No.2 Liquidator was approached by the respondent No.7 Welspun, who evinced interest in pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the I B Code. t. Liquidator of ABGSL reserves the right to suspend/ abandon/cancel/extend or modify the process terms and/or documents and/or reject or disqualify any Bidder at any stage of process without assigning any reason and without any notice liability of whatsoever nature. 45. Clause 11.6 and Schedule IV of the Second Swiss Challenge Process Document are also relevant and are worded on the same lines: 11.6 Notwithstanding anything to the contrary contained herein, the Liquidator expressly reserves the right to abandon/ cancel/ terminate/ waive the current process or a part thereof contemplated hereunder (at any stage without liability). Further, the Liquidator reserves the right to reprise and resize or change the lots/ combination of notes in the current sale process or in any other sale process that may be contemplated, in accordance with applicable laws, and without incurring any liability in this regard, in the best interest of stakeholders. Schedule IV : Terms Conditions e. It is clarified that issuance of the Process Document does not create any kind of binding obligation on the part of the Liquidator or ABG to effectuate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Liquidator. Identical rights were reserved with the Liquidator even in the Second Swiss Challenge Process Document. In fact, as noted above, Schedule IV goes a step further and entitles the Liquidator to include a bidder to participate in the sale process at any stage. He could even decide to sell the composite assets of the Corporate Debtor during the said process. 48. Merely because the appellant herein had submitted a bid under the Anchor Bid Document and was declared as the Anchor Bidder in the Second Swiss Challenge Process, could not vest a right on it for it to insist that the said process must be taken to its logical conclusion. The appellant has been harping about the vested right that had allegedly accrued in its favour on being declared as the Anchor Bidder. But it has conveniently glossed over an affidavit dated 23rd March, 2021 filed by it, undertaking inter alia that it would remain unconditionally and irrevocably bound by the Swiss Challenge Process Document and the decision of the respondent No.2 - Liquidator. Given the aforesaid terms and condition of the Anchor Bid Document and the Second Swiss Challenge Process Document, read collectively with the unqual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Second Swiss Challenge Process that was confined to the Dahej Material, respondent No.7 Welspun expressed its willingness to purchase the Dahej land and the scrap as a composite asset thereby curtailing two rounds of sales, first for the Dahej Material followed by the Shipyard and the other assets. Secondly, the respondent No.2 Liquidator had valid reasons to believe that a consolidated sale of the assets of the Corporate Debtor will lead to a higher return and a quicker recovery for the stakeholders. Thirdly, composite sale of the assets would lead to maximization of recovery within a guaranteed timeline. In the assessment of the respondent No.2 Liquidator, a two tier process of selling the Dahej Material in the first round through the Swiss Challenge method, followed by the sale of the Dahej land in the second round, would have caused prejudice to the stakeholders for the reason that continuing the Second Swiss Challenge Process would have meant that the appellant or the H1 bidder, as the case may be, would have to be granted at least 15 to 18 months to lift the material from the Dahej Shipyard, thus stalling the entire process of the sale of the Dahej land to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aspect of rejecting even the highest bid received by an Authority, this Court has held in Laxmikant and Others (supra) as under : 4. Apart from that the High Court overlooked the conditions of auction which had been notified and on basis of which the aforesaid public auction was held. Condition No. 3 clearly said that after the auction of the plot was over, the highest bidder had to remit 1/10 of the amount of the highest bid and the balance of the premium amount was to be remitted to the trust office within thirty days from the date of the letter informing confirmation of the auction bid in the name of the person concerned . Admittedly, no such confirmation letter was issued to the respondent. Conditions Nos. 5, 6 and 7 are relevant: 5. The acceptance of the highest bid shall depend on the Board of Trustees. 6. The Trust shall reserve to itself the right to reject the highest or any bid. 7. The person making the highest bid shall have no right to take back his bid. The decision of the Chairman of the Board of Trustees regarding acceptance or rejection of the bid shall be binding on the said person. Before taking the decision as above and informing the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erer to cancel the process if the tender document so permits, we may usefully refer to Montecarlo Limited (supra), wherein it is has been held as under : 26. . Exercise of power of judicial review would be called for if the approach is arbitrary or mala fide or procedure adopted is meant to favour one. The decision-making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints. (emphasis added) [Also refer : Sterling Computers Limited v. M/s M N Publications Limited and Others (1993) 1 SCC 445 , Tata C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned holistically by the respondent No.2 Liquidator who then placed the cards before the stakeholders in the meeting conducted on 6th August, 2021. Even though the provisions of the IBC empower the Liquidator to take an independent decision for the sale of the assets of the Corporate Debtor in liquidation, it can be seen that he has taken the stakeholders into confidence at every step. Only after finding them to be in agreement with the option sought to be explored by him of halting the Second Swiss Challenge Process and proceeding with the Private Sale of the consolidated assets of the Corporate Debtor by directly liaising with the potential buyers, did the respondent No.2 Liquidator take such a decision solely with the object of augmenting realization from the sale of the assets. Thereafter, the matter was taken to the Adjudicating Authority (NCLT) for necessary permissions under Section 35(1) of the IBC that was duly granted. The decision taken by the respondent No.2 Liquidator cannot be treated as arbitrary, capricious or unreasonable for interference by this Court. The said decision is tempered with sound reason and logic. It is a purely commercial decision centered on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rections, including the decision to sell the movable and immovable assets of the Corporate Debtor in liquidation by adopting a particular mode of sale and the Adjudicating Authority (NCLT) grants approval to such a decision, there is no provision in the IBC that empowers the Appellate Authority (NCLAT) to suo motu conduct a judicial review of the said decision. The jurisdiction bestowed upon the Adjudicating Authority [NCLT] and the Appellate Authority [NCLAT] are circumscribed by the provisions of the IBC and borrowing a leaf from Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Others (2020) 8 SCC 531, they cannot act as a Court of equity or exercise plenary powers to unilaterally reverse the decision of the Liquidator based on commercial wisdom and supported by the stakeholders. The Court has also observed in the captioned case that from the legislative history, there is contra-indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority. A similar reasoning has prevailed with Respondent in K. Sashidhar v . Indian Overseas Bank and Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 passed by the NCLT and directed restraining of the Private Sale Process, is quashed and set aside. In our opinion, the Private Sale process of the composite assets of the Corporate Debtor should be taken further by the respondent No.2 Liquidator without losing any further time and be concluded at the earliest. All the eligible bidders who have made Earnest Money Deposits would be entitled to participate in the negotiations to be conducted by the respondent No.2 Liquidator for privately selling the consolidated assets of the Corporate Debtor. Accordingly, we direct that the process of private negotiations that had commenced on 24th August, 2021, shall be taken to its logical end and brought to a closure by the respondent No.2 Liquidator within four weeks from the date of passing of this order. 63. As a result, Civil Appeal No.7722 of 2021 filed by R.K. Industries fails and the same is dismissed along with I.A No. 166862/2021. Civil Appeal No.7731 of 2021 filed by Welspun is allowed on the afore-stated terms. Parties are left to bear their own costs. Pending applications, if any other than IA No. 166862/2021 shall stand disposed of. - - TaxTMI - TMITax - Insolvency & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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