TMI Blog2023 (1) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of the EMD. The Successful Auction Purchaser has genuine case for not proceeding with the deposit of the balance bid amount due to attachment of the assets of the corporate debtor on 02.12.2021 as noted above. The 90 days period had not even come to an end on 02.12.2021 so as to impute any violation of the term and conditions by the Successful Auction Purchaser. The Adjudicating Authority after considering the submissions of parties has taken the views that as on today the liquidator is not in a position to hand over the custody of the units of the corporate debtor for which e-auction was held and the Division Bench of the High Court on 24.12.2021 has directed parties to maintain status quo. The Adjudicating Authority has rightly passed an order permitting the Successful Bidder to withdraw from the auction and directed to refund of the amount of the EMD Rs. 5 Crores and First Installment of Rs. 30 Crores. Even in a case where Successful Auction Bid as going concern is not approved, Successful Auction Bidder is not entitled for any Interest on the EMD and 1st Installment. We are of the view that the Successful Auction Bidder is not entitled for interest on the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er PMLA Act, 2002 regarding the payment of Rs. 300 Crores sanctioned by Bank of Baroda to M/s. PSL Limited. (iii) On 25.01.2021, Liquidator received an email from the ED asking the liquidator not to proceed with the sale of the assets of the Corporate Debtor. Liquidator filed a writ petition no. 3261 of 2021 before the Delhi High Court seeking direction against the ED and continuation of the liquidation of the Corporate Debtor. An interim order dated 17.03.2021 was passed by the Hon ble High Court directing the Appellant to proceed for the sale of the corporate debtor in accordance with the provisions of the Code. Appellant accordingly republished the sale notice for selling the corporate debtor as a going concern. E-auction process information document was also issued. E-auction was fixed for 09th April, 2021. On 09th April, 2021, the Respondent No. 1 participated in the e-auction and was declared as highest bidder. (iv) First installment of Rs. 30 Crores was paid by the Respondent No.1 to the Appellant on 23rd April, 2021. On 08.09.2021, the Adjudicating Authority approved the sale of the Corporate Debtor as a going concern in favour of the Respondent No. 1-Successful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts liberty to the petitioner to move the Adjudicating Authority for release of the amounts presently held in escrow in terms of the interim order passed in these proceedings. Any application that may be made in this regard by the Liquidator shall be disposed of by the Adjudicating Authority bearing in mind the conclusions recorded hereinabove. (viii) Enforcement Directorate filed a Letter Patent Appeal questioning the order dated 15.12.2021 passed by Learned Single Judge. The Division Bench of the Delhi High Court issued notice in the Letter Patent Appeal and also passed an interim order directing parties to maintain status qu qua the assets of PSL Limited. By Order dated 24.12.2021, the Respondent No.1 Lucky Holdings Pvt. Ltd. was impleaded as one of the Respondents in the Letter Patent Appeal. (ix) In the Letter Patent Appeal, an Application was filed CM No. 9111 of 2022 for staying the proceedings before the Adjudicating Authority under PMLA on which Application notices were issued. Before the Division Bench, Learned Counsel appearing for the Successful Auction Purchaser- Respondent No. 1 made a statement that Respondent No. 1 wishes to exit by withdrawing its bid f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Sr. Counsel-Mr. Krishnendu Dutta appearing for the Appellant submits that the Respondent No. 1 failed to deposit the total bid amount within the time allowed by Order dated 08.09.2021 as modified on 05.10.2021 and as per paragraph 1(12) of Schedule 1 of the Liquidation Process, Regulations, 2016, the amount deposited by Respondent No. 1 are deserved to be forfeited as per the process information document of eauction. It is submitted that Respondent No. 1 participated in the e-auction fully knowing that Enforcement Directorate had initiated proceedings against the Corporate Debtor. In the process sale notice as is where is , as is what is and whatever there is basis , Respondent No. 1 participated in the eauction fully knowing well about the email dated 25.01.2021 received from Enforcement Directorate which was disclosed in e-auction process document, Respondent No.1 cannot withdraw from e-auction. It is further submitted that within 90 days period as permitted under paragraph 1(12) of Schedule 1 of Liquidation Process, Regulations 2016 Respondent No. 1 failed to deposit balance amount from 08.09.2021. The Respondent No.1 has violated the terms and conditions of sale notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing noted the aforesaid fact, the Adjudicating Authority rightly has passed an order permitting the Respondent No. 1 to withdraw from e-auction. Mr. Ramji Srinivasan further submits that the liquidator himself has made an application before the High Court seeking a permission to proceed with the sale of the assets of the Corporate Debtor which has not been attached by the Order dated 02.12.2021. The Division Bench has permitted the Liquidator to proceed with the sale and liquidator having sold the assets it is clear that the auction sale dated 08.09.2021 cannot be given effect by any means. 7. Learned Counsel appearing for the EARC-Intervener submits that financial creditor has given their consent before the Division Bench for attachment by the Enforcement Directorate be transferred qua the properties to sale proceeds. 8. We have considered the submissions of Learned Counsel for the parties and have perused the record. 9. Considering the submissions and perusing the record, following are the three questions which arise for consideration: i. Whether the Successful Auction Purchaser (Respondent No. 1) having not deposited the balance bid amount within 90 days from approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter, IBC ). The link of the Order is .. 12. Respondent No. 1 was the Successful Auction Purchaser in the e- Auction held on 09th April, 2021 and auction was approved on 08.09.2021 which order was modified on 05.10.2021 which permitted the Successful Auction Purchaser to make the payment within 30 days from the date of approval order and as per paragraph 1(12) of Schedule 1 of Liquidation Process, Regulations 2016. The ninety days period computing from 08.09.2021 was to come an end on 08.12.2021 as per paragraph 1(12) of Schedule 1 of Liquidation Process, Regulations 2016. Any amount if paid after 30 days and within 90 days was required to be paid along with interest. Regulation thus prescribed period of 90 days for payment of entire bid amount. The Successful Bidder has deposited the amount of Rs. 30 Crore as the First Installment within the time and it was entitled to deposit the entire balance amount along with interest within 90 days. The most important event which took place subsequent to the approval of the auction is the attachment of the assets of the corporate debtor under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing. Till the next date of hearing, the parties shall maintain status quo qua the assets of PSL Limited, a company in liquidation. 13. We may also notice that in the order dated 24.12.2021 statement on behalf of Learned Counsel for the Successful Auction Purchaser recorded that Successful Auction Purchaser is not making any further payment to the liquidator, further in subsequent hearing of the LPA on 22.02.2022 clear statement made on behalf of Learned Counsel for the Successful Auction Purchaser that Successful Auction Purchaser wishes to exit by withdrawing its bid from the e-auction. Statement was recorded and accepted by the court following is the order passed on 22.02.2022 by the High Court: Ms. Maneesha Dhir, learned counsel for the auction purchaser states that her client wishes to exit by withdrawing its bid from the e-auction process of the corporate debtor. The statement made by Ms. Dhir is taken on record and accepted by this Court. Further, the parties are given liberty to take action in accordance with law in pursuance thereto. 14. It is relevant to notice that with regard to proceedings under PMLA, the Liquidator has filed a writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uccessful Bidder fails to make the payment of the 1st installment payment within 15 days from the declaration as Successful Bidder in accordance with the terms of the E-auction process document; or (viii) If the Bidder is identified as the Successful Bidder and it fails to extend the validity of the EMD through the bank guarantee or does not accept the Letter of Intent issued by the Liquidator; or (ix) If the Successful Bidder, fails to make the complete payment within the time stipulated in the Liquidation and/or the Final Approval Order. 11.5.2 In case of occurrence of any of the above events: (i) All the amounts deposited by the Bidder or any other person on its behalf till that date shall be forfeited and the Bidder or any other Person shall not be entitled to refund of the same; (ii) the option to acquire the assets of the Company/Company will be offered to the next highest bidder. It is clarified that the Liquidator shall, in his discretion, have the right to offer the option to acquire the assets of the Company, both to the next highest bidder under Option A or to determine the successful bidders under Option B and C and offer the option to acquire th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and first installment paid by Successful Bidder shall be refunded but no interest shall be payable by the Liquidator on the said amount refunded to the Successful Bidder. Clause 15.5 of the Terms and Conditions is as follows: 15.4 In the event, the Final Order is passed by the Judicial Authority rejecting the sale on going concern basis pursuant to this E-Auction Process Document and the same is not appealed by the Liquidator in the NCLAT or the Supreme Court (as the case may be), the Liquidator shall return/refund the EMD and 1st Installment payment made by the Successful Bidder within 60 days from the receipt of the Final Order. No interest shall be payable by the Liquidator on the said amounts to be refunded to the Successful Bidder. 18. Even in a case where Successful Auction Bid as going concern is not approved, Successful Auction Bidder is not entitled for any Interest on the EMD and 1st Installment. We are of the view that the Successful Auction Bidder is not entitled for interest on the amount of EMD and First Installment and the Adjudicating Authority without adverting to clause 15.4 has issued direction for refund of the EMD and 1st Installment along with inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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