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TMI Blog2024 (1) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... the Parties. 2. IA (I.B.C)/334(KB)2023 has been preferred by Member of Suspended Board of Manthan (CO) in liquidation. 3. The Applicants would submit as follows: 3.1 The e-auction notice (Page 151) of 77,500 shares of the Corporate Debtor in Alliance is being sought to be sold in Liquidation, apart from an immovable property at Tajpur, West Bengal. 3.2 That the Corporate Debtor held 48.14% shares in Alliance. That the majority Shareholders of Alliance have devised a strategy to obtain the shareholding of Alliance held by Corporate Debtor and intending to push Manthan into Insolvency have filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016. They have destroyed chances of any Resolution by their incorrect acts and after commencement of CIRP, by two rights issues dated 30th September 2019 and 7th September 2021, issued 39,000 and 1,00,000 shares respectively in Alliance, thereby, reducing the shareholding of corporate debtor in Alliance from 48.14% to 25.83%. Further that through their associates an attempt is being made to acquire the said shares at an undervalue in liquidation sale. 3.3 It is submitted that such an attempt for auction sale is in Viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was at Rs. 1155/- and Rs. 1100/- which can be verified from the records of CP No. 15 of 2022, I. A. No. 847 of 2021 and I. A. No. 850 of 2021, all pending shares of such large quantities totalling to about 48.14% being sold at book value, is an undervalued sale. In fact there would be premium including control premium applicable to shareholding of this nature. For a sum of 9.2 Crores, Alliance through its stooge would acquire shares which are easily worth in excess of Rs. 50 crores giving purchaser about 50% rights in Alliance. It is alleged that the I.A. No. 847 of 2021, I.A. No. 850 of 2021 and CP No. 15 of 2022, all proceedings where these two rights issues are under challenge should be decided first. There is an Order dated 27th September passed by The Hon'ble National Company Law Tribunal whereby rights issues have been made subject to final outcome of further orders. If Liquidator succeeds in this application or if the Applicant succeeds, the sale will be of 48.14% shares in Alliance. Presently, it is for 25.83% shares in Alliance. 3.7 It is alleged that the valuation report is not disclosed whereas under Regulation 35 of the Liquidation Process Regulations, 2016, valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidation Regulations and hence as per Regulation 21(3), the said shares have automatically become part of the Liquidation Estate by operation of law. It is argued further that the sale is being conducted on an "as is where is whatever there is where ever there is" basis. The same is stated categorically in the process document. Copies of all cause papers and details of litigation are uploaded in the VDR (Virtual Data Room) to which the auction participants have access. That the possession of the shares are not with the Liquidator is categorically stated in the bid process document at page 102 of the petition. The process document pertains to an auction which includes several other assets (such as plant/machinery and land) possession of which is with the Liquidator. Since it's a composite bid process document, it is stated possession will be handed over on "as is where is basis". There is no inconsistency in the bid process document. That the bidders are participating knowing all the risks and factual aspect. Since, sale is being done on as is where is basis, the new auction participant will continue with the litigation against Alliance, if required. As such, the concern of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is the book value is not sustained. The book value of the 77500 shares are Rs. 54.85 lakhs. The average fair value as per IBBI Registered Valuers is Rs. 9.21 Crores and average liquidation value is Rs. 4.61 Crores. The shares have been put up for auction Rs. 9.21 Crores i.e., at the average fair value, hence valuation of shares and quoting of price cannot be faulted. 9. Regulation 21A of the Liquidation Regulation says that if the secured creditor has not discharged its obligations within 30 days from liquidation commencement date 06.04.2022, the shares will automatically form part of the Liquidation Estate. The options available to the secured creditors in liquidation proceedings are the following: * Relinquish its security interest to the liquidation estate and realise proceeds from the sale of assets by the Liquidator in the manner specified in Section 33; or * Realize its security interest under section 52(1)(b) * Realise its security under SARFAESI Act etc. Therefore, Alliance is directed to handover the certificates in original to the Liquidator within a week from the date of pronouncement of this order. Regulation 21A of the IBBI (Liquidation Process) Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an of Rs.10.20 crores to Manthan Broadband Services Private Limited (Manthan) and Manthan pledged its 77,500 shares to Alliance. On 18.09.2019, Manthan was admitted to insolvency in CP (IB) No.1634/KB/2018. On 06.04.2022 order of liquidation was passed in respect of Manthan. On 11.01.2023 the Liquidator of Manthan invited EOI, inter alia, for sale of the said shares. Kalyankari Texfab Private Limited, the Applicant herein deposited an earnest money of Rs.90 lacs with the Liquidator to participate in the said e-Auction. On 14.02.2023 an order was passed by this Tribunal in IA(IB) No.334/KB/2023 permitting e-Auction to be held subject to the outcome of IA(IB) No.334/KB/2023. At the e-Auction held on 14.02.2023, Kalyankari Texfab Private Limited came out as the highest bidder with a bid of Rs.9.61 crores. 2.2 It is urged that under the provisions of Section 35 of the IBC, the Liquidator is duty bound to take custody and control of all assets, properties, effects and actionable claims of the Corporate Debtor and to sell the same [Section 35 (1) (a0 and (1) (f)]. The IBBI (Liquidation Process) Regulations, inter alia, provide that the process of liquidation will be complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance is placed on United Bank of India vs. Official Liquidator & Ors. (1994) 1 SCC 575 that - "14. When the Official Liquidator sells the property and assets of a company in liquidation under the orders of the Court he cannot and does not hold out any guarantee or warranty in respect thereof. This is because he must proceed upon the basis of what the records of the company in liquidation show. It is for the intending purchaser to satisfy himself in all respects as to the title, encumbrances and so forth of the immovable property that he proposes to purchase." 4.3 To counter the allegation of the Suspended Promotors that the said shares did not form a part of the liquidation estate and thus could not have been sold by the Liquidator, it was vociferously argued that as on 04.03.2019 a C.S. No.54 of 2019 has been filed by Alliance against Manthan praying, inter alia, for a declaration that the said 77,500 shares are pledged in favour of Alliance. On 06.04.2022 the Liquidation of Manthan commenced and on 06.05.2022, Form-D was filed by Alliance with the Liquidator whereby Alliance opted to realize its own security interest in respect of the said shares. The Liquidator on 06.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance Broadband Services Pvt. Ltd. It was urged that the allegation that Mr. Jagabandhu Raut is related to Mr. Debendra Raut is baseless and false. The concerned person appeared before this Tribunal and denied such allegation. That mere allegation that Mr. Jagabandhu Raut, a Director of Kalyankari, and Mr. Debendra Raut were Directors in another company being M/s. Raut Foundation, does not make Kalyankari a related party of Alliance. 5. We have considered the rival contentions and perused records. The Applicant being an H1 Bidder who has paid the earnest money to participate in the bid process and would be severally prejudiced if the sale does not go through. 6. We are convinced that the Applicant is a proper and necessary party in IA (IB) No.334 of 2023. However, IA (IB) No.334 of 2023 is already dismissed and hence no order is passed in Iv.P. No.14 of 2023, is thus disposed. 7. Urgent Certified copy of this order, if applied for, be supplied to the parties, upon compliance of all requisite formalities. 1. The application IA (I.B.C)/497(KB)2023 has been preferred by the Liquidator of the Manthan Broadband praying for the following reliefs: (a) Take on record the report ..... X X X X Extracts X X X X X X X X Extracts X X X X
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