In the matter of Divine Alloys & Power Co. Limited

“a. To approve the Private sale of the corporate debtor as a Going concern under Regulation 33(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 in favour of Orissa Metaliks Private Limited at the bid price of Rs. 38.50 crores on “as is where is whatever there is and without recourse basis; b. Ad interim orders in terms of prayer above; c. Such further and/or other order or orders as this Hon’ble Tribunal may deem fit and proper;” Factual Matrix: 3. The financial creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the corporate debtor vide C.P.(IB) No. 1412/KB/2018, which was admitted on 07.03.2019. Thereafter, the corporate debtor was ordered for liquidation on 11.05.2021 vide order passed by this Adjudicating Authority.

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 4. Pursuant to the order dated 11.05.2021, public announcement was made by the applicant under the applicable regulations of the Insolvency and Bankruptcy Code, 2016 via paper publication through “The Telegraph” and “Ananda Bazar Patrika” Kolkata edition and through “Prabhat Khabar” and “The Times of India” Jharkhand Edition” on 13.05.2021. Meanwhile, lockdown was declared by the Government of West Bengal on 15.05.2021, due to the ongoing Covid situation which was extended further up to 15.08.2021, with several restrictions. The situation was quite the same in the State of Jharkhand.

5. The applicant formed the Stakeholders Consultation Committee (hereinafter referred as ‘SCC’) and accordingly, filed the progress reports from time to time in accordance with the provisions of IBC, 2016 and the applicable regulations.

6. The applicant convened the Stakeholders Consultation Committee (SCC) meeting on 14.07.2021, for discussion on a) The matter of liquidation of the corporate debtor as a going concern. b) The mode of sale of the corporate debtor. c) About the timeline for auction of sale of corporate debtor as going concern and d) Other matters.

7. This Adjudicating Authority vide its order dated 13.09.2021, allowed exclusion of period from 16.05.2021 to 15.07.2021,

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 keeping in mind the lockdown situation and finally 90 days period from the date of commencement of liquidation expired on 08.10.2021 instead of 08.08.2021. Several times the extension was allowed by this Adjudicating Authority and the last extension was granted on 12.05.2023, for sale of corporate debtor as going concern and further 90 days period was expired on 09.08.2023 and period of liquidation completed on 11.05.2023.

8. According to the Sale Notice dated 06.09.2022, the date of submission of EMD was on 29.09.2022. On or before 29.09.2022, EMD was received from one of the Eligible Bidders who has participated in the E-Auction held on 29.09.2022. Thereafter, Letter of Intent (LoI) was issued and unconditionally accepted by the successful Bidder on 30.09.2022.

9. In accordance with the process documents along with the applicable Liquidation Process Regulations, the successful bidder was to pay the sale consideration/final consideration within 90 days from the date of issuance of Letter of Intent which they failed to do so.

10. This Adjudicating Authority on 01.02.2023, heard I.A. No. 210/KB/2023 where the Bench allowed the application for extension of period for sale of corporate debtor as going concern by 90 days and liquidation period by one year vide order dated 12.05.2023. The period of liquidation ended on 09.08.2023. This Adjudicating Authority heard IA No. 1535/2023 and in DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 terms of the Order dated 06.10.2023, allowed the application for extension of period of sale of corporate debtor as going concern by 90 days which was completed on 03.01.2024.

Submissions of the Learned Counsel for the Liquidator: 11. Ld. Counsel, Mr. Shaunak Mitra appearing on behalf of the liquidator submits that liquidator from time to time published the sale Notice in newspaper and thereafter, several times, the sale through e-auction was discussed in the Stakeholders Consultation Committee Meeting and till date, 32 SCC Meetings have been held and total 19 e-auctions have been failed.

12. Ld. Counsel submits that liquidation process is a time bound process and under Regulation 44(1) it is to be completed within one year from commencement of the liquidation process or such extended period as allowed by this Adjudicating Authority from time to time. The extension period of Liquidation of one year as allowed by this Adjudicating Authority in terms of Order dated 12.05.2023 is completing on 11.05.2024.

13. Further, it is submitted that the e-auction for sale of corporate debtor as going concern was conducted 19 (nineteen) times which have failed except once as stated above when the successful bidder did not deposit the balance consideration within the stipulated period as provided in the regulation. Consequently, the amount deposited by the successful bidder was forfeited and the sale was cancelled by the applicant and DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 the last reserve price of the assets for sale of corporate debtor as going concern is Rs. 38.30 crore.

14. That, the stakeholders in the meeting discussed about the sale of assets on part and parcel basis due to failure of repeated auction. In the meantime, the applicant received a bid offer over mail from one of the prospective bidders named M/s Orissa Metaliks Private Limited who has shown interest to acquire the corporate debtor as going concern by way of private sale and whose bid offer is higher than the last failed auction price.

15. The applicant on receipt of the said proposal, placed before the Stakeholders Consultation Committee for their consideration in the 32nd SCC meeting where the stakeholders discussed and consented to the private sale in favour of M/s Orissa Metaliks Pvt Ltd, whose bid offer is higher than the last failed auction price.

16. Ld. Counsel for the liquidator asserts that in terms of Regulation 33, which deals with the mode of sale along with Schedule 1(2) of the IBBI (liquidation process) Regulations, 2016, the prior permission has to be obtained for such sale.

17. We have duly considered the submissions of the Ld. Counsel for the applicant and perused the documents placed before us.

Findings: 18. We have noted that vide an affidavit dated January 25, 2024, annexed at Pages 77-78, to the application, M/s Orissa

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 Metaliks Pvt Ltd, has expressed its interest for purchase the Corporate Debtor as going concern and agreed to pay 10% EMD by way of NEFT/ RTGS within 3 days of SCC’s offer and to pay the rest amount within 10 days of the receipt of the final approval from this Adjudicating Authority. Regarding the issue relating to the land, M/s Orissa Metaliks Pvt Ltd, states that:

“Land clarity :- We understand that the DRI Plant land is not owned by the Corporate Debtor. There is a dispute of 5.67 acres of land owned by the company. We understand entrance is not owned by the Company. We have done our due diligence and our offer is "As is where is basis", "As is what is basis", "Whatever there is basis" and "No recourse basis" We will continue the aforesaid litigation as our offer is "As is where is basis", "As is what is basis", "Whatever there is basis" and "No recourse basis". This offer is valid for consideration by SCC for 30 days and thereafter we understand liquidator need to take approval of Hon'ble NCLT and till final order of the Hon'ble NCLT.”

19. Further, through Bid Application Form dated February 05, 2024, annexed at Page 79-85 to the application, M/s Orissa Metaliks Pvt Ltd, communicated their desirous in participating in the E-Auction of the Corporate Debtor.

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 20. Further, we have noted that in 32nd SCC meeting convened on 20.01.2024 (minutes of 32nd SCC meeting is annexed at pages 98-115) wherein the stakeholders consented for private sale of the Corporate Debtor as “Going Concern”, “As is where is basis”, “As is what is basis”, “Whatever there is basis” and “No recourse basis” in favour of the M/s Orissa Metaliks Pvt Ltd. The extract of the minutes of the 32nd SCC meeting is reproduced hereunder:

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 21. Further, we have noted that the M/s Orissa Metaliks Pvt Ltd. has deposited Rs. 3.85 Crore as EMD which is 10% of the total consideration of Rs. 38.30 Crore and Rs. 10 Lakh as Refundable Deposit, totalling to Rs. 3.95 Crore in the bank account of the Corporate Debtor maintained in the Punjab National Bank on 07.02.2024. the Proof of payment of deposit money is annexed at page 116 to the application. Further, we have noted that the last reserve price was Rs. 38.30 Crore.

22. We would refer Regulation 32 and 33 of the IBBI (Liquidation Process) Regulation, 2016 as under: Regulation 32: Sale of Assets, etc. The liquidator may sell- (a) an asset on a standalone basis; (b) the assets in a slump sale; (c) a set of assets collectively; (d) the assets in parcels; (e) the corporate debtor as a going concern; or (f) the business(s) of the corporate debtor as a going concern: Provided that where an asset is subject to security interest, it shall not be sold under any of the clauses (a) to (f) unless the security interest therein has been relinquished to the liquidation estate.

Regulation 33: Mode of sale. (1) The liquidator shall ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I.

DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 (2) The liquidator may sell the assets of the corporate debtor by means of private sale in the manner specified in Schedule I when- (a) the asset is perishable; (b) the asset is likely to deteriorate in value significantly if not sold immediately; (c) the asset is sold at a price higher than the reserve price of a failed auction; or (d) the prior permission of the Adjudicating Authority has been obtained for such sale: Provided that the liquidator shall not sell the assets, without prior permission of the Adjudicating 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. 23. Thus, in terms of forgoing discussion, we approve the “Private Sale” of corporate debtor as a “going concern” in favour of “M/s Orissa Metaliks Private Limited” in terms of Section 35(1)(n) and Section 60(5) of Insolvency and Bankruptcy Code, 2016, read with Regulation 32 and 33 of IBBI (liquidation process) Regulations, 2016.

24. “M/s Orissa Metaliks Private Limited” is directed to comply all the terms and conditions as decided and agreed in the SCC meetings for the implementation of successful private sale of DIVISION BENCH, COURT NO. II KOLKATA I.A.(IB) No. 382/KB/2024 In C.P. (IB) No. 1412/KB/2018 the Corporate Debtor herein as a Going Concern under Regulation 33(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 at the bid price of Rs. 38.50 Crore on “as is where is whatever there is and without recourse basis”.

25. Liberty is hereby granted for preferring application for confirming sale of the Corporate Debtor as a going concern and for issuance of sale certificate by the Liquidator in favour of the M/s Orissa Metaliks Private Limited upon the completion of the sale and against the receipt of purchase consideration.

26. In terms of view above, this application being I.A. (IB) No. 382/KB/2024 in C.P. (IB) No. 1412/KB/2018 is disposed of accordingly.

27. Certified copies of this order, if applied for with the Registry of this Adjudicating Authority, be supplied to the parties upon compliance with all requisite formalities.

D. Arvind Bidisha Banerjee Member (Technical) Member (Judicial)

This order is signed on the 16th Day of April, 2024.

Bose, R. K. [LRA]/ PH [PS]