Jfc Finance (India) Limited vs Anil Kohli And Anr

IN THE MATTER OF: JFC Finance (India) Ltd. ...Appellant

Versus Mr. Anil Kohli & Anr. ...Respondents Present: For Appellant: Mr. Abhijeet Sinha, Mr. Karan Grover, Mr. Devashish Chauhan, Mr. Paras Mittal, Advocates For Respondent: Mr. Abhishek Anand, Mr. Sahil Bhatia, Mr. Hardik Khatri, Advocates for R-1 Mr. Nidhesh Gupta, Sr. Advocate with Mr. Shaunak Kashyap, Mr. Dhruv Goel, Ms. Muskan Yadav, Karan K., Mr. Vaibhav, Mohak Sharma, Advocates for R-2

ORDER

21.03.2023: Heard Learned Counsel for the parties.

2. This Appeal has been filed against the Order dated 21st February, 2023 by

which Order the Adjudicating Authority has rejected I.A.-240/2023 filed by the

Appellant seeking a direction to the Liquidator to set aside the auction of Lot I

assets of the Corporate Debtor.

3. In the Liquidation of the Corporate Debtor, the Liquidator has issued

public announcement for sale of the assets of the Corporate Debtor in Lot I and

Lot II. Last date for submission of EMD was 16.12.2022. In response to the 2

Public Announcement, six offers were received which included offer of

Respondent No. 1 and Appellant. The Appellant submitted offer of Rs. 17.50

Crores whereas the Respondent No. 2 submitted offer of Rs. 15 Crores. The offers

were opened in the Meeting of the Stakeholders and after discussion, it was

decided that E-auction shall be conducted on 12th January, 2023 on an online

platform. Scheduled inter-se bidding between the interested parties took place

on 12th January, 2023 for two lots (Lot I and Lot II). Inter-se bid for Lot I

commenced on 12th January, 2023 between 11:00 AM to 12:00 PM and Lot II on

same day 12th January, 2023 between 03:00 PM to 04:00 PM. Appellant

participated in inter-se bidding and it is the case of the Appellant that due to

some internet/technical glitch at 1.39.15PM, he could not submit a bid and last

bid submitted by him was Rs. 49 Crores. On 12th January, 2023, the Bidding

was held and Respondent No. 2 submitted a Bid of Rs. 50.5 Crores. On 12th

January, 2023, the Liquidator informed the Respondent No. 2 that he is the

highest bidder and further steps shall be communicated. On 13th January, 2023,

Letter of Intent was issued to Respondent No. 2 which was accepted by the

Respondent No. 2. On 15th January, 2023, Appellant wrote an email to the

Liquidator that due to some internet/technical glitch, he could not enhance his

bid and subsequently an Application has been filed being I.A.-240/2023 seeking

direction to set aside the E-auction which has been rejected by the Impugned

Order. The Adjudicating Authority after considering the submissions of the

parties in paragraph 16 of the Judgement returned following finding:

Company Appeal (AT) Ins. No. 239 of 2023 3

"16. Analysis & Finding:-

We have heard the Ld. Sr. Counsel for both the sides as well as Ld. Counsel for the Liquidator and perused the documents. It is seen that the Applicant JFC Finance (India) Limited has made no bid subsequent to its final offer of Rs. 49,00,00,000/-(Rupees Forty Nine Crore only) for lot 1. The reason for technical glitch quoted by the Applicant JFC Finance (India) Limited appears to be an afterthought as it did participate in the subsequent bid on the same date for lot 2 and at that time also, he did not raise the issue of the technical glitch on the 'Auction Tiger' platform. No screenshot of the alleged technical glitch has been produced. The e-mail dated 15.01.2023, it three days after the e-bidding result was declared. We have also studied the process document and are unable to agree with the contention of the Ld. Sr. Counsel for the Applicant that as per the process document, approval of the Hon'ble NCLT was needed to conclude the sale. The same is also evident from our order dated 31.03.2021 read with order dated 28.04.2021 passed in IA-914/2021 wherein permission has been given to the Liquidator to assign/transfer NRRAs through a transparent process in consultation with the stakeholders' consultation committee in accordance with Regulation 31A on consideration to any person who is eligible to submit a resolution plan during CIRP. The process information document does contain a clause to the effect that the Liquidator is not bound to select an offer of prospective investor/buyer and reserves

Company Appeal (AT) Ins. No. 239 of 2023 4

the right to reject any of the offer without assigning any reason whatsoever. Further, the Liquidator post receipt of offer in consultation with the stakeholders may enter into negotiations/inter-se bidding or any other means to maximize the value of the stakeholders.

The judgment of this Adjudicating Authority in the case of Bank of Baroda Vs. Rathi Super Steels in respect of IA(IBC)-4489/(PB)/2021 in CP(IB)-1446(PB)/2018 as well as order of the Hon'ble NCLAT in the matter of Rimjhim Ispat and Anr. Vs. Jindal Stainless Limited is based on different facts namely that it was a private auction and the process document contained the clause that the sale would be subject to the approval of Hon'ble NCLT and the entire payment had not been made and the sale had not been concluded.

In our view the bidder who withdraws from the bidding process can not plead law or equity or price improvement as an afterthought. Accordingly, we are inclined to dismiss I.A.-240/2023.

Order

I.A.-240/2023 is dismissed and Ivn. P-09/2023 is accordingly disposed of. The Liquidator is directed to proceed further in the matter as per law."

4. Mr. Abhijeet Sinha, Learned Counsel for the Appellant challenging the

Order contends that offer which was given by the Appellant was Rs. 10 Crores

more and object in the liquidation proceeding being maximization of the assets

of the Corporate Debtor, the Adjudicating Authority ought to have accepted the

Company Appeal (AT) Ins. No. 239 of 2023 5

application in the interest of all stakeholders. It is further submitted that the

process with regard to the Bid held on 12.01.2023 was not finalized since it was

yet to be approved by the Adjudicating Authority hence no right or interest has

been created in favour of Respondent No. 2. It is submitted that the Adjudicating

Authority has committed error in rejecting his application.

5. Mr. Nidhesh Gupta, Learned Sr. Counsel appearing for Respondent No. 2

refuting the submissions of Learned Counsel for the Appellant submits that

present is a case where there was no technical glitch as contended by the

Appellant since the Appellant on the same day in Lot II participated and was

declared successful bidder which was held at 03:00 to 04:00 PM. It is submitted

that the Liquidator has informed the Appellant on 12th January, 2023 that

Respondent No. 2 is successful bidder and Appellant is unsuccessful bidder. It

is submitted that Appellant at no point of time on 12th January, 2023 has

informed even e-auction platform about any glitch and he sent an email on 15th

January, 2023 after three days which is nothing but afterthought. It is further

submitted that the present is a case where inter-se bidding was held among all

applicants and the process was completed, Respondent No. 2 was declared as

highest bidder which cannot be allowed to be unsettled at the instance of the

Appellant who did not increase his bid and after three days as an afterthought

has submitted higher offer and filed application before the Adjudicating

Authority.

Company Appeal (AT) Ins. No. 239 of 2023 6

6. We have considered the submissions of Learned Counsel for the parties

and have perused the record.

7. Coming to the submission of Learned Counsel for the Appellant regarding

the technical glitch, we are of the view that Adjudicating Authority has rightly

taken the view that the case set up by the Appellant of technical glitch is an

afterthought. Appellant on 12th January, 2023 when e-auction was held and

technical glitch occurred, did not send any email to the auction platform as well

as Liquidator about his inability to increase his bid due to technical glitch and

on 12.01.2023 at 6.45 PM, he was also informed in respect of his unsuccessful

bid.

8. On 13th January, 2023, Letter of Intent was issued which was accepted by

Respondent No. 2 and it was on 15th January, 2023, an email was sent by the

Appellant about technical glitch that he could not increase his bid. The

Adjudicating Authority has rightly taken the view that it is only afterthought. We

see no reason to take any different view.

9. Coming to the submission of Learned Counsel for the Appellant that

maximization is the object of the proceeding and he has offered Rs. 10 Crores

more, the said offer ought to have been accepted and his application ought to

have been allowed. We have noticed above that in pursuance of the public

announcement, EMD were submitted and offers which were made by the

Appellant as well as Respondent No. 2 were 17.50 Crores and 15 Crores,

respectively. Decision was taken to hold inter-se bidding on 12th January, 2023

Company Appeal (AT) Ins. No. 239 of 2023 7

where all concerned parties including Appellant and Respondent No. 2 were

given opportunity to increase the bid, the bid given by the Appellant was Rs. 49

Crores whereas the Bid given by the Respondent No. 2 was Rs. 50.5 Crores which

was accepted as the highest bidder and he was communicated on the same day

also.

10. As noted above, Appellant as an afterthought sent an email and filed

application making a higher offer after completion of the E-auction which

decision was taken by the Liquidator for holding e-auction after consultation by

the Stakeholders Committee and for the object of giving fair opportunity to all to

increase their bid. When all gave their bid on 12.01.2023 including the Appellant

and the Highest Bid has been accepted, it is not open to anyone to come after

three days and say that they are ready to give a higher offer, this will be against

the principal of e-auction where everybody has opportunity to give their bids and

after completion of the e-auction, no one can be allowed to offer higher amount.

We are of the view that the Adjudicating Authority has rightly rejected his

Application IA-240/2023. There is no merit in the Appeal, the Appeal is

dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Basant/nn

Company Appeal (AT) Ins. No. 239 of 2023