Shri Manoj Khattar vs Arrhum Tradelink Private Limited & Anr

IN THE MATTER OF: Arrhum Tradelink Pvt. Ltd. ...Appellant

Versus

Manoj Khattar Liquidator of Vimal Oil & Foods Ltd. ...Respondent

Present: For Appellant : Mr. Navin Pahwa, Sr. Advocate with Mr. Himanshu Satija, ms. Neha Mehta Satija, Mr. Harsh Saxena Ms. Ridhi Ranjan and Mr. Ravi Pahwa, Advocates

For Respondent : Ms. Richa Kapoor, Mr. Kunal Anand and Ms. Shisham Pradhan, Advocates for R-2 (Bank of India). Mr. Palash Agarwal, Advocate for Liquidator

With Company Appeal (AT) (Insolvency) No. 2284 of 2024

IN THE MATTER OF: Manoj Khattar, Liquidator of Vimal Oil & Foods Ltd. ...Appellant

Versus

Arrhum Tradelink Pvt. Ltd. & Anr. ...Respondents

Present: For Appellant : For Respondent : Ms. Richa Kapoor, Mr. Kunal Anand and Ms. Shisham Pradhan, Advocates for R-2 (Bank of India). Mr. Navin Pahwa, Sr. Advocate with Mr. Himanshu Satija, ms. Neha Mehta Satija, Mr. Harsh Saxena Ms. Ridhi Ranjan and Mr. Ravi Pahwa, Advocates for R-1.

ORDER

(Hybrid Mode)

17.04.2025 Heard Learned Counsel for the Appellant as well as the

Counsel for the Liquidator and counsel appearing for the Financial Creditor.

These two appeals have been filed against the same order dated

07.10.2024 in I.A. No. 471/NCLT/AHM/2022 filed by Arrhum Tradelink

Private Limited - The Successful Auction Purchaser. By the impugned order,

Adjudicating Authority while dismissing the application has also set aside the

sale of the property as going concern and has also issued various directions,

aggrieved by which order the Successful Auction Purchaser as well as the

Liquidator has filed these Company Appeal (AT) (Insolvency) No. 1944 of 2024,

filed by the Successful Auction Purchaser and Company Appeal (AT)

(Insolvency) No. 2284 of 2024 filed by the Liquidator.

Brief facts to be noticed deciding the appeals are:

On an application filed by the Bank of Baroda under Section 7 CIRP

against the Corporate Debtor - Vimal Oil and Foods Limited CIRP commenced

on 19.12.2017, no resolution plan having been approved, The Liquidation

order was passed on 19.12.2019 by the Adjudicating Authority. Liquidator

published a sale notice on 02.11.2020 for sale of the assets and properties of

Corporate Debtor liquidation as a going concern.

In pursuance of the auction notice, the Appellant - Arrhum Tradelink

Pvt. Ltd. participated in the auction held on 04.12.2020 and was declared

Successful Purchaser for an amount of Rs.69.95 Crores. A sale agreement

was also executed on 03.03.2021 by the Liquidator in favour of the Successful

Auction by a to the separate process of public auction and separate agreement

dated 11.03.2021 was entered. All Financial Creditors gave no objection/no

dues certificate to the Corporate Debtor and confirmed the sale as going

Company Appeal (AT) (Insolvency) No. 1944 & 2284 of 2024 2 of 7 concern. Appellant paid the entire sale consideration and acquired the

Corporate Debtor as going concern. Appellant has also filed a Criminal

Miscellaneous Application No. 11557 of 2021 in the Gujrat High Court

praying for quashing the criminal proceeding filed against the Corporate

Debtor. Relying on Section 32A of the Insolvency and Bankruptcy Code, 2016

(for short 'IBC'). The Appellant filed an IA No. 471/2022 seeking certain reliefs

and concessions.

In the Application, the Appellant has prayed for various reliefs and

concessions. The Application came for consideration before the Adjudicating

Authority. By the impugned order, the Adjudicating Authority has dismissed

the Application and while dismissing the application has also directed for

cancellation of sale as going concern. The Adjudicating Authority by the

impugned order in paragraph 11 has issued following direction:

"....

11. In view of the above, we pass the following orders:

ORDER I. The sale of the property of the corporate debtor as "going concern" is null and void.

II. Penalty to be imposed for filing this application as having been done on "Clean Slate Basis". Separate action to be initiated against the Liquidator in the IA filed seeking discharge from liquidator, who has done this act of sale when there are IAs including Sec 66 applications and recovery of Debts pending (which have been excluded from the sale) including the action of the SCC with directions to Registry to report to IBBI further disciplinary action against the liquidator on all acts and

Company Appeal (AT) (Insolvency) No. 1944 & 2284 of 2024 3 of 7 deeds committed during the liquidation. process including passing necessary orders against the Resolution Professional not be enrolled in any of the CIRP matters till the matter is decided by the Disciplinary Committee. III. Pending IAs to be disposed at the earlier and the liquidation process to continue by appointing a new liquidator from the panel of IBBI.

IV. IA 471 of 2022 in CP(IB) No.135/NCLT/AHM/2017is dismissed."

Aggrieved by the aforesaid order these two appeals have been made.

Learned Counsel for the Successful Auction Purchaser Mr. Navin

Pahwa, Senior Counsel appearing for the Appellant contends that the

application which was filed by the Successful Auction Purchaser was seeking

relief and concessions and at the time of consideration of application, there

was no occasion to declare the sale void, illegal as has been done in the

impugned order. It is submitted that the sale was confirmed, Financial

Creditor also gave their no objection and there was no challenge to the sale

by anyone. When there was no challenge to the sale, question of sale being

void or illegal could not have been gone into by the Adjudicating Authority

while considering the Application for relief and concessions.

Learned Counsel for the Appellant has also referred to the judgment of

Gujrat High Court dated 24.08.2022 in Criminal Miscellaneous Application

No. 11557 of 2021 which application was filed by the Successful Auction

Purchaser and has been allowed by the Gujrat High Court relying on Section

32A of the IBC. It is submitted that the present in not a case where any order

Company Appeal (AT) (Insolvency) No. 1944 & 2284 of 2024 4 of 7 was required by Adjudicating Authority for declaring the sale as null and void

and issuing further directions.

Learned Counsel for the Liquidator also has supported the submissions

made by the Successful Auction Purchaser and submits that sale was never

challenged by any of the bidders or any of the creditors. Sale had become final

and sale agreement was never questioned and Corporate Debtor has already

been handed over to the Successful Auction Purchaser for running the

Corporate Debtor, which is being run. It is submitted that application was

only for seeking certain reliefs and concessions and at that stage, there was

no occasion to declare the sale null and void.

Learned Counsel appearing for the Financial Creditor - Bank of India

also submits that there was no challenge to the sale and the Financial

Creditors also support the submissions of Counsel appearing for the

Appellant.

We have considered submission of counsel for the parties and perused

the record.

From the facts which has been noticed above, it is clear that the sale of

the Corporate Debtor was on pursuance of the public auction held on

04.12.2020. The Arrhum Tradelink Pvt. Ltd. emerged a Successful Auction

Purchaser and sale agreement dated 03.03.2021 is also executed by

Liquidator in its favour and the Successful Auction Purchaser has been

handed over the Corporate Debtor and has been running the Corporate

Debtor. The auction notice which has been brought on the record indicate

Company Appeal (AT) (Insolvency) No. 1944 & 2284 of 2024 5 of 7 that sale of the auction mentioned the sale as going concern. Copy of the

auction notice has been brought on record at page 95, which is as follows:

No bidder or any other creditor has challenged the auction notice as

going concern sale. When no one challenged the auction notice as a going

concern sale and auction took place as a going concern and culminated

finally, we fail to see that issue of going concern sale could be raised by the

Adjudicating Authority of its own at the time of considering the application

for relief and concessions. There was no challenge before the Adjudicating

Authority to the sale in favour of the auction purchaser the entire sale

Company Appeal (AT) (Insolvency) No. 1944 & 2284 of 2024 6 of 7 consideration had already been paid and distributed to the stakeholders, no

creditor has also raised any question regarding sale.

We thus are of the view that the Adjudicating Authority declaring the

going concern sale as null and void cannot be supported. The Appellant has

also relied on the judgment of Gujrat High Court as noted above, where giving

the benefit of Section 32A of IBC, the proceedings have been quashed against

the Corporate Debtor and the Gujrat High Court has extended the benefit of

Section 32A of IBC in the facts of the present case.

We thus are of the view that the impugned order passed by Adjudicating

Authority dated 07.10.2024 cannot be sustained. Both the Appeals are

allowed. Order impugned is set aside.

The prayer of the applicants in I.A. No. 471/2022 having not being

considered on merits, we permit the applicant to file a fresh application

seeking reliefs and concessions within a period of 30 days from today, which

may be considered and decided accordance with law at an early date.

[Justice Ashok Bhushan] Chairperson

[Arun Baroka] Member (Technical) pks/nn

Company Appeal (AT) (Insolvency) No. 1944 & 2284 of 2024 7 of 7