Solen Renewable Energy Dmc vs M/S Beta Infratech Private Limited And ...

Solen Renewable Energy Dmc vs M/S Beta Infratech Private Limited And ... on 2 January, 2024 1 NATIONAL COMPANY LAW APPELLATE TRIBUNAL. PRINCIPAL BENCH, NEW DELHI Comp. App. (AT) (Ins) No. 1444 of 2023 & I.A. No. 5168, 5169 of 2023 IN THE MATTER OF: Solen Renewable Energy DMCC ...Appellant Versus BETA Infratech Pvt. Ltd. Through Mr. T.S.N. Raja (Liquidator) & Anr. ...Respondents Present: For Appellant : Mr. Ramji Srinivasan, Sr. Adv. with Mr. Abhijeet Sinha, Mr. Puneet Bhardwaj, Ms. Gaganpreet Chawla, Mr. Aditya Goswami, Mr. Manish Paliwal, Ms. Namrata Saraogi, Mr. Kartik Pandey, Ms. Heena Kochar, Advocates For Respondent : Dr.Pinki Anand, Sr. Adv. with Mr. Sameer Jain, Mr. SuvigyaAwashthy, Ms. Saudamini Sharma, Mr. Vivek Joshi, Mr. Rohan Gulati, Advocates for R2 Mr. Madhusudan Sharma with TSN Raja, Liquidator JUDGMENT Per: Justice Rakesh Kumar Jain: This appeal is directed against the order dated 31.10.2023, passed by the Adjudicating Authority (National Company Law Tribunal, Court No. IV, New Delhi) by which an application bearing I.A. 3049/2023 filed in Company Petition No. (IB) - 117/(PB)/2019 by Respondent No. 2 with a prayer to direct the liquidator (Respondent No. 1) to grant an opportunity of competitive bidding to it against the other entity whose bid has been accepted by the Liquidator towards the purchase of property in question and also to direct Respondent No. 1 to disclose the financial bid of the entity that has been accepted by the liquidator towards the purchase of property in question and further to direct Respondent No. 1 to supply a copy of the I.A. filed by the Liquidator seeking approval of this Tribunal towards the sale of property in question, has been disposed of with a direction to Respondent Comp.

App. (AT) (Ins) No. 1444 of 2023 2 No. 1 and SCC to reconsider the matter between both the parties i.e. Appellant and Respondent to meet the objective of the Code and maximization of value. 2. Briefly put, Punjab National Bank filed an application under Section 7 of the Code bearing I.B-117/PB/2019 for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor (M/s Beta Infratech Pvt. Ltd.). The said application was admitted by the Adjudicating Authority on 14.06.2019. S.V. Satyanarayana was appointed as Interim Resolution Processional. 3. Since, no prospective and viable resolution plan was received by the RP, therefore, the Adjudicating Authority, on the recommendation of the CoC, ordered liquidation of the Corporate Debtor on 24.07.2020 and appointed TSN Raja as the liquidator/Respondent No. 1. The property in question is 77MWx2 Gas Turbine GE Make Frame 6, 74 MW Steam Turbine GE Heat Recovery Generator - Thermax Make. Electricals ABB of the Corporate Debtor located at Uttrakhand. Respondent No. 1 made various efforts for the sale of the property in question.

The same is being depicted by the following chart which is reproduced as under:- Comp. App. (AT) (Ins) No. 1444 of 2023 3 4. The last failed auction dated 27.02.2023 of Rs. 202 Cr. was held on 15.03.2023. The property in question was then offered by way of private sale and on 23.04.2023 the Appellant submitted an offer of 202.01 Cr., higher than the reserve price of the last failed auction advertised on 27.02.2023. On 24.04.2023 Respondent No. 1 accepted the proposal of the Appellant and invited the Appellant to submit tender documents alongwith deposit of EMD. The Appellant deposited Rs. 20,20,89,958.00/- towards 10 per cent (EMD) in multiple tranches from 24.04.2023 to 06.05.2023. However, case of Respondent No. 2 is that it carried out physical inspection of the property in question on 02nd and 03rd May, 2023 and showed their interest to purchase the property in question through email dated 05.05.2023. 5. The SCC convened its 21st meeting on 09.05.2023 to consider the proposal of the Appellant but it was adjourned to 15.05.2023 due to paucity Comp. App. (AT) (Ins) No. 1444 of 2023 4 of time.

It is alleged that Respondent No. 2 submitted its offer of Rs. 202 Crores on 10.05.2023 but Respondent No. 1 informed Respondent No. 2 that the sale of the property in question is being finalized with the Appellant, therefore, it should not make proposal without EMD. Respondent No. 2 through email dated 13.05.2023 asked for more time to make binding/concrete offer but Respondent No. 1 reiterated its earlier stand that it cannot be possible until and unless EMD of Rs. 20.20 Cr. is immediately sent. On 14.05.2023 Respondent No. 2 revised its non-binding offer to Rs. 212.1 Cr. and promised that it would deposit EMD on 15.05.2023 but it did not happen. On 15.05.2023 Respondent No. 1 informed Respondent No. 2 again stating that without EMD, there cannot be a binding proposal and thus no cognizance shall be taken of the same. On 15.05.2023 adjourned 21st SCC meeting was held approving the issuance of sale letter by Respondent No. 1 and on 16.05.2023 the Appellant completed all legal formalities by submitting the tender documents. 6. As a consequence thereof, Respondent No. 1 issued sale letter/confirmation to the appellant as private sale with other terms and conditions stipulated therein on 'as is where is basis and as is what is basis and without recourse' after consultation with the SCC in its 21st meeting on 09.05.2023 and adjourned meeting on 15.05.2023.

The Appellant accepted the sale letter on 18.05.2023 through its email and formed a concluded contract between the parties. 7. On the other hand, Respondent No. 2 again made the offer of Rs. 212.1 Cr. but did not deposit the EMD alongwith it and had rather transferred a sum of Rs. 20.64 Cr. to the account of Respondent No. 1 on Comp. App. (AT) (Ins) No. 1444 of 2023 5 22.05.2023. The offer of Respondent No. 2 was put inthe 22nd meeting of SCC held on 26.05.2023 and after deliberations it was not taken to be considered since the same was received well after the confirmation of sale in favour of the Appellant. 8. As a result thereof, Respondent No. 2 filed the application I.A. No. 3049 of 2023 under Section 60(5) of the Code for seeking various directions, mentioned hereinabove, for a competitive bidding between the Appellant and Respondent No. 2. The Adjudicating Authority passed the impugned order and in pursuance of the direction contained, Respondent No. 1 gave a notice dated 03.11.2023 for holding e-auction between the Appellant and Respondent No. 2. However, the said auction has been stayed by this Tribunal vide its order dated 08.11.2023 and after hearing the arguments,while reserving the judgment, directed that the interim order shall continue till pronouncement of the judgment.

9. Counsel for the Appellant has submitted that the Adjudicating Authority has committed a patent error in allowing the application of Respondent No. 2 without appreciating the fact that the property in question has been sold by Respondent No. 1, after the approval of SCC, by way of private sale by negotiation and since the Appellant has given offer higher than the reserve price way back on 23.04.2023 and the proposal was accepted by Respondent No. 1 pursuant to which the Appellant deposited the EMD between 24.04.2023 to 06.05.2023 of an amount of Rs. 20,20,89,958.00/- and there has never been a proposal by Respondent No. 2 with EMD, which was repeatedly asked for, by Respondent No. 1 though Respondent No. 2 kept on interacting with Respondent No. 1, to gain time, Comp. App. (AT) (Ins) No. 1444 of 2023 6 but it had never given a binding offer and when the SCC approved the issuance of sale certificate to the Appellant on 15.05.2023 and the Appellant completed all the formalities by submitting the tender documents as a consequence to which the sale letter was also issued on 17.05.2023 and accepted by the Appellant on 18.05.2023, Respondent No. 2 sent the offer of 212.1 Cr. on 19.05.2023 and on 22.05.2023 deposited the EMD of Rs. 20.64 Cr. in the account of Respondent No. 1 unauthorizedly much after the completion of the sale.

It is thus submitted that the Adjudicating Authority has committed an error in reopening the concluded sale between the Appellant and Respondent No. 1 by the impugned order observing that Respondent No. 2 made the non-binding offer on 14.05.2023 whereas the sale letter was issued on 17.05.2023. It is submitted that on 14.05.2023, Respondent No. 1 made the non-binding offer and promised to deposit EMD on 15.05.2023 which was never deposited and in the meantime on 15.05.2023 21stSCC meeting took place approving the issuance of sale letter and on 16.05.2023 all the formalities were completed and the sale letter was issued on 17.05.2023 whereas the offer was made again by Respondent No. 2 on 19.05.2023. 10. On the other hand, the liquidator (Respondent No. 1) who has appeared in person has submitted that the private sale has been conducted on the basis of the terms of sale mentioned in the failed sale published on 27.02.2023. It is further submitted that the Appellant made the deposit of EMD on 06.05.2023 but since it failed to deposit the tender documents till 16.05.2023 the contract of sale was not completed without it and as soon as the tender documents were submitted on 16.05.2023, sale letter was issued Comp.

App. (AT) (Ins) No. 1444 of 2023 7 on 17.05.2023. He also submitted that Respondent No. 2 had been repeatedly asked to deposit EMD but the same was never deposited, therefore, it was only an interest which was being shown by Respondent No. 2 without making a binding offer. It is also submitted that the offer was made by Respondent No. 2 after the sale certificate was issued to the Appellant on 19.05.2023 much after the issuance of sale letter on 17.05.2023 and the EMD was deposited on 22.05.2023 which was of no avail at that time. 11. On the other hand, Counsel for Respondent No. 2 has argued that for the purpose of private sale, Respondent No. 1 has to prepare a strategy to approach the interested buyers and the sale has to be completed with terms of sale. In this regard, she has referred to Schedule 1 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016which deals with the issue of private sale. It is further submitted that the offer made by Respondent No. 2 is more than the price on which the property in question has been sold because the Appellant has given the Price of Rs. 202.01 Cr. whereas Respondent No. 2 has given Rs. 212.1 Cr., therefore, the Adjudicating Authority has rightly allowed the application and directing Respondent No. 1 and the SCC to reconsider the matter between both the parties i.e. Appellant and Respondent No. 2 to meet the objective of the Code and maximization of the value.

12. In rebuttal, Counsel for the Appellant has submitted that the liquidator had planned the strategy by inviting the offer from the interested parties as the private sale was to be conducted through negotiation. Respondent No. 2 was repeatedly askedby Respondent No. 1 to make a Comp. App. (AT) (Ins) No. 1444 of 2023 8 binding offer by depositing EMD because according to their own letter dated 19.05.2023, Respondent No. 2 has mentioned that the terms and conditions for sale advertisement dated 27.02.2023 had to be followed and in the advertisement dated 27.02.2023 the sale was to be conducted 'as is where is as is what is whatever there is basis' and deposit of EMD was one of the Condition precedent. It is further submitted that the Appellant had filed an application before the Adjudicating Authority only for the waiver of the interest in terms of the sale letter. Respondent No. 1 has also reiterated its stand that it had made clear to both the parties that the terms of sale would be the same as published on 27.02.2023. He has also submitted that it had tried to sell the property in question through e-auction many times but when it ultimately failed, he offered the property for sale by private sale and was constantly in touch with the Appellant and Respondent No. 2 out of which the Appellant made the binding offer by depositing the EMD and the offer was accepted by the SCC and after submission of tender documents, the sale was completed and closed.

13. We have heard Counsel for the parties and perused the record with their able assistance. 14. There is no dispute that the property in question was tried to be sold by Respondent No. 1, firstly, through e-auction in which the reserve price was reduced as permitted in clause 4A and 4B of Schedule 1 pertaining to mode of sale and was ultimately reduced to Rs. 202 Cr. when it was offered on 27.02.2023. The Appellant submitted an offer on 23.04.2023 of Rs. 202.01 Cr., higher than the amount mentioned in the advertisement dated 27.02.2023, which was accepted by Respondent No. 1 asking them to Comp. App. (AT) (Ins) No. 1444 of 2023 9 submit tender documents alongwith deposit of EMD. According to Respondent No. 2 it conducted physical inspection of the property in question on 02.05.2023/03.05.2023 and Respondent No. 1 informed Respondent No. 2 that he has received part of EMD from another prospective investor (Appellant) who is likely to complete the process and advised Respondent No. 2 to take a quick call if they are really interested. The EMD was deposited by the Appellant in various tranches from 24.04.2023 to 06.05.2023 which has been recorded in the sale letter and is reproduced as under:- Sl.

Date of Details of Date of Credit Amount Credited No. Transfer Transfer (Rs) 1. 24.04.2023 222,222 -Euro 27.04.2023 1.93,12,773 2. 27.04.2023 1,010 - Euro 01.05.2023 89,811 3. 04.05.2023 666,100 - Euro 08.05.2023 595,77,916 4. 05.05.2023 750,000 - USD 08.05.2023 610,76,110 5. 06.05.2023 751,250 - USD 09.05.2023 614,33,348 Total 20,20,89,958 15. The first email of Respondent No. 2 is dated 05.05.2023 by which it communicated its interest to Respondent No. 1 for purchasing the property in question. The said letter is reproduced as under:- ANNEXURE-24" From: Sameer Jain sameer@pslchambers.com Date: Friday, 5 May 2023 at 11:28 PM To: pratikshajain@betainfra.com pratikshajain@betainfra.com Comp. App. (AT) (Ins) No. 1444 of 2023 10 Cc:tsnraja@gmail.com, SuvigyaAwasthy,Saudamini Sharma saudamini@pslchambers.com Subject: Asset Sale: M/s Beta Infratech Pvt Ltd Hello Pratiksha, This is in connection with our conversation yesterday. I write to you on behalf and under the instructions of Aksa Energy, established in 1997, which is Turkey's largestpublicly listed independent power producer. Aksa is a subsidiary of Kazanci Holding which is a global powerhouse,engaging in production activities on fourcontinents, operating in 21 countries.

We are instructed to approach you to express our client's interest to purchase the plant and machinery of M/s BetaInfratech Pvt Ltd ('BIPL) which was put up for sale vide advertisement dated 27.02.2023 by Mr. T.S.N Raja,Liquidator of BIPL. As requested by you, all the details of our client can be accessed at: https://www.aksainvestorrelations.com/en/about- aksaenergy/company-profile/ Once you have perused the details of our client, please let me know a good time to speak with you and Mr. Raja tofurther set-up a meeting in this regard. I look forward to hearing from you Best Regards, Sameer Jain Managing Partner" 16. Respondent No. 2 again sent an Expression of Interest on 09.05.2023 in which it showedwillingness to purchase the property in question at the reserved price of Rs. 202 Cr., the said letter is also reproduced as under:- Comp. App. (AT) (Ins) No. 1444 of 2023 11 Comp. App. (AT) (Ins) No. 1444 of 2023 12 17. Respondent No. 1 sent an email dated 11.05.2023 to Respondent No. 2 intimating that sale is being finalised with another investor and without binding proposal, no correspondence is possible.

The said letter is also reproduced as under:- "Re: Asset Sale:M/s Beta Infratech Pvt Ltd tsnraja Thu 5/11/2023 12:05 PM To: Sameer Jain Cc: SuvigyaAwasthy;Saudamini Sharma ;VivekJoshi ;SELIM DONMEZ ＜SELIM.DONMEZ@aksa.com.tr>;OZGE EKEN CAUTION: External Email. Mr Samir, Comp. App. (AT) (Ins) No. 1444 of 2023 13 It was clarified to you and to the AKSA representatives Mr Korkut, Mr Basar and their EPC contractor or agent Mr Michaellohrmann that the sale is being finalised with another investor and without a binding proposal no correspondence in this regard will beentertained. Regards raja tsn TSN RAJA M COM, FCMA & INSOLVENCY PROFESSIONAL" 18. On 13.05.2023 Respondent No. 2 sent an email to Respondent No. 1, through counsel, that Respondent No. 2 is in the process of making a binding/concrete offer. The said letter is reproduced as under:- Comp. App. (AT) (Ins) No. 1444 of 2023 14 19. On 13.05.2023 itself Respondent No. 1 apprised Respondent No. 2 that he will not accept any more correspondence on the issue concerned as according to him Respondent No. 2 was trying to alibi for litigation because it has not sent a proper offer supported with EMD nor any binding agreement, he rather asked Respondent No. 2 that if interested then transfer immediately Rs. 20.20 Cr..

The said email is also reproduced as under:- "Re: Asset Sale:M/s Beta Infratech Pvt Ltd tsnraja Thu 5/13/2023 1:02 PM To: Sameer Jain Cc: SuvigyaAwasthy;Saudamini Sharma ;VivekJoshi ;SELIM DONMEZ ＜SELIM.DONMEZ@aksa.com.tr>;OZGE EKEN OZGE.EKEN@aksa.com.tr;pratikshajian@betainfra.com CAUTION: External Email. Sir, No more correspondence will be entertained on this issue. You are trying to create a sort of alibi for litigation, I imagine. There is neither a proper offer supported by the EMD nor any binding agreement. We regret, we do not promise or hold anything based on some baseless proposal, despite the undersigned trying to explain the provisions of law, by inviting you all to a virtual meet. Thank you please do not drag the issue, if interested transfer immediately Rs. 20.20 cr. and furnish your proposal. Regards raja tsn TSN RAJA M COM, FCMA & INSOLVENCY PROFESSIONAL" 20. Vide letter dated 14.05.2023, Respondent No. 2 revised its offer to Rs. 212.1 Cr. and promised to deposit EMD on 15.05.2023. The said letter is reproduced as under:- Comp. App. (AT) (Ins) No. 1444 of 2023 15 Comp.

App. (AT) (Ins) No. 1444 of 2023 16 Comp. App. (AT) (Ins) No. 1444 of 2023 17 Comp. App. (AT) (Ins) No. 1444 of 2023 18 21. It is pertinent to mention that in the aforesaid letter Respondent No. 2 itself has mentioned that the terms and conditions for this saleare of the sale advertisement dated 27.02.2023. Respondent No. 1 again wrote to Respondent No. 2 that without EMD it cannot take into consideration its offer and sent an email on 15.05.2023 in this regard. The said letter is reproduced as under:- "From:tsnraja Sent: Monday, May 15, 2023 6:51 AM To: OZGE EKEN Cc:SELIM DONMEZ ; KORKUT OZTURKMEN ＜KORKUT.OZTURKMEN@aksa.com.tr>; CEVDET YALCIN ; MURAT CAPTUG ＜mcaptug@kibrisenerji.com>; CUNEYT UYGUN Subject:Re: Asset Sale:M/s Beta Infratech Pvt Ltd Ma'am, Comp. App. (AT) (Ins) No. 1444 of 2023 19 At the outset once again it is reiterated that this letter will not giveany commitment nor any right or preference to the Plant and Machinery put for sale. As detailed the sale is under finalisation without any bindingproposal supported by EMD, we will not take cognizance of yourmail. Please refer to trailing mail where it was categorically informed we will not entertain any mail unless there is a binding proposal.

We are not in receipt of any transfer of EMD hence there is nobinding proposal from your end. Please find attached draft sale letter which will be in the formatattached subject to mutual agreement on certain points. Also for information sake the undersigned invites your attention tothe following issues of your trailing mail: 1.ref to page 3 item 1 line 6 2. which is subject to negotiation after the existing binding offer amount is disclosedbyyou.Thus,we request you to disclose the binding offeravailable withyou, inorder for us to revise the present offer, ifrequired 3.thus you are making your offer conditional. you are atliberty to add that 'since the present offer is notrevealed, you reserve the right to enhance to be in thecompetition' 4.Please note a conditional offer is not acceptable. 5.Further AS PER IBC 2016, only 90 days period ispermitted hence we cannot consider your request for16 weeks which goes beyond the stipulated 90 days. 6.When you send the final proposal please send it onletterhead. 7.Also share other documents and affidavits which arethere on the website Please note this reply itself is unwarranted since there is no binding offer To keep the spirit of IBC 2016, we are entertaining.

Regards raja tsn PS:Please restrict the number of recipients, you may internally circulate toeveryone concerned TSN RAJA M COM, FCMA & INSOLVENCY PROFESSIONAL" 22. Thereafter on 15.05.2023 21st SCC meeting took place and approved the issuance of sale letter to the Appellant who has completed the formalities on 16.05.2023 and ultimately on 17.05.2023 the sale letter was issued which is also reproduced as under:- Comp. App. (AT) (Ins) No. 1444 of 2023 20 Comp. App. (AT) (Ins) No. 1444 of 2023 21 Comp. App. (AT) (Ins) No. 1444 of 2023 22 Comp. App. (AT) (Ins) No. 1444 of 2023 23 Comp. App. (AT) (Ins) No. 1444 of 2023 24 23. The sale letter was accepted by the Appellant vide email dated 18.05.2023. Thereafter, Respondent No. 2 sent a letter dated 19.05.2023in which he made the offer with EMD which was to be deposited on 22.05.2023. The said letter is also reproduced as under:- Comp. App. (AT) (Ins) No. 1444 of 2023 25 Comp. App. (AT) (Ins) No. 1444 of 2023 26 Comp. App. (AT) (Ins) No. 1444 of 2023 27 Comp. App. (AT) (Ins) No. 1444 of 2023 28 24. Vide email dated 22.05.2023, Respondent No. 1 informed Respondent No. 2 that the sale has been completed with the Appellant.

The said letter is reproduced as under:- "Re: Beta BO tsnraja Mon 22/05/2023 13:58 Tc:OZGE EKEN Cc:KORKUT CZTURKMEN Ms OzgeEken Ma'am, it was clarified to you on more than a couple of occasions earlier(ref our mail senton 11th May 2023, 13th May 2023 and 15th may 2023) where in we detailed that: 1.We will not take cognizance of your proposal unless supported by stipulatedEMD. 2.we are in receipt of a binding proposal from yet another investor 3. You being a third party we will not reveal the details of the offer or investor 4.we already issued letters to them Comp. App. (AT) (Ins) No. 1444 of 2023 29 We regret to inform you that we will not entertain your proposals in this situation. Regards TSN RAJAM COM, FCMA & INSOLVENCY PROFESSIONAL" 25. From the aforesaid documentary evidence on record, it is well established that Respondent No. 2 was aware of the terms and conditions of the sale which were the same mentioned in the last auction dated 27.02.2023 and Respondent No. 1 made the strategy to sell the property in question by way of private sale by resorting to the terms and conditions of sale much less insisting upon the party interested in bidding to deposit EMD to show its bonafide and executed the sale after the approval of the SCC and also put up the case of Respondent No. 2, offering some more amount to which the SCC in its wisdom declined and directed Respondent No. 1 to go ahead with the sale to the Appellant.

Respondent No. 2 was only showing its interest in the purchase of the property in question but did not make an offer much less binding which would have been possible only with deposit of EMD of Rs. 20 Cr which had in fact been paid/deposited by the Appellant way back on 24.04.2023 to 06.05.2023 whereas the first email on record on behalf of Respondent No. 2 is dated 05.05.2023 in which it communicated its interest through counsel and did not even make any offer. It kept on involving Respondent No. 1 in showing the interest but though repeatedly asked by Respondent No. 1 that merely showing the interest in the purchase of the property would not be of any consequence unless Respondent No. 2 makes a binding offer by depositing the EMD, the same was never done by Respondent No. 2 till the sale in question was completed in favour of the Appellant by issuance of sale letter dated 17.05.2023 and Comp. App. (AT) (Ins) No. 1444 of 2023 30 was accepted the same by the Appellant on 18.05.2023 because the letter for giving proposal with EMD was written by Respondent No. 2 on 19.05.2023. 26. Thus, in view of the aforesaid facts and circumstances, Respondent No. 2 appears to have been sitting on the fence as to whether it may purchase the property or not but as soon as the property was sold and the sale was completed by 18.05.2023 in favour of the Appellant it became uneasy and came into the action with letter dated 19.05.2023 and initiated the present litigation.

27. The Adjudicating Authority has completely overlooked all these facts in the impugned order and seems to have been swayed with the amount which has been offered by Respondent No. 2 i.e. Rs. 212.1 Cr as against 202.1 Cr. but offer of the higher price after the conclusion of the sale is of no consequence because it would then be an unending process and would not finalise the sale even by private negotiation. 28. With these observations, we find that the present appeal is meritorious, therefore, the appeal is allowed and the impugned order is set aside. No costs. [Justice Rakesh Kumar Jain] Member (Judicial) [Naresh Salecha] Member (Technical) New Delhi 02nd January, 2024 Sheetal Comp. App. (AT) (Ins) No. 1444 of 2023