State Bank Of India vs Bhuvee Stenovate Private Limited

State Bank of India ....Appellant Vs.

Bhuvee Stenovate Pvt. Ltd. & Ors. ...Respondents For Appellant: Mr. Vaibhav Gaggar, Mr. Robin Singh Sirohi and Mr. Dev Karan, Advocates.

For Respondents: Mr. Rishav Banerjee, Mr. Saptarshi Mandal and Pratiksha Mishra, Advocates for R-1. Mr. Abhijeet Sinha, Mr. Sanjay Bose, Mr. Manan Verma, Mr. Saikat Sarkar, Mr. Rishi Singhal and Mr. Akash Chatterjee Advocates for R-2 Mr. Krishan Kumar, Ms. Namrata Chadha, Advocates for R-5.

JUDGMENT

(25 January, 2023) th

Ashok Bhushan, J.

This Appeal has been filed against the order dated 16.06.2022 passed

by the Adjudicating Authority (National Company Law Tribunal), Kolkata

Bench-I, Kolkata in I.A (I.B.C)/469(KB)2022, IVN.P (IBC)/9(KB)2022 in

C.P.(IB)/515(KB)2018. The Corporate Insolvency Resolution Process (CIRP)

was initiated against 'Bhuvee Stenovate Private Limited' (Corporate Debtor)

by order dated 12.03.2019. An order was passed on 07.02.2020 to liquidate

the Corporate Debtor and the Respondent No.1 was appointed as the

liquidator of the Corporate Debtor. The liquidator issued seven public

announcements for the sale of the Corporate Debtor as a going concern under 2

Regulation 32A of the IBBI (Liquidation Process) Regulations, 2016. Although

during the second e-auction process, second lot of the then Asset Blocks were

sold successfully, however, the Corporate Debtor could not be sold as a going

concern. The liquidator published the 8th auction notice on 21.01.2022,

certain inventories of the Corporate Debtor consisting mainly of finished

goods were successfully sold. 11th public announcement dated 15.05.2022

was issued by the Liquidator for sale of the rest of the unsold assets of the

Corporate Debtor. On 04.03.2022, 4th Stakeholders' Consultation Committee

meeting took place where the Liquidator updated the Stakeholders'

Consultation Committee with respect to the liquidation process of the

Corporate Debtor. Certain suggestions were received in the meeting regarding

the manner of sell of the assets. The State Bank of India indicated that the

revaluation is required to be done. It was also noticed in the minutes that the

offer price of Rs.50 to Rs. 60 Crores is on a lower side than the expected

amount of realization. The Liquidator stated before the Stakeholders'

Consultation Committee that suggestions shall be examined and fruitful

action be taken. On 12.05.2022, the Respondent No.2- 'Laser Solar LLP'

submitted a proposal to the Liquidator for acquisition of the unsold assets of

the Corporate Debtor by way of private sale for a sum of Rs.50.05 Crores. The

Liquidator by e-mail dated 13.05.2022 informed the Respondent No.2 that

offer of Rs. 50.05 Crores is well below the last reserve price published.

Therefore, the offer was not acceptable. The Respondent No.2- 'Laser Solar

LLP' after rejection of his offer by the Liquidator filed an I.A. No. 469 of 2022

before the Adjudicating Authority.

Comp. App. (AT) (Ins.) No. 1013 of 2022 3

2. During pendency of the above Application 'M/s. Jindal Stainless

Limited' has also submitted a proposal dated 04.06.2022 to acquire the

Corporate Debtor as a going concern by way of private sale which offer was

also rejected by liquidator by e-mail dated 06.06.2022. Thereafter, 'M/s.

Jindal Stainless Limited' filed an Intervention P. No. 9 of 2022 in I.A. No. 469

of 2022 before the Adjudicating Authority praying for following reliefs:-

"a. Pass an order allowing Jindal Stainless Limited to intervene into the proceeding initiated by Laser Solar LLP in I.A. No. (I.B.C.)/469/(KB)2021 in CP(IB) No. 515/KB/2018;

b. Pass an order dismissing I.A. No. (I.B.C.)/469/(KB)2021 in CP(IB) No. 515/KB/2018;

c. Pass an order directing the Liquidator to consider the bid of Jindal Stainless Limited to run any fair and transparent process in accordance with the Liquidation Regulations for the sale of the Corporate Debtor and/or its assets"

3. I.As filed by the Respondent No.2- 'Laser Solar LLP' and 'M/s. Jindal

Stainless Limited' were listed before the Adjudicating Authority on 07.06.2022

and 10.06.2022. By an order dated 10.06.2022, the Adjudicating Authority

directed both Respondent No.2 and 'M/s. Jindal Stainless Limited' to submit

their respective bids under cover of sealed envelope before the Adjudicating

Authority on or before 13.06.2022. The Liquidator was present before the

Adjudicating Authority on the said dates. The competitive bids which were

Comp. App. (AT) (Ins.) No. 1013 of 2022 4

received by the Adjudicating Authority from Respondent No.2 and 'M/s.

Jindal Stainless Limited' were opened on 16.06.2022 in open Court and the

Adjudicating Authority noted that the Respondent No.2 has submitted a bid

of Rs.61.05 Crores for the properties, whereas 'M/s. Jindal Stainless Limited'

has submitted a bid of Rs.52.50 Crores. The Adjudicating Authority by the

order dated 16.06.2022 confirmed the sale by private treaty in favour of the

highest bidder i.e. Respondent No.2- 'Laser Solar LLP' and directed the

liquidator to take further steps in accordance with law. 'M/s. Jindal Stainless

Limited' made a request before the Adjudicating Authority to stay the

confirmation for 48 hours to see if 'M/s. Jindal Stainless Limited' wanted to

match the offer. The said prayer was declined. The Appellant who is a

Financial Creditor of the Corporate Debtor and is also 36% shareholder in the

Shareholders' Consultation Committee has filed this Appeal challenging the

order dated 16.06.2022.

4. We have heard Shri Vaibhav Gaggar, Learned Counsel for the Appellant,

Shri Rishav Banerjee, Learned Counsel for the Respondent No.1 and Shri

Abhijeet Sinha, Learned Counsel for the Respondent No.2. We have also heard

Learned Counsel for the other Respondents.

5. Learned Counsel for the Appellant challenging the impugned order

submits that the Adjudicating Authority exceeded its jurisdiction in asking

the only two Applicants who were before the Adjudicating Authority to submit

their bids and on the basis of the said bid has confirmed auction of assets of

the Corporate Debtor. It is submitted that the IBC provides manner and

procedure for liquidation and as per Section 33, it is the liquidator who has Comp. App. (AT) (Ins.) No. 1013 of 2022 5

to conduct the sale of the assets either by public auction or by private sale.

For conducting private sale, procedure is prescribed under Schedule-I of the

IBBI (Liquidation Process) Regulations, 2016. For conducting a private sale

also, a manner and procedure is prescribed. Liquidator has not conducted

any private sale as per the IBBI (Liquidation Process) Regulations, 2016 and

the Adjudicating Authority could not have itself conducted the private sale

and confirmed the private sale. The last reserve price of public auction was

about Rs.181 Crores. The confirmation of the sale in favour of the Respondent

No.2 by the Adjudicating Authority is not in accordance with the manner and

procedure prescribed in the IBC. The Liquidator has already rejected the offer

made by the Respondent No.2. It is further submitted that the Appellant was

not even informed of the Application I.A No. 469/2022 nor the Stakeholders'

Consultation Committee was informed about the proceedings before the

Adjudicating Authority and without taking consultation from the

Stakeholders' Consultation Committee the order has been passed. It is

submitted that the Liquidator has also during the hearing before the

Adjudicating Authority has expressed its objection to the offer of the

Respondent No.2.

6. Learned Counsel for the Liquidator submitted that the Liquidator has

already rejected the offer received by the Respondent No.2 as it being much

lower to the last reserve price which was Rs.181 Crores. It is submitted that

the liquidator was present before the Adjudicating Authority and has

communicated its objection to the offer of the Respondent No.2. However,

after the order was passed by the Adjudicating Authority, the liquidator under

Comp. App. (AT) (Ins.) No. 1013 of 2022 6

the direction issued by the Adjudicating Authority has issued the Sale

Certificate in favour of the Respondent No.2. On 25.06.2022, the liquidator

has also distributed sale proceed to the Appellant also. It is submitted that

before the Adjudicating Authority, liquidator has informed that Stakeholders'

Consultation Committee has already rejected the proposal of private sale and

has formed an opinion that an Application has to be filed before the

Adjudicating Authority for revaluation of the Corporate Debtor.

7. Shri Abhijeet Sinha, Learned Counsel appearing for the Respondent

No.2 refuting the submissions of the Counsel for the Appellant submits that

in spite of several public auctions, no bidder came to take the Corporate

Debtor. The Stakeholders' Consultation Committee in its minutes has also

noted that the offer which was being received before the Adjudicating

Authority where between range of Rs.50 Crores to Rs. 55 Crores whereas sale

in favour of the Respondent No.2 has been confirmed of Rs.61.05 Crores. It is

submitted that the Appeal has neither been filed by the Liquidator nor by

'M/s. Jindal Stainless Limited' and the Appellant has also not brought before

this Tribunal any prospective buyer who can submit a better offer than one

given by the Respondent No.2. After various failed attempts in auction

process, the Adjudicating Authority thought it fit to accept the private bid for

which there is no bar in law. It is submitted that the Liquidator has already

issued sale certificate to the Respondent No.2. Respondent No.2 has taken

the possession of the assets of the Corporate Debtor and is running the

Corporate Debtor and incurring expenses.

8. We have heard Learned Counsel for the parties and perused the record.

Comp. App. (AT) (Ins.) No. 1013 of 2022 7

9. The manner and procedure under which liquidator shall proceed to

auction/ sell the assets of the Corporate Debtor has been provided in the

Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations,

2016. Regulation 32 provides for 'sale of assets'. Regulation 32-A provides for

'sale as a going concern'. Regulation 33 deals with 'mode of sale'. Regulation

33 which is relevant for the present case is as follows:-

"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 (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

Comp. App. (AT) (Ins.) No. 1013 of 2022 8

and the buyer and shall submit a report to the Adjudicating Authority in this regard, seeking appropriate against the colluding parties."

10. Regulation 33(1) provides that ordinarily the liquidator shall sell the

assets of the Corporate Debtor through an auction in the manner specified in

Schedule I. Sub-regulation (2) of Regulation 33 also empowers the liquidator

to sell the assets of the Corporate Debtor by means of private sale in the

manner specified in Schedule I. Schedule I of the Regulations has two clauses.

Clause (1) deals with 'auction' and Clause (2) deals with 'private sale'. Clause

(2) of Schedule-I is as follows:-

"2. PRIVATE SALE (1) Where an asset is to be sold through private sale, a liquidator shall conduct the sale in the manner specified herein.

(2) The liquidator shall prepare a strategy to approach interested buyers for assets to be sold by private sale.

(3) Private sale may be conducted through directly liaising with potential buyers or their agents, through retail shops, or through any other means that is likely to maximize the realizations from the sale of assets.

(4) The sale shall stand completed in accordance with the terms of sale.

(5) Thereafter, the assets shall be delivered to the purchaser, on receipt of full consideration for the assets, in the manner specified in the terms of sale."

Comp. App. (AT) (Ins.) No. 1013 of 2022 9

11. Present is a case where assets were notified for public auction. Last

public auction was notified on 01.06.2022 by notice dated 15.05.2022.

Auction was to be held in four lots. The reserve price as mentioned in the last

public auction was about Rs. 181 Crores. While noticing the facts as above,

we have noted that the Respondent No.2 has given an offer to the liquidator

on 12.05.2022 to acquire the assets by way of private sale of Rs.50.05 Crores

which offer was rejected by the Liquidator on 13.05.2022 and it was thereafter

Respondent No.2 filed an Application being I.A No. 469 of 2022 before the

Adjudicating Authority where making following prayers:-

"a. An order directing the Respondent to allow the Applicant to accept the offer of the Applicant and sale and transfer the Corporate Debtor through a private sale on a going concern basis in accordance with the provisions of the Code and the relevant regulations made there under.

b. Ad Interim order restraining the Respondent to proceed with any auction in respect of the assets of the Corporate Debtor."

12. In the Application, the Respondent No.2 was praying for a direction to

liquidator to accept the offer of the Respondent No.2 and transfer the

Corporate Debtor through a private sale on a going concern basis in

accordance with the provisions of the Code. The manner and procedure of

conducting the private sale is governed by Regulations and the liquidator is

empowered to conduct sale of the assets by means of private sale in the

manner specified in Schedule-I. We have noticed the provisions of Clause (2)

Comp. App. (AT) (Ins.) No. 1013 of 2022 10

of Schedule-I which is a procedure for private sale. One of the requirements

of the Regulation is that Liquidator is to prepare a strategy to approach

interested buyers for assets to be sold by a private sale. As per the

Regulations, the private sale has to be conducted in a manner so as to

maximise the realisations from the sale of assets. The liquidator, thus, for

conducting private sale is not to identify one buyer and sell the assets rather

strategy has to be made to approach the interested buyer for assets which is

with the object to attract more and more interested buyers to maximise the

realisations from the sale of assets. 4th meeting of the Stakeholders'

Consultation Committee held on 04.03.2022 has been brought on record

where several suggestions were given to the Liquidator for the sale of the

assets by different means. With regard to fresh valuation as suggested by the

State Bank of India, the Bank of Baroda has also agreed to the suggestion

and it was noted that the said can be done with the permission from the

Adjudicating Authority. From the record, it is also clear that the liquidator did

not file any application for obtaining any permission from the Adjudicating

Authority for private sale and the Adjudicating Authority, on an application

submitted by the Respondent No.2 making an offer and another intervenor-

'M/s. Jindal Stainless Limited', directed both to submit their bids in a sealed

cover. The Adjudicating Authority on being satisfied that two bidders have

come up before the Court showing their interest to acquire the Corporate

Debtor, the Adjudicating Authority could have directed the liquidator to

conduct the private sale so that apart from Respondent No.2 and 'M/s. Jindal

Stainless Limited' if any other interested person wanted to participate,

opportunity ought to have been given. The liquidator under the statutory Comp. App. (AT) (Ins.) No. 1013 of 2022 11

Scheme of the IBBI (Liquidation Process) Regulations, 2016 have been

empowered to take a decision regarding sale of the assets of the Corporate

Debtor. It is relevant to notice that the offer of the Respondent No.2 was

rejected by the Liquidator.

13. The Hon'ble Supreme Court had occasion to consider the provisions of

Liquidation Regulations, 2016 in reference to conduct of sale by liquidator in

"R.K. Industries (Unit-II) LLP vs. H.R. Commercials Private Limited and

Ors.- 2022 SCC OnLine SC 1124". In the above case, Stakeholders'

Consultation Committee adopted the Swiss Challenge Process for sale of the

assets of the Corporate Debtor. The second Swiss Challenge process was

initiated where certain bids were received by the liquidator which was not

completed. In second Swiss Challenge process, one 'H.R. Commercials Private

Limited' filed an I.A challenging the bid process in second Swiss Challenge

process where interim order was passed. The Appellant- 'R.K. Industries' filed

an Appeal before the Appellate Tribunal which Appeal was disposed of

directed the Adjudicating Authority to decide the I.A filed by 'H.R.

Commercials Private Limited'. NCLT has passed an order permitting the

liquidator to go for private sale of the assets of the Corporate Debtor which

order was challenged by 'R.K. Industries' in the Appeal which was dismissed.

In the above context, the Hon'ble Supreme Court had occasion to consider the

provisions of Sections 33 & 35 of the Code as well as the Regulations 32, 33

and Schedule-I of the IBBI (Liquidation Process) Regulations, 2016. The

Hon'ble Supreme Court after noticing the aforesaid provisions laid down in

paragraphs 43 and 44:-

Comp. App. (AT) (Ins.) No. 1013 of 2022 12

"43. On a conjoint reading of the aforesaid provisions of the IBC and the Liquidation Regulations, it is evident that the Liquidator is authorized to sell the immovable and movable property of the Corporate Debtor in liquidation through a public auction or a private contract, either collectively, or in a piecemeal manner. The underlying object of the Statute is to protect and preserve the assets of the Corporate Debtor in liquidation and proceed to sell them at the best possible price. Towards this object, the provisions of the IBC have empowered the Liquidator to go in for a public auction or a private contract as a mode of sale. Besides reporting the progress made, the Liquidator can also apply to the Adjudicating Authority (NCLT) for appropriate orders and directions considered necessary for liquidation of the Corporate Debtor. The Liquidator is permitted to consult the stakeholders who are entitled to distribution of the sale proceeds. However, the proviso to Section 35(2) of the IBC makes it clear that the opinion of the stakeholders would not be binding on the Liquidator. Regulation 8 of the Liquidation Regulations refers to the consultative process with the stakeholders, as specified in Section 35(2) of the IBC and states that they shall extend all necessary assistance and cooperation to the Liquidator for completing the liquidation process. Regulation 31A has introduced a Stakeholders' Consultation Committee that may advise the Liquidator regarding sale of the assets of the Corporate Debtor and must be furnished all relevant information to provide such Comp. App. (AT) (Ins.) No. 1013 of 2022 13

advice. Though the advice offered is not binding on the Liquidator, he must give reason in writing for acting against such advice.

44. When it comes to the mode of sale of the assets of the Corporate Debtor, whether immovable or movable and other actionable claims, Regulation 33 of the Liquidation Regulations comes into play and states that ordinarily, the Liquidator will sell the said assets through auction, as specified in Schedule-I(1). Sub-section (2) of Section 33, IBC gives an option to the Liquidator to sell the assets of the Corporate Debtor through a Private Sale, in the manner set out in Schedule-1 (2). Regulation 33 of the Liquidation Regulations is couched in a language which shows that ample latitude has been given to the Liquidator, who may "ordinarily" sell the assets through auction thereby meaning that in peculiar facts and circumstances, the Liquidator may directly go in for a Private Sale. To avoid the pitfalls of disposing of the assets by conducting a Private Sale for the Pittance, Regulation 33 has prescribed some stringent conditions that the Liquidator is under an obligation to comply. The said pre- conditions are that (i) the asset is perishable; (ii) the asset is likely to deteriorate in value significancy if not sold immediately; (iii) the asset is sold at a higher price than the reserved price of the failed auction; and (iv) the Adjudicating Authority (NCLT) must grant prior permission for such a sale. The proviso appended to Regulation 33(2) of the Liquidation Regulations places yet another embargo to the effect that when the Liquidator intends to sell Comp. App. (AT) (Ins.) No. 1013 of 2022 14

the assets of the Corporate Debtor by way of a Private Sale to a related party of the Corporate Debtor, his relative party or any professional appointed by him, it is mandatory to obtain prior permission of the Adjudicating Authority (NCLT).

Even the mode of sale has been regulated under the Liquidation Regulations for both, a public auction and a Private Sale. All the above dos and don'ts have been inserted to protect the assets of the Corporate Debtor and safeguard the interest of the stakeholders."

14. The Hon'ble Supreme Court in the above case has laid down that

Regulation 33 prescribed some stringent conditions that the liquidator is

under an obligation to comply. The Hon'ble Supreme Court has further held

in the above case that the Appellant- 'R.K. Industries' who was submitted a

bid and was declared as the Anchor Bidder does not have any right to insist

that the said process be taken to its logical conclusion. Thus, a person who

was selected as Anchor Bidder i.e. highest bidder in a Swiss Challenge Method

is not clothed with any right to insist that he be treated as Anchor Bidder so

that process be completed. In paragraphs 52 & 53, following has been laid

down:-

"52. Merely because the appellant herein had submitted a bid under the Anchor Bid Document and was declared as the Anchor Bidder in the Second Swiss Challenge Process, could not vest a right on it for it to insist that the said process must be taken to its logical conclusion. The appellant Comp. App. (AT) (Ins.) No. 1013 of 2022 15

has been harping about the vested right that had allegedly accrued in its favour on being declared as the Anchor Bidder. But it has conveniently glossed over an affidavit dated 23 March, 2021 filed by it, undertaking inter alia that it would remain unconditionally and irrevocably bound by the Swiss Challenge Process Document and the decision of the respondent No. 2 Liquidator. Given the aforesaid terms and condition of the Anchor Bid Document and the Second Swiss Challenge Process Document, read collectively with the unqualified undertaking given by the appellant acknowledging that the respondent No. 2 - Liquidator was well empowered to cancel/modify or even abandon the said process, it does not lie in the mouth of the appellant to urge that once it was set into motion, there was no justification to discontinue the Second Swiss Challenge Process. No special rights came to be bestowed on the appellant as the Anchor Bidder for it to insist that the said process ought to be taken forward and concluded, irrespective of the subsequent decision taken by the respondent No. 2 Liquidator, backed to the hilt by the stakeholders of discontinuing the Swiss Challenge Process and opting for Private Sale of the consolidated assets of the Corporate Debtor to be conducted through direct negotiations

53. To put it otherwise, an Anchor Bidder has no vested right beyond the ROFR, being the origination of the proposal. It must be borne in mind that the Swiss Challenge Process is just another method of private participation that has Comp. App. (AT) (Ins.) No. 1013 of 2022 16

been recognized by this Court for its transparency [Refer Ravi Development (supra)]. Ultimately, the IBC has left it to the discretion of the Liquidator to explore the best possible method for selling the assets of the Corporate Debtor in liquidation, which includes Private Sale through direct negotiations with the object of maximizing the value of the assets offered for sale."

15. In the present case, Respondent No.2 who was the Applicant making

an offer to acquire the assets of the Corporate Debtor was at best an offeror

whose offer was required to be tested with any other willing interested person

and the Adjudicating Authority ought to have asked the liquidator to conduct

the private sale and give opportunity to others to compete since the

maximisation of the assets of the Corporate Debtor is the object of the IBC.

Merely on the basis of one application and other by an intervenor, the

Adjudicating Authority could not have concluded the sale in favour of the

Respondent No.2. The liquidator has earlier rejected the offer given by the

Respondent No.2 which clearly meant that the liquidator was not satisfied

with the offer made by Respondent No.2 which was far below the last reserve

price of Rs.181 Crores. The Hon'ble Supreme Court in the above judgment

has held that it is not for the Court to substitute its decision taken by the

Liquidator.

16. In the facts of the present case, we are of the view that the Adjudicating

Authority by adopting a process of taking two bids, one by the Applicant and

another by intervenor could not have concluded the sale of the Corporate

Debtor without giving an opportunity to the liquidator to take steps for private Comp. App. (AT) (Ins.) No. 1013 of 2022 17

sale. In the present case, the facts clearly indicate that the liquidator has not

embarked upon private sale process nor had sought any permission from the

Adjudicating Authority to proceed with the private sale. Thus, private sale

procedure by the liquidator was not in place to know as to whether there are

other interested bidders who are interested to acquire the Corporate Debtor

by means of private sale. Without giving opportunity to the liquidator to take

steps to sell the assets of the Corporate Debtor by private sale, the

Adjudicating Authority itself has taken two bids and confirmed the sale, which

according to us, is not the proper procedure for maximisation of the assets of

the Corporate Debtor.

17. Learned Counsel for the Respondent No.2 submitted that the Appellant

has not brought any prospective bidder who is ready to offer any higher

amount. Learned Counsel for the Appellant has submitted that after passing

of the impugned order, he has received a letter from one 'Jagdamba Cutlery

Limited' where it has written that it is ready to offer a better price. The

Appellant, who is a Financial Creditor has stake in the assets of the Corporate

Debtor, has every right to question the order of the Adjudicating Authority

even though the Liquidator has chosen not to challenge the order. Liquidator

issued the Sale Certificate in favour of the Respondent No.2 only as per the

direction issued by the Adjudicating Authority dated 16.06.2022. We also

need to notice the fact that in pursuance of the impugned order, the Sale

Certificate has also been issued to Respondent No.2.

18. In view of the foregoing discussions, we are unable to uphold the order

of the Adjudicating Authority dated 16.06.2022 confirming the sale in favour Comp. App. (AT) (Ins.) No. 1013 of 2022 18

of the Respondent No.2 on the basis of bids received by the Respondent No.2

and one intervenor before the Adjudicating Authority. An opportunity has to

be given to the Liquidator to explore the possibility of conducting a private

sale to elicit any higher offer for the assets of the Corporate Debtor than to

one given by the Respondent No.2. We also are of the view that in event no

higher offer comes in a process which is undertaken by the liquidator in

pursuance of this order to one which has been given by the Respondent No.2,

the Respondent No.2 be allowed to retain the Corporate Debtor. Ends of

justice be served in disposing this Appeal with following directions:-

(i) The order dated 16.06.2022 passed by the Adjudicating Authority

approving the private sale of the Corporate Debtor by private

treaty in favour of Respondent No.2 is set aside.

(ii) The liquidator is permitted to conduct a private sale of the assets

of the Corporate Debtor by adopting Swiss Challenge Method

treating the bid offered by the Respondent No.2 as an Anchor Bid.

(iii) The Liquidator shall issue public notice of the Swiss Challenge

Method and publish terms and conditions for participating in the

Swiss Challenge Method by the interested bidders. On completion

of Swiss Challenge Method, in event any higher bid is received

than the bid offered by the Respondent No.2 of Rs.61.05 Crores,

the bid of the higher bidder shall be confirmed, consequently

rejecting the bid of Respondent No.2

(iv) Consequent to acceptance of bid of any higher bidder, the effect

of the order dated 16.06.2022 including the sale certificate issued

Comp. App. (AT) (Ins.) No. 1013 of 2022 19

in favour of Respondent No.2 shall be reversed and Respondent

No.2 shall be obliged to restore the assets of the Corporate Debtor

to the Liquidator to be handed over to the highest bidder.

(v) The Liquidator shall be entitled to return the amount of

consideration received from the Respondent No.2 out of the sale

proceeds of higher bid, of course, with liberty to adjust any loss

and damage to the assets of the Corporate Debtor which could

have happened in the interregnum period.

(vi) In event no higher bid is received, the bid of Respondent No.2 of

Rs. 61.05 Crores shall be confirmed and Sale Certificate be issued

in favour of the Respondent No.2, to be operative from the date of

earlier sale certificate.

19. The process as directed by this order shall be completed by the

Liquidator within the period of three months from today and an appropriate

report of the proceedings taken by the liquidator and the outcome shall be

filed before the Adjudicating Authority by the liquidator. No costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Anjali

Comp. App. (AT) (Ins.) No. 1013 of 2022