14 Sep 2022 1:45 PM GMT
The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), while adjudicating an application filed in State Bank of India v Ess Dee Aluminum Limited, has declined to entertain a revised bid received after the due time fixed by the Liquidator in the bidding notice, while observing that time...
The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), while adjudicating an application filed in State Bank of India v Ess Dee Aluminum Limited, has declined to entertain a revised bid received after the due time fixed by the Liquidator in the bidding notice, while observing that time lines are fixed with a definite purpose and the different stages of bidding process should conclude at the scheduled time.
Ess Dee Aluminum Limited ("Corporate Debtor") was admitted into Corporate Insolvency Resolution Process ("CIRP") on a petition filed by State Bank of India. Subsequently an order for liquidation was also passed by the Adjudicating Authority.
On 03.08.2022 the Liquidator had issued notice inviting bids for auction of Corporate Debtor's properties in Block A, Block-B, Block-C, Block-D, Block-E, Block-F, Block-G and Block –H. Chinar Steel Segments Private Limited ("Applicant") submitted bid for Block-H and an amount of Rs. 4 Crore was deposited as Earnest Money Deposit (EMD) with the Liquidator.
As per the notice issued by the Liquidator, the last date of EMD submission was 24.08.2022 upto 5:00 P.M. and the date of e-auction was fixed for 26.08.2022 between 03:00 P.M. to 05:00 P.M. The Applicant submitted an additional amount of Rs. 1 Crore in the liquidation account of the Corporate Debtor on 24.08.2022 at 08.30 P.M. and sent an Email to the Liquidator at around 10:00 P.M., requesting to switch from Block-H to Block A in the auction and undertaking to provide duly executed document by 25.08.2022 for bid of Block-A.
Thereafter, Applicant also filed an application before the Adjudicating Authority seeking direction to the Liquidator to allow the Applicant to participate in e-auction of the Corporate Debtor on 26.08.2022 at 3.00 P.M. However, when the auction took place on the due date, the bid of amount of Rs. 103.4 Crores was accepted by the Liquidator from another bidder (Successful Bidder) for Block A. Therefore, the Applicant sought stay on issuance of Letter of Intent to the Successful Bidder for Block A.
Contentions Of The Applicant
The Applicant argued that merely depositing Rs. 1 Crore just few hours late than the time fixed in the bidding notice is not a valid reason for rejection of the bid. Further, the Stakeholder's Consultation Committee had rejected the bid and as per the Regulations, it is only the Liquidator who is empowered to accept or reject a bid and SCC has no role as such in it. Therefore, the rejection of Applicant's bid is bad in law. Further, the Liquidator had adopted hyper technical approach in not extending a few hours of time and allowing the Applicant to participate in the bidding process of Block-A instead of Block-H.
Contentions Of The Liquidator
The Liquidator submitted that Block-A was already sold to the highest bidder and there were as many as 51 bidders, who submitted their bids before 5:00 P.M. in terms of the time fixed in bidding notice. The Liquidator is bound by the bidding document and the schedule fixed therein and Applicant could not be treated differently.
Decision Of NCLAT
The Bench opined that there was sufficient and reasonable time for any bidder to bid for any Block subject to the eligibility; and there was no valid reason for seeking to bid for a different block and depositing the money after the time fixed by the Liquidator had elapsed. "The time lines are fixed with a definite purpose, the different stages of bidding process should conclude at the scheduled time. It is not understood or forthcoming as to why the applicant after 23 days suddenly changed his mind on the last date for change from Block from H to A."
The Bench observed that a person should not be allowed to change his mind on the last date and be allowed to deposit the EMD as such. It needs to be noted that there were as many as 51 bidders, who submitted their bid within the time. Therefore, no exception can be made in case of Applicant. If Applicant was serious in bidding, he could have done so for which there was sufficient and reasonable time of 23 days granted in the e-auction notice issued on 03.08.2022. There is no reason for the applicant to complain after having failed to submit the EMD within time.
The Bench held that the Applicant's plea is misplaced and rejected the application.
Case Title: State Bank of India v Ess Dee Aluminum Limited
Case No.: C.P (IB) No.1284/KB/2019
Counsel for Applicant: Mr. Mainak Bose, Mr. Anurag Bagaria, Ms. Riya Debnath, Advocates.
Counsel for Respondent: Mr. Rishav Banerjee, Mr. Aditya Gauri, Mr.Dhanjaya Sud, Advocates.
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