Bidder cannot request for conversion into sale as a going concern after accepting Corporate Debtor in slump sale

Jindal Power Ltd Vs Dushyant C Dave Liquidator of Shirpur Power Pvt Ltd (NCLT Ahmedabad)

Conclusion: Once a successful bidder had accepted and purchased the Corporate Debtor in slump sale under IBC, the bidder could not request to convert that sale into a sale of Corporate Debtor as a going concern from slump sale as it would affect the rights of members of the stakeholders’ committee prejudicially .

Held: In the instant case, when no prospective buyers turned up to purchase the Corporate Debtor as a going concern, the Liquidator published a fresh notice dated 20.07.2021 declaring the slump sale of the Corporate Debtor. The reserve price for slump sale was fixed for Rs. 4,77,84,50,000/-, which was further reduced to Rs. 3,14,38,49,770/-. Jindal Power Ltd. (“Applicant/Successful bidder”) emerged as the successful bidder of Corporate Debtor and accepted to purchase the Corporate Debtor as slump sale and deposited the bid amount. Thereafter, the Successful Bidder filed an application before NCLT Bench requesting to convert the slump sale of the Corporate Debtor into the sale as a going concern and direct the Liquidator to issue the sale certificate accordingly. It was held that the applicant had not put any condition when he accepted the bid to purchase the corporate debtor as a slump sale. The applicant, in this case, wanted to issue the direction to the liquidator to convert the slump sale into the sale as a going concern which could not be done. The price of the corporate debtor in the sale as a going concern was fixed at Rs. 5,66,23,00,000/-as maximum and Rs. 4,33,16,59,500/- as a minimum whereas the price of slump sale of the corporate debtor was fixed at Rs. 4,77,84,50,000/- as maximum and Rs. 3,14,38,49,770/- as a minimum. The applicant accepted the corporate debtor in slump sale for a minimum price of Rs. 3,14,38,49,770/-. There was a vast difference between the sale price of the corporate debtor as a going concern and the sale price of the corporate debtor in a slump sale. If the applicant’s request was allowed then certainly the rights of members of the stakeholders’ committee would affect prejudicially. Therefore, the application was not maintainable.

FULL TEXT OF THE NCLT AHMEDABAD ORDER

1. The application (IA/561(AHM)2022) is filed by the applicant – successful bidder with request to direct the liquidator to treat the sale of the corporate debtor as a going concern and allow the applicant to have all benefits as of approved resolution plan as per sections 31 and 32A of the Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”).

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