Liquidator acted in undue haste directed to freshly conduct private sale of corporate debtor: NCLT Indore

Hira International Ltd Vs Girdharilal Sugar & Allied Industries Ltd (NCLT Indore)

NCLT Indore held that liquidator who acted in undue haste in conducting private sale of the corporate debtor as a going concern in non-transparent manner is directed freshly conduct of bidding in specified manner.

Facts- The corporate debtor was admitted under the Corporate Insolvency Resolution Process (“CIRP”). Further vide order dated 21.01.2022 the IRP Mr. Ashish Kanodia was replaced by Mr. Amresh Shukla as a Resolution Professional.

The liquidator published an E-auction notice on 10.11.2022 for the sale of the assets of corporate debtor as a going concern. However, in the process, all the prospective applicants namely Samyak International Ltd, Umang Enterprises, Crown Steels, Labhanshi Agritech Pvt Ltd who had submitted their bid application were considered disqualified on the ground such as that they failed to submit the evidence of sources of liquid funds available with them to meet the reserve price. Thereafter, the liquidator proceeded with the private sale considering the E-auction to sale the corporate debtor as a going concern has failed as none of the bidders were eligible as qualified bidder. Being aggrieved by the same, the present appeals are filed.

Conclusion- Held that the process had not been transparent. In the facts of the case, we would have cancelled the entire process and ordered for the afresh process by way of E-auction. But keeping in view the fact that while resorting to the process of private sale, the liquidator had at least made the public announcement by way of advertisement in the newspapers and had also informed all those prospective buyers who were declared by him as ineligible in the process of first E-auction, we looked into if even this process is done in the transparent manner. We find that herein too, the liquidator not only had acted in undue haste but had also not given fair chance to the other bidders particularly Labhanshi Multitrade Pvt Ltd for bidding and offer higher amount, if any, over and above amount offered by Radheshyam Dairy. We also take note of the fact that a lot of time has already been gone into process of the liquidation and the litigation thereof. Therefore, considering the facts in totality we are of the view that end of justice would be achieved if the bidding is again ordered between two parties namely Radheshyam Dairy and Labhanshi Multitrade Pvt Ltd. For this purpose, we direct the liquidator to call for a meeting of the SCC giving notice at least five days prior to the date of meeting so that other SCC members could also attend the said meeting for further negotiations and bidding by the aforesaid two parties.

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