LiquSale-Auction Sale-Irregularity in auction

After completion of Liquidation Auction, it is not open for a third party to offer higher amount by challenging the auction – JSK Estate Pvt. Ltd. Vs. Sundresh Bhat and Anr. – NCLAT New Delhi

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After completion of Liquidation Auction, it is not open for a third party to offer higher amount by challenging the auction – JSK Estate Pvt. Ltd. Vs. Sundresh Bhat and Anr. – NCLAT New Delhi Read Post »

Circumstances when a sale of property by auction or other means may be set-aside after its confirmation | Henderson Principle | Applicability of Lis Pendens in case of subsequent transfer of the property sold under auction – Celir LLP v. Mr. Sumati Prasad Bafna and Ors. – Supreme Court

In this judgment, Hon’ble Supreme Court deals with the following points:
(i) Concept of Abuse of Process of Court and Collateral challenge to judgments that have attained finality.
(ii) Scope of Section 17 of the SARFAESI Act, 2002.
(iii) Once Borrower has elected to move the High Court for the very same cause of action and underlying prayers, the Borrower was precluded from pursuing its remedies before the DRT.
(iv) The ‘Henderson’ Principle as a corollary of Constructive Res-Judicata.
(v) Four situations where in second proceedings between the same parties doctrine res judicata as a corollary of the principle of abuse of process may be invoked
(vi) Applicability of Lis Pendens in the absence of any registration as required under the State Amendment to Section 52 of the Transfer of Property Act, 1882.
(vii) Interpretation of the Higher Court decisions.
(viii) Circumstances when a sale of property by auction or other means under the SARFAESI Act may be set-aside after its confirmation.

Circumstances when a sale of property by auction or other means may be set-aside after its confirmation | Henderson Principle | Applicability of Lis Pendens in case of subsequent transfer of the property sold under auction – Celir LLP v. Mr. Sumati Prasad Bafna and Ors. – Supreme Court Read Post »

First duty is cast upon Liquidator to provide exact information to the bidder about the auction property | Whether NCLT has jurisdiction to impose damages under the IBC, 2016? – D.D. International Pvt. Ltd. and Anr. Vs. Rajesh Kumar Agarwal Liquidator, Divine Alloys & Power Company Ltd. and Ors. – NCLAT New Delhi

The Hon’ble NCLAT held that:
(i) The Liquidator/ Respondent was duty bound, being the custodian of the record of the Corporate Debtor, to give the exact details of the property which was put to sale by e-auction
(ii) In the Code, there is no procedure for imposing damages. Even if, for the sake of argument, it is presumed that the Tribunal has the jurisdiction to impose damages as well, it is incumbent upon the Tribunal to first quantify as to how much damages has been caused to the CD and how the said damages have to be compensated.

First duty is cast upon Liquidator to provide exact information to the bidder about the auction property | Whether NCLT has jurisdiction to impose damages under the IBC, 2016? – D.D. International Pvt. Ltd. and Anr. Vs. Rajesh Kumar Agarwal Liquidator, Divine Alloys & Power Company Ltd. and Ors. – NCLAT New Delhi Read Post »

At belated stage, after the sale of Corporate Debtor under Liquidation confirmed, the objections raised by a Prospective Bidder cannot be entertain especially when there is no allegation of fraud – JSK Estate Pvt. Ltd. Vs. Mr. Sundaresh Bhat, Liquidator of EMCO Ltd. and Anr. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that:

(i) It is settled law that sale on ‘as is where is’ basis in liquidation does not necessarily mean that the successful bidder has to bear past liabilities which get settled as per Section 53 of the Code. Even if the auction notice contained clause of ‘as is and where is basis’ or of encumbrances, no fault can be found with the liquidator for having issued such a notice.
(ii) The Liquidator was quite justified in doing so in order to be on the safer side and to avoid incurring any future liability out of the proposed sale. There is nothing wrong if the successful bidder approached the Hon’ble NCLT for various reliefs and concessions with respect to ‘clean slate’ and for transfer of assets without encumbrances and if the appropriate reliefs and concessions were granted as per the settled law.
(iii) A successful bidder of a property in liquidation proceedings under the IBC is always at liberty to seek certain reliefs and concessions on the principle of clean slate.

At belated stage, after the sale of Corporate Debtor under Liquidation confirmed, the objections raised by a Prospective Bidder cannot be entertain especially when there is no allegation of fraud – JSK Estate Pvt. Ltd. Vs. Mr. Sundaresh Bhat, Liquidator of EMCO Ltd. and Anr. – NCLT Mumbai Bench Read Post »

Schedule-I of Liquidations Process Regulations, 2016 is directory in nature and not mandatory – Mr. Bhanu Pratap Singh Vs. Mr. Rakesh Jindal (Liquidator) – NCLAT New Delhi

Hon’ble NCLAT held that in any case the Schedule-I of Liquidations Regulations is directory in nature and not mandatory as is evident in the use of the word “shall ordinarily” in Regulation 33(1). When the mechanism of sale as specified in Regulation 32 is changed, the Schedule-I has to be followed afresh after every such change.

Schedule-I of Liquidations Process Regulations, 2016 is directory in nature and not mandatory – Mr. Bhanu Pratap Singh Vs. Mr. Rakesh Jindal (Liquidator) – NCLAT New Delhi Read Post »

Merely because Liquidator has the discretion of carrying out multiple auction it does not necessarily imply that he would abandon or cancel a valid auction fetching a reasonable price and opt for another round of auction process with the expectation of a better price – Eva Agro Feeds Pvt. Ltd. Vs. Punjab National Bank and Anr. – Supreme Court

In this important judgment, Hon’ble Supreme Court has interpretated various issues as:
(i) Powers and duties of the Liquidator
(ii) Requirement of reasons for cancellation of the highest bid
(iii) Para 1(11A) was inserted in Schedule I vide notification dated 30.09.2021 is prospective or retrospective
(iv) Cancellation of the auction sale in liquidation process
(v) Ineligibility of retired/ex-Director of the Corporate Debtor to participate in Auction sale
(vi) Date on ineligibility of the Buyer under Section 29A attract

Merely because Liquidator has the discretion of carrying out multiple auction it does not necessarily imply that he would abandon or cancel a valid auction fetching a reasonable price and opt for another round of auction process with the expectation of a better price – Eva Agro Feeds Pvt. Ltd. Vs. Punjab National Bank and Anr. – Supreme Court Read Post »

Although, no specific timelines for Auction have been given in the Liquidation Process Regulations, 2016, normally Notice period of 30 days is given to get best value – Naren Seth Liquidator of Ciemme Jewels Ltd. Vs. Sunrise Industries – NCLAT New Delhi

In this case, date of publication of final E-auction notice is 02.04.2022 with merely one working day (Monday) to submit KYC, another three days upto 07.04.2022 to submit EMD of Rs. 1.15 Crores and finally one more day upto 08.04.2022 to give bids. Thus, the entire liquidation process was supposed to be completed in one week.
NCALT held that (i) although, no specific timelines have been given in the Liquidation Process Regulations, 2016, normally notice period of 30 days is given to get best value. In this connection, as a referring point only, we would like to refer to the provision of sub-rule (6) of Rule 8 of the SARFAESI Security Interest (Enforcement) Rules, 2002. This also indicates that sufficient time say 30 days ought to have been give. Thus, we find the Liquidator acted in hurry in concluding the E-auction.
(ii) NCLAT upheld the decision of AA wherein the E-auction was set aside and it was held that the Liquidator must bear all expenses incurred for the auction. We also do not appreciate conduct of the Liquidator in whole process as observed by the Adjudicating Authority.

Although, no specific timelines for Auction have been given in the Liquidation Process Regulations, 2016, normally Notice period of 30 days is given to get best value – Naren Seth Liquidator of Ciemme Jewels Ltd. Vs. Sunrise Industries – NCLAT New Delhi Read Post »

NCLT allows refund of EMD of Bidder since the title of property fell under the buffer zone which was not disclosed – Mr. Abhishek Agarwal Vs. Mr. Yedavilli Sai Karunakar, Liquidator of B.S. Ltd. – NCLT Hyderabad Bench

In this case, the land sold in the e-Auction fell under the buffer zone, which is preserved as Open Space Buffer Use Zone. No construction is permitted in the Open Space Buffer except for fishing, boating and picnics along the banks provided that only construction allowed is open to sky jetties for boating, platforms for fishing.
The liquidator did not even attempt to cause preliminary enquiry with regard to the land. He cannot take refuge under the Clause “As is where is basis and whatever is where is basis”. He is expected to disclose the available details of the land and details of the land which can be obtained from the public domain.
In the circumstances, we deem it just to order for the refund of the Earnest Money Deposit of the applicant since it would amount to undue enrichment of the Corporate Debtor.

NCLT allows refund of EMD of Bidder since the title of property fell under the buffer zone which was not disclosed – Mr. Abhishek Agarwal Vs. Mr. Yedavilli Sai Karunakar, Liquidator of B.S. Ltd. – NCLT Hyderabad Bench Read Post »

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