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Judgment
Per: B. S.V. PRAKASH KUMAR, MEMBER (JUDICIAL)
It is an MA filed u/s 35(1)(f) of the Insolvency & Bankruptcy Code, 2016 by the Liquidator of M/s. Rathna Stores Private Limited for obtaining permission to conduct private sale of the property as stated under Regulation 32(d) read with Regulation 33(2)(d) of IBBI (Liquidation Process) Regulations, 2016.
On perusal of this application filed by the Liquidator seeking permission to conduct private sale as contemplated under Regulations 33(2)(d) of IBBI Regulations on the ground that this Applicant could not find any bidder coming forward to buy it, despite having already conducted two e-auctions as stated under Regulation 33 read with Schedule-I of IBBI (Liquidation Process) Regulations, 2016, this Applicant is now constrained to file this application before this Bench seeking permission of this Authority as stated above.
When we have gone through as to whether this Applicant has held e-auction as stated under Regulation 33 read with Schedule-I of IBBI (Liquidation Process) Regulations, 2016, we have noticed that this Applicant has prepared a marketing strategy with the help of marketing professionals which is reflected in Page 60 to 64 of the application, thereafter, prepared terms and conditions of the sale including upset price (reserve price)for earnest money. The reserve price for this e-auction has been arrived at ₹31 Crores as stated under Regulations 34 of IBBI Regulations which is not more than six months old. In pursuance of the reserve price set out, the Liquidator issued a public announcement of e-auction as stated under Regulations 12(3) of IBBI Regulations on 25.01.2019 fixing e-auction date as 11.02.2019. When nobody came forward to participate in the bidding to be held on 11.02.2019, this Applicant consulted with other stakeholders thereafter, and gave another public announcement for carrying out e-auction sale on 02.03.2019 fixing reserve price (upset price) fixed as ₹31 Crores. Upon 2nd public announcement, when two Proposed Purchasers namely, M/s. Kalyan Silks and M/s. Accord Hotel had come forward, he tried to conduct e-auction as mentioned above. During this process, these Proposed Purchasers raised issues relating to income-tax attachment and deficiencies of documents of the property, over which despite the Liquidator explaining the position in respect to the issues raised by them, they did not participate in the bidding, the result of it is 2nd e-auction also failed on 18.03.2019. Since nobody came forward to bid this property in 2nd e-auction, this Applicant has consulted property consultants along with other stakeholders of the Corporate Debtor to sell the proposed property through Private sale. Since this Applicant has to take permission to hold private sale as stated under Regulation 33(2) (d) of IBBI (Liquidation Process) Regulations, 2016, this Applicant has filed this application before this Bench.
Looking at this application, it appears that one Mr. Maharajan of Velavan Stores has agreed to purchase this property for sale consideration of ₹27.60Crores. In pursuance thereof, the Applicant has already entered into an Agreement of Sale dated 05.07.2019, based on that agreement, the proposed purchaser advanced ₹2.76Crores before the date of sale agreement. As per the agreement between them, he has to pay the remaining amount of ₹24.84Crores within 60 days from the date of execution.
As per Regulation 33 of IBBI Regulations, 2016, this Applicant should have taken prior permission of this Bench before entering into an agreement with the prospective purchaser. When we have put it to this Applicant as to how he has entered into an Agreement of Sale without obtaining prior permission from this Bench, he has explained that nobody was coming forward to purchase this property, after hectic exercise, since this prospective purchaser has come forward to purchase this property for a value of 86% of the reserve price, he has entered into an Agreement of Sale in consultation with other stakeholders of the company i.e. Creditors whose claim is to be repaid out of the sale proceeds.
Knowingly or unknowingly this Applicant having already entered into the Agreement of Sale, we are of the considered opinion that the liquidator has put all his efforts to hold e-auction, as nobody came forward to participate in e-auction, since has been able to get hold of a buyer, and the value the said buyer wanted to bring in is more than 75% of the reserve price, we are constrained to grant the permission sought by this Applicant for holding private sale. Moreover, the prospective purchaser who has come forward to purchase this property has agreed to purchase the same more than 75% of the reserve price as required under the Regulations, we have not noticed any malafide intention in holding private sale.
In view of the reasons aforementioned, we hereby permit this Applicant/Liquidator to hold private sale as mentioned under Schedule-I (2 of the Mode of Sale) of IBBI (Liquidation Process) Regulations within the time prescribed.
Accordingly, this MA/779/2019 is hereby allowed.