Chowgule SBD Private Ltd. vs Mr. Vijaykumar V. Iyer & Ors.

Heard learned Counsel for the Appellant as well as for the Liquidator and the learned Counsel for Respondent No. 2- Mangalore Port Trust.

This appeal has been filed against an order dated 24.01.2023 passed by the Adjudicating Authority (NCLT, Mumbai Bench-I) by which the Adjudicating Authority has disposed of the Applications – I.A. No. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022 and I.A. No. 2164/MB/C-I/2021 in CP(IB) No. 292/MB/C-I/2017. The issues which have been raised in this appeal lie in a very narrow campus. The Appellant, who is a successful bidder, has submitted an offer and which contains the terms and conditions of payment and steps to be taken vide letter dated 08.06.2022. Several steps have been mentioned in the amended bid towards Parcel -4 in respect of Bharti Defence and Infrastructure Limited (in Liquidation). Adjudicating Authority had considered the Applications and has substantially allowed the Application with the directions as has been contained in paragraph-54 of the Order. One of the grievances raised in the Appeal is that with regard to direction-VIII where in the terms and conditions direction was sought to Karnataka maritime Board/Department of Ports and Inland Water Transport, Government of Karnataka to transfer the lease hold rights, has been held to rendered infructuous in view of the settlement arrived at by the successful bidder and Mangalore Port. It is submitted that the Affidavit which was filed on behalf of Port itself contemplates direction by the Adjudicating Authority for taking necessary steps. It is submitted that the Adjudicating Authority erred in holding that said direction has become infructuous.

Learned Counsel for the Liquidator submits that in view of the order passed by the Adjudicating Authority, which is clear approval of the successful bid, liability to make payment also arises and the Appellant ought to have deposited the amount. Hence the direction issued by the Adjudicating Authority to make payment within 10(ten) days from the said date has to be honoured by the Appellant.

Learned Counsel for the Port submits that in view of the Affidavit of the Port, the Port is ready to consider the application for transfer/fresh lease. It is further submitted that the Application has already been filed by the Appellant on 06.02.2023 to the Port. Learned Counsel for the Port submits that the said Application shall be considered in accordance with law.

We have heard the learned Counsel for the parties and perused the records. In so far as the submission of the Appellant that direction to the Port was necessary in view of the request made in the Affidavit by the Port itself and the Adjudicating Authority committed error in holding that the prayer has become infructuous is correct, the Affidavit of the Maritime Port has been brought on record at Annexure-16 to the Appeal. Paragraphs 3,4 & 5 of the Affidavit, which are relevant in the present case, are as follows:

When we read the aforesaid Affidavit filed on behalf of the Port, it was clearly contemplated that “Respondent No. 2 would extend the necessary support as per directions given by this Hon’ble Adjudicating Authority”. The said Affidavit clearly contemplates that direction be issued by the Adjudicating Authority. Hence, we are of view that ultimate observations in paragraphs 47,52 & 54(viii) that relief clause in paragraph-6 has become infructuous is not correct. Hence, we are of the view that directions issued in paragraph 54(viii) need to be substituted. We thus delete “Rendered Infructuous in view of the settlement arrived at by the Successful Bidder and Mangalore Port.” with Direction that Respondent No. 2, Mangalore Port, shall consider the application of the Appellant for transfer/fresh lease in accordance with law.

Now coming the submissions made by the learned Counsel for the Liquidator that the Appellants are liable to make payment within 10(ten) days from the approval of the order of the Adjudication Authority dated 21.04.2023, suffice to say that terms and conditions which have been approved in its Step 7, paragraph- 1.7, following have been provided

Aforesaid Step 7 in paragraph 1.7 contemplates payment within 10(ten) days of obtaining transfer approval by the Port. We, however, have also been referred to paragraph 1.10 at page 227, combined reading of above steps indicates that the Appellant shall make payment within ten days from the Transfer approval or before 31^st March, 2023 whichever is earlier.

In view of the aforesaid, we are of the view that direction of the Adjudicating Authority to make payment within 30 days from the order is not sustainable and the payment shall be made in accordance with Step 7 as quoted above. Further direction of the Adjudicating Authority to pay interest is also not sustainable since it is a private sale and sale is not governed by Regulation 12 of Schedule -1 of the Liquidation Regulation and there was no interest component in the private sale.

Lastly, learned Counsel for the parties has referred to the direction (vii) in paragraph-54 and it is submitted that the benefit of Section 32A (2) of the Code is also available to sale of liquidation asset which is the fact in the present case. In view of the above Direction –(vii) is also substituted to the effect that the Appellant shall also be entitled to the benefit of Section 31A (2) of the Code.

Learned Counsel for the Port has submitted that Port shall proceed to consider the Application submitted by Appellant on 06.02.2023 and shall take an early decision in the matter. Looking into the facts and circumstances of the present case, we are of the views that Port Authorities-Mangalore Port Trust shall endavour to take decision and complete the process within 4(Four) weeks from today.

In view of the foregoing, we dispose of this appeal in following manner:-