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Judgment
O R D E R
Justice M. Venugopal, Member (Judicial):
IA No. 124 of 2023 in Comp. App (AT) (CH) (INS.) No. 33 of 2023:
Background:
According to the Petitioner / Appellant, the main Comp. App (AT) (CH) (INS.) No. 33 of 2023, is preferred by him, in respect of the `Impugned Order’, dated 19.01.2023 in IA(IBC)/1018(CHE)/2022 in CP/759/IB/CB/2018, passed by the `Adjudicating Authority’ (`National Company Law Tribunal’, Division Bench – II, Chennai).
Petitioner / Appellant’s Submissions:
It is represented on behalf of the Petitioner / Appellant is that, the `Petitioner / Appellant’, is an `Aggrieved Person’, as per Section 61(1) of the I & B Code, 2016, and in fact, the `Petitioner / Appellant’, gave a `Proposal’ dated 08.11.2021, for the purchase of the `Corporate Debtor’ / `Liquidation Company’, as a `Going Concern’, for a sum of Rs.80/-Crores to the `1st Respondent.’.
The Learned Counsel for the Petitioner / Appellant submits that through an `Order’ in MA/122/2021 in CP/759/IB/2018 dated 11.03.2022, the `Adjudicating Authority’ (`Tribunal’), had directed the `1st Respondent / Liquidator’, to consider the `Proposal’ of the `Petitioner / Appellant’, for `Swiss Challenge’ Method.
It is represented on behalf of the Petitioner / Appellant that there was an `wanton omission, breach and collusion’, in between the `Parties’, in Compliance of the `Order’, passed in MA/122/2021 in CP/759/IB/2018 dated 11.03.2022, which was not `appraised’, and taken into `account’, by the `Adjudicating Authority’ (`Tribunal’).
Also that, it is the stand of the Petitioner / Appellant that the `Offer’ of the `Petitioner / Appellant’, is more than the value offered by the `2nd Respondent’, before the `1st Respondent’, and that the `Appellant’s Proposal’ dated 08.11.2021, to purchase the `Corporate Debtor’ / `Company’, as a `Going Concern’, is much `beneficial’ to the `Stakeholders Committee’ and `Economy’, at large.
The Learned Counsel for the Petitioner / Appellant points out that, the `Appellant’, has preferred the `Appeal’, in respect of `breach’, `manipulation’ and `compliance’, in regard to an `Order’ in MA/122/2021 in CP/759/IB/2018 dated 11.03.2022 and by the Respondents action, there was a collusion, in between the `Respondents’, jointly and severally, which was not considered by the `Adjudicating Authority’.
The contention of the Petitioner / Appellant is that, before the `1st Respondent’, as a `proposed purchaser’, for the `Assets’ of the `Corporate Debtor’ / `Company’ (under `Liquidation’, M/s. St. John Freight Systems Limited as an `Ongoing Concern’, dated 08.11.2021), for a sum of Rs.80/- Crores along with its entire `Assets’ of the `Corporate Debtor’ / `Company’, as an `Ongoing Concern’, as per Section 32A of the IBBI (Liquidation Process) Regulations, read with Section 39C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and this fact itself is `sufficient cause’, to maintain an `Appeal’, as per Section 61(1) of the I & B Code, 2016.
With a view to prove the Petitioner / Appellant’s case and to `appraise’ the grave `violation, breach, non-compliance of the `Order’, passed by the `Adjudicating Authority’ (`Tribunal’), by the `Respondents’ jointly and severally, the IA No.124 of 2023 in Comp. App (AT) (CH) INS. No. 33 of 2023 is filed, seeking `Leave’ of this `Tribunal’, in permitting the `Petitioner / Appellant’, to prefer an `Appeal’, against the `Order’ dated 19.01.2023 in IA(IBC)/1018(CHE)/2022 in CP/759(IB)/CB/2018, passed by the `Adjudicating Authority’ (`Tribunal’), in the interest of `Justice’ and `Equity’.
1st Respondent / Liquidator’s Pleas:
The Learned Counsel for the 1st Respondent / Liquidator submits that IA(IBC)/1018(CHE)/2022 in CP/759(IB)/CB/2018, was filed by the `1st Respondent’ (under Section 60(5) of the I & B Code, 2016, read with Regulations 32A(e), seeking for the `Sale of Corporate Debtor’, as a `Going Concern’, by way of a `Private Sale’, with other `Reliefs’.
It is projected on the side of the 1st Respondent / Liquidator that the only `Parties’, to the said `Application / Petitioner’, where the `Corporate Debtor’, represented by its `Liquidator’ (`1st Respondent’ herein) and the `Buyer’, being the `Sole Proforma Party’ / `2nd Respondent’ (M/s. G C Logistics India Private Limited).
According to the 1st Respondent / Liquidator, the Petitioner had filed an IA No.1343 of 2022, before the `Adjudicating Authority’ (`Tribunal’), which was dismissed on 06.12.2022. A `Restoration Application No. 18 of 2022’, was preferred by the `Petitioner’, for restoring IA No. 1343 of 2022, which was dismissed on 24.01.2023, wherein the `Counsel for the Petitioner’, had submitted before the `Adjudicating Authority’, that the subject matter of `Restoration Application’, became an `Infructuous’ one and ultimately, the said `Application’ was `dismissed’.
As a matter of fact, the Petitioner had not taken any steps to implead or object to the `Sale’ of the `Corporate Debtor’, and since the `Petitioner’ was not a `Party’ to the `Original Proceeding’, before the `Adjudicating Authority’ (`Tribunal’), he cannot maintain the present IA/124 of 2023 along with the instant Comp. App (AT) (CH) (INS.) No. 33 of 2023.
The Learned Counsel for the 1st Respondent / Liquidator contends that the `Petitioner /Appellant’, has no `Locus Standi’, to prefer IA No. 124 of 2023 in Comp. App (AT) (CH) (INS.) No. 33 of 2023 and further, he is not a `Stakeholder’, in the `Liquidation Process’ of the `Corporate Debtor’. That apart, just sending a `Proposal’, without pursuing the same, does not make the `Petitioner / Appellant’, as an `Aggrieved Person’.
The Learned Counsel for the 1st Respondent points out that the `Swiss Challenge Application’, was preferred by the 1st Respondent in 2021, which was allowed on 11.03.2022. If at all, the Petitioner / Appellant, had suffered any grievance, as to the process of the `Swiss Challenge’ or his vague `Proposal’ furnished, he could have assailed the same, at a relevant point of time. However, to come out with an `Unsubstantiated Plea’, at the fag end of the `Liquidation’ of the `Corporate Debtor’, is a clear indication, on behalf of the Petitioner / Appellant, towards his conduct in stalling the `Liquidation Process’ vis-à-vis the `Sale’.
The Learned Counsel for the 1st Respondent takes a stand that the Learned Counsel for the Petitioner /Appellant, had made an unfounded and baseless allegation of collusion, between the `Adjudicating Authority’ (`Tribunal’) and the 1st Respondent and a scandalous allegation made without any reasons or basis, is to be disregarded, and the IA No. 124 of 2023 in Comp. App (AT) (CH) (INS.) No. 33 of 2023, is to be `dismissed’, with an `Exemplary Costs’.
The categorical stand of the 1st Respondent is that, there is `no cause’ for maintaining the IA No. 124 of 2023 in Comp. App (AT) (CH) (INS.) No. 33 of 2023, because of the fact that pursuant to an `Order’ dated 19.01.2023, passed in IA/1018/2022 in CP/759/IB/CB/2018 (whereby and whereunder, the `Sale’ as a `Going Concern’, for the `Corporate Debtor’, was `allowed’, by the `Adjudicating Authority’ / `Tribunal’), a `Sale Agreement’ dated 27.01.2023, was executed, between the `Corporate Debtor’, and the `2nd Respondent’, whereby, the `Management in Entirety’, was handed over to the `2nd Respondent’.
Furthermore, according to the 1st Respondent, the Wholesale Profits, received from the 2nd Respondent, was distributed, to the `Stakeholders’, as per Section 53 of the Code. In reality, the `Stakeholders’ to whom the `monies’, were distributed, were not arrayed as `Parties’, to the IA No. 124 of 2023 or in main Comp. App (AT) (CH) (INS.) No. 33 of 2023.
Stance of the 2nd Respondent / Successful Resolution Applicant:
According to the Learned Counsel for the 2nd Respondent, pursuant to the `impugned order’, the 2nd Respondent, had entered into and executed the `Going Concern Purchase Agreement’, for the said takeover dated 27.01.2023 and took over the `operations’ of the `Corporate Debtor’. In fact, the `Official’ takeover of the `Corporate Debtor’, was on 30.01.2023. Also that, the `Corporate Debtor’s current 350 employees, were retained by the `2nd Respondent’ for now, to continue running the operations of the `Corporate Debtor’, who would be put to extreme hardship, if the `Sale’ of the `Corporate Debtor’, is `reversed’.
The plea of the 2nd Respondent is that, towards the `Acquisition of the Corporate Debtor’, due consideration was paid by the 2nd Respondent and in fact, a sum of Rs.4,46,40,000/-, was paid on 19.05.2022 and the remaining sum of Rs.40,17,60,000/-, was paid on 05.07.2022 and the Full Payment of Consideration of Rs.44,64,00,000/-, was made. Besides this, that the `Remitted Consideration’, was `dispersed’, as per Section 53 of the I & B Code, 2016.
The Learned Counsel for the 2nd Respondent, refers to the decision of the Hon’ble Supreme Court of India in Ravi Development v. Shree Krishna Prathisthan & Ors., reported in (2009) 7 SCC at Page 462 at Spl Pg.: 463, wherein, it is observed and held as under:
``The State of Maharashtra, after due deliberations and study of the methodologies which were prevailing in the country for dealing with suo motu development proposals, decided to apply Swiss Challenge method to the proposal of the appellant Ravi Development. Further, Swiss Challenge method was being applied by the State Government only on a pilot basis. The Swiss Challenge method is transparent in as much as all the parties were well aware of the ``right of first refusal’’ accorded to the ``originator of proposal’’. As per the method which was known to all the parties, the originator of the proposal must, in consideration of his vision and his initiative be given to the benefit of matching the highest bid submitted. The rejection of the highest bidder has been made by following the precondition of the acceptance of the tender already given in the said public notice. The said method is beneficial to the Government in as much as the Government does not lose any revenue as it is still getting the highest possible value. (Paras 21 to 23, 37, 53 and 54) Moreover, in the Swiss Challenge method, there is no provision for allowing other tenderers to raise the bid further, when ``initiator of proposal’’ accepts to raise up to the highest bid. In any case, there was no such request by any other bidder after Ravi Development accepting to match the highest bid.’’ (Para 44)
Appeal & Appellate Authority:
An `Appellant’ in an `Appeal’, before the `National Company Law Appellate Tribunal’, under Section 61 of the I & B Code, 2016, cannot `rely’ upon Section 421 of the Companies Act, 2013, as opined by this `Tribunal’. No wonder, an `Appeal’, from an `Order’, `Approving’ such `Resolution Plan’, is only limited to the grounds, laid down in Section 61 (3) of the I & B Code, 2016.
Assessment:
At the outset, this `Tribunal’, points out that the `1st Respondent / Petitioner’, had filed an IA(IBC)/1018/CHE/2022 in CP/759/IB/CB/2018, before the `Adjudicating Authority’ / `Tribunal’ (under Section 60(5) of the I & B Code, 2016, read with Regulations 32A(e), praying for the `Sale’ of the `Corporate Debtor’, as a `Going Concern’, by means of a `Private Sale’, coupled with other `Prayers’. In fact, the `Buyer’ (`2nd Respondent’ / `G C Logistics India Private Limited’), is the only `Party’, shown in the said `Application’.
The ground reality of the matter is, the `Petitioner / Appellant’, had not made any endeavour to furnish his objections or took steps to get himself added as one of the `Parties’, in IA/1018(CHE)/2022 in CP/759/IB/CB/2018, before the `Adjudicating Authority’ (`Tribunal’).
It transpires that the `Adjudicating Authority’ (`Tribunal’), had allowed the `Swiss Challenge’ bidding, through its `Order’ dated 11.03.2022, and further that, the Respondents had sent him the emails dated 16.03.2022, 23.03.2022, 26.03.2022 and 30.03.2022, apprising him of the `Swiss Challenge Bidding’, and called upon him to take part in the said `Bidding’, which was made mention of by the `Adjudicating Authority’ (`Tribunal’), vide Paragraph 8.2 of the `Impugned Order’.
It comes to be known that, when a `Meeting’, was convened on 06.04.2022, to receive and considered all `Bids’ in the `Swiss Challenge’, the `Petitioner / Appellant’, had not attended the `Meeting’ and also made `no offer’.
As regards the plea of the Petitioner / Appellant, that there was a serious violation and creation of records, manipulation of emails made by the `1st Respondent’ and that the same was not `considered’ and was not `appraised’ by the `Adjudicating Authority’ (`Tribunal’) in its `Order’ dated 11.03.2022 in MA No. 122 of 2021 in CP/759/IB/2018 and the later `Order’, in IA/IBC/1018/CHE/2022 dated 19.01.2023, this `Tribunal’, at this juncture, pertinently points out that the Judgment of the Hon’ble Supreme Court of India dated 16.07.2003, in the matter of Central Bank of India v. Vrajlal Kapurchand Gandhi & Anr. (vide Appeal (Civil) No. 4634 of 2003, reported in India Kanoon), wherein, it is observed as follows:
``Statements of fact as to what transpired at the hearing recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. If a party thinks that the happenings in Court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the Judges, to cull the attention of the very Judges who have made the record. That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there. It is not open to a party to contend before this Court to the contrary. This Court cannot launch into an enquiry as to what transpired in the High Court. It is simply not done. Public policy and judicial decorum do not permit it. Matters of judicial record in that sense are unquestionable However, the Court can pass appropriate orders if a party moves it contending that the order has not correctly reflected happenings in Court.’’
It must be borne in mind that the `Proposals’ of one `M/s. Galaxy Freight Systems’ and the `Proposal’ of the `2nd Respondent’ / `G C Logistics India Private Ltd.’, was placed before the `Stakeholders Consultation Committee’, and MA No.122 of 2021, was filed by the `1st Respondent / Liquidator’, for a `Swiss Challenge Auction’, to be held, which was `allowed’, by the `Adjudicating Authority’, through its `Order’, passed on 11.03.2022.
In the `Swiss Challenge Auction’, which took place on 06.04.2022, in which, the `2nd Respondent’, was named as a `Successful Bidder’, and it satisfied the payment of Rs.44,64,00,000/-. Further, the purchase of the `Corporate Debtor’, as a `Going Concern’, by the `2nd Respondent’, was `allowed’, by the `Adjudicating Authority’, through its `Order’, passed in IA(IBC)/1018/CHE/2022 in main CP/759/IB/CB/2018.
It is not out of place for this `Tribunal’, to make a significant mention that this `Tribunal’ in the Judgment dated 21.10.2022 in Bipin Textile Processing Industries Private Limited v. Shiva Dutt Bannanjee & Ors. (vide IA No. 771 of 2022 in Comp. App (AT) (CH) (INS.) No. 341 of 2022), reported in India Kanoon, wherein at Paragraph 15, it is observed as under:
15.``At this juncture, this `Tribunal' aptly points out that the `object of seeking Leave', is to prevent an `unreasonable plea' to be taken by a `Stakeholder' / `Litigant', who has no `Tangible' / `Substantial Defense', in regard to the implementation of the `Resolution Plan'.’’
In so far as the present case is concerned, it is brought to the fore that the `New Management’ of the Corporate Debtor, had issued two communications dated 02.02.2023, whereby and whereunder, the 2nd Respondent had announced a `Welcome Bonus’, to all the employees of the `Corporate Debtor’. Also that, the `Sale Proceeds’, received in `Full’, from the 2nd Respondent, was distributed to the `Stakeholders’, as per the ingredients of Section 53 of the Code.
Not resting with the above, this `Tribunal’, keeping in mind of a primordial fact that the `Petitioner / Appellant’, is not a `Stakeholder’, in the `Liquidation Process’ of the `Corporate Debtor’, and in any event, has `no substantial interest’ in the `Corporate Debtor’, comes to a cocksure conclusion that the `Petitioner / Appellant’, has no vested interest in the `Corporate Debtor’, and in view of the fact that the entire `Management’, was handed over to the `2nd Respondent’ and the entire `Sale Proceeds’, were distributed to the `Stakeholders’, the `Leave’ sought for by the `Petitioner / Appellant’, to prefer the instant Comp. App (AT) (CH) (INS.) No. 33 of 2023, before this `Tribunal’, is not `acceded to’. Viewed in that perspective, the IA No. 124 of 2023 in Comp. App (AT) (CH) (INS.) No. 33 of 2023, fails.
Result:
In fine, the IA No. 124 of 2023 in Comp. App (AT) (CH) (INS.) No. 33 of 2023 is dismissed. No costs.
Comp. App (AT) (CH) (INS.) No. 33 of 2023:
In view of the fact that this `Tribunal’, has dismissed the IA No. 124 of 2023 in Comp. App (AT) (CH) (INS.) No. 33 of 2023 (`Leave’, to file an `Appeal’), filed by the `Petitioner / Appellant’, the main Comp. App (AT) (CH) (INS.) No. 33 of 2023, is not `entertained’, and the same is `Rejected’, by this `Tribunal’. The connected pending IA Nos. 122 and 123 of 2023, are `Closed’.