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Judgment
Heard Ld. Sr. Counsel Mr. Krishnendu Dutta for the Appellant on Admission of the Appeal as well as I.A. No. 1830 of 2021 an Application for stay of the proceedings/urgent interim reliefs.
Ld. Sr. Counsel for the Appellant submits that on 25.04.2019 liquidation order was passed in this matter, 05th electronic auction process was initiated by the Respondent No. 2 (Liquidator), pursuant to advertisement inviting Expression of Interest (EOI) for participating in the electronic auction sale process for asset of Corporate Debtor published on 05.08.2020 on the terms of conditions set forth in the EOI process document, uploaded on the website of the Corporate Debtor. This auction process was for scrap and metal assets laying at the Dahej shipyard of the Corporate Debtor. The Appellant was selected/elected as anchor bidder who had deposited the 10% of their bid (43.10 Crs.) in time. The Respondent No. 1 filed the Application I.A. No. 273 of 2021 inter alia challenging the Swiss challenge process. The Application was pending for pretty long time, therefore, the Appellant has filed CA (AT) (Ins) No. 374-375 of 2020 for direction. This Appellate Tribunal vide order dated 18.06.2021 requested the Adjudicating Authority to decide the Application I.A. No. 273 of 2021 and I.A. No. 379 of 2021 on priority basis preferably on 20.07.2021. However, the Application has not been decided by the Adjudicating Authority on 20.07.2021 and ultimately by non-speaking and cryptic order dated 16.08.2021. Ld. Adjudicating Authority has disposed of the Applications I.A. No. 273 of 2021, 379 of 2021, 445 of 2021 and 527 of 2021, which is impugned in this Appeal.
Ld. Sr. Counsel for the Appellant further submitted that Ld. Adjudicating Authority delivered the impugned order on 16.08.2021, however, it is uploaded on 23.08.2021. In the impugned order, Ld. Adjudicating Authority directed the Liquidator to complete the entire sale process within three weeks from the date of this order. In the light of the order the detailed bid process document was shared on 25.08.2021 and the virtual data room link and password were shared only on 26.08.2021 on the same day when EMD of Rs. 67.50 Crs. was to be submitted.
Ld. Sr. Counsel for the Appellant submitted that the process was conducted in such a haste manner that no one can participate in this process except Welspun Steel Resources Pvt. Ltd. It is also submitted that during the course of hearing on 16.08.2021 Welspun Steel Resources Pvt. Ltd. had given an offer of Rs. 675 Crs. in open court. It is pointed out such an offer of Rs. 675 Crs. for purchase of scrap and metal, land and buildings at Dahej whereas on the earlier process was undertaken by the liquidator for the sale of Dehaj scrap and metal of assets. The Appellant is the highest bidder and his bid was for Rs. 43.10 Crs. and the Appellant has deposited EMD 10% on 26.03.2021.
Ld. Sr. Counsel for the Appellant submitted that before 16.08.2021 the Liquidator has not filed any Application before the Adjudicating Authority that why the Liquidator has cancelled the auction process for sale of scrap and metal and suddenly initiated a new auction for sale of scrap and metal, land and buildings. The process is not transparent and fair, therefore, the auction process may be stayed till pendency of this Appeal.
On the other hand, Ld. Sr. Counsel Mr. Arun Kathpalia appearing on caveat for Respondent drew our attention towards terms and conditions of auction and submitted that the Appellant has no vested right to challenge the auction process. Ld. Sr. Counsel Mr. Ramji Srinivasan appearing on caveat for Respondent No. 2 (Liquidator) supports the argument advanced by the Ld. Sr. Counsel for the Respondent No. 1 and also supports the impugned order.
We have considered the submissions of Ld. Sr. Counsels for the parties. It is not appropriate to express any opinion at this stage. This is a fit case for admission as well as for stay of the impugned order. Thus, we hereby stay the impugned order and the auction process till next date of hearing. For the ready reference the impugned order is reproduced: -
"16.08.2021
IA No. 273 of 2021 is filed by HR Commercial Pvt Ltd. to direct the Respondent to disclose the entire process of selection of the Anchor Bidder or alternatively to discard the Swiss Challenge Process and adopt the Anchor Bid as reserve price, invite bids accordingly and allow inter se bidding amongst the parties under the aegis of the Liquidator or this Tribunal as this Tribunal may deem fit and proper.
IA No. 379 of 2021 is filed by the Applicant i.e M/s. Kanter Steel India Pvt. Ltd. praying to quash and set aside Process Document dated 27.03.2021 and restrain the Respondent from taking any steps in pursuance of the Process Document.
IA No. 445 of 2021 is filed by M/s. Welspun Steel Resources Pvt. Ltd. to direct the Liquidator to consider and accept its offer for the Consolidated Assets and to quash and set aside/cancel/revoke the Second Swiss Challenge Process.
IA No. 527 of 2021 is filed by M/s. Chinar Steel Segment Centre Pvt Ltd. with a prayer to direct the Respondent/Liquidator to allow the Applicant to participate in the e-auction Process of the Corporate Debtor.
Learned Sr. Counsel appearing for the Liquidator during the course of arguments has submitted that IAs. have been filed objecting the e-auction process undertaken by the Liquidator for the sale of Dahej metal, scraps and assets. He further submitted that the removal of metals & scrap will take 15 to 20 months and after removal of the same he has to go in for sale of land and buildings, which will delay the Liquidation process.
He further submitted that he has received a bid for purchase of metals & Scrap and land and Buildings at Dahej. If these assets are sold in one go, it will save time and maximise value to the stakeholders. Hence, he is going for cancellation of present auction process in consultation with the stakeholders as terms and conditions of auction process document provide for the same and initiate a new auction for sale of Metals & Scrap and Land and Buildings as a whole at Dahej.
Since, the Liquidator is going for new auction, and the tender document allows him except to do so, the objections of the Applicant in various IAs, except No.332 of 2021 and 1.A. No.371 of 2021 will not survive it is seen from the record that the sale process is delayed for almost three years. Hence, we direct the Liquidator to complete the entire sale process in consultation with stakeholder committee within three weeks from the date of this order.
The Liquidator to allow all parties herein to take part in bidding process.
We further make it clear that the Liquidator may fix appropriate condition for the prospective bidders to check their bonafide
With this, the I.A. No.273 of 2021, T.A. No.379 of 2021, I.A. No.445 of 2021 and L.A. No.527 of 2021 stands dispose of.
The matter is fixed for further consideration of I.A. No.332 of 2021 and 1.A. No.371 of 2021 on 31st August 2021."
Ld. Counsel for the Respondents may file Reply Affidavit and also Reply of I.A. No. 1830 of 2021 within two weeks. Rejoinder, if any, may be filed within one week thereafter.
Let the matter be fixed 'For Admission (After Notice)' on 27th September, 2021.