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Judgment
Rajasekhar V.K., Member (Judicial):
This Court convened through video conferencing.
The Interlocutory Application No. 933 of 2021 has been filed by the Applicants Nicco Employee’s Union (INTTUC) and others under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (Code), seeking the following reliefs:
a. That the Respondent Liquidator be directed to distribute equity shares of NPRL held by NCL in liquidation in specie to the Applicants in proportion to their admitted dues;
b. That the Respondent Liquidator be directed to distribute equity shares of NPRL held by NCL in liquidation in specie to the other members of the MC in proportion to their admitted dues;
c. That the notice dated 2 October 2021 along with notice dated 11 October 2021 fixing the date of auction on 28 October 2021 be set aside;
d. Injunction upon Respondent Liquidator from selling the shares of NPRL held by NCL in Liquidation till disposal of the instant application;
e. Ad interim orders in terms of prayers above.
Submissions on behalf of the Applicant:
3.1 The case of the Applicants is that the members of the applicant have been rendered unemployed from 17th October 2017 on account of passing of the order of liquidation of the Company, by virtue of section 33(7) of the Code. The Applicants are barely sustaining their livelihood and are with great difficulty pursuing the litigations in their quest to get their rightful dues. The Applicants herein have preferred the instant application for the distribution of unsold asset of the Nicco Corporation Limited (NCL) in liquidation in specie basis in proportionate value of their undischarged claims in the liquidation process of NCL.
3.2 The unsold asset of NCL include 25% shareholding in Nicco Parks and Resorts Limited (NPRL) which is a separate company. The said 25% shareholding translates into 1,17,00,000 shares of NPRL. The Respondent Liquidator is selling the shares at a massively discounted valuation which is much less compared to the prevailing market valuation of the shares.
3.3 The respondent Liquidator has been attempting to sell the said 25% shareholding in NPRL since long, however, so far has been unable to do so. The applicants submit that till date the respondent liquidator has published more than 10 number of sale notices but remained unsuccessful to sell the same. Over the time, the respondent Liquidator has reduced the reserve price for the said shares by more than ₹10 Crores. Further such reduction runs completely contrary to the prevailing market demand. As on date of the last notice (i.e on 2nd October 2021) the difference between the reserve price as fixed by the respondent Liquidator and the price of the shares calculated in terms of its traded value on the BSE is an astounding ₹23.61 crores. The respondent Liquidator has last attempted to sell the shares at a massively discounted price on 28th October 2021.
3.4 As per section 35 of the Code, the respondent Liquidator has the duty to carry out the liquidation process in such a manner so as to ensure maximum recovery from the sale of such assets. The respondent Liquidator’s conduct in this regard has been questionable to the extent that the respondent Liquidator is eluding all points of contact when attempted by the Applicants. Additionally, several anomalies are also observed in the successive notices published by the Respondent Liquidator in abnormally short intervals.
3.5 The admitted claim of the Applicants stands at ₹8,69,22,700 Crore approximately with another additional ₹8 Crore approximate quantum under consideration before this Tribunal. This application has been filed praying for directions upon the Respondent Liquidator to distribute the said shares of NPRL to the applicants in specie basis in proportion to their dues. The shares can then be either sold on the market to maximize returns or be held to be disposed off at a later date when the market price of the shares may be even higher . Such specie distribution of shares is not prohibited under the Code.
4 Submissions on behalf of the Respondent:
4.1 The case of the Respondent Liquidator is that in terms of this Tribunal’s order dated 27th October, 2021, an e-auction in the matter of 25% shares of NPRL was successfully convened on 28Th October, 2021, wherein the Consortium of Bandhan Employees Welfare Trust and Mr. Angshuman Ghosh (hereinafter referred to as ‘Acquirer’) to the appeared as the successful bidder. Thereafter, on 10th November, 2021 full payments towards balance sale consideration were made by the Acquirer in terms of the Invitation dated 2nd October, 2021. Copy of auction report has already been submitted vide 17th Progress Report.
4.2 Further, given that the NPRL is a listed company, the Acquirer was required to make open offer in terms of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 for acquisitions of certain number of shares from the existing shareholders. The Acquirer made, and has successfully completed the said open offer process in terms of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
4.3 Thus, the Acquirer has completed all the needed steps from the side of the Acquirer for completion of the sale. The Liquidator will now, as required under IBBI (Liquidation) Regulations, issue a sale certificate and cause delivery of the said shares to the Acquirer, subject to orders, if any, as the Tribunal may pass in the matter.
Analysis and Findings
Heard the learned Counsel for the Applicant and the learned Counsel for the Respondent and perused the record.
Vide order dated 27th October, 2021, this Tribunal had permitted the Liquidator to conduct the sale of the shares and held that no interim order was necessary.
According to the record, an e-auction in regard of the said shares was held by the Liquidator on 28th October 2021 wherein the Consortium of Bandhan Employees Welfare Trust and Mr. Angshuman Ghosh (hereinafter referred to as ‘Acquirer’) have become the successful bidders.
As such, the present application filed by the Applicants for distribution of the said shares of NPRL amongst the applicants in specie basis in proportion to their dues has become infructuous and is hereby dismissed. In any case, the application has also been preferred too late in the day without any explanation as to why they did not approach this Adjudicating Authority earlier.
This matter of selling of shares of NPRL has held up the liquidation proceeding for a period of more than four years now. It is time to let the Liquidator complete the process expeditiously without any further hinderance. We hope earnestly that all stakeholders will now recognize this and refrain from filing any frivolous application of this nature, in future.
The registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.
Certified Copy of this order may be issues, if applied for, upon compliance of all requisite formalities.