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Judgment
ORDER
This is an application filed by the Applicant/Liquidator under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 45(3)(a) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 with the following prayer:
a. Allow the Present Application;
b. Take note of the sale of the Corporate Debtor as a going concern to Jindal Stainless Limited on the terms and conditions mentioned in Limited E-Auction Process Information Document dated 29.09.2022 read with Addendum to Limited E-Auction Process Information Document dated 22.10.2022, Letter of Intent dated 01.11.2022 (executed on 03.11.2022) and the sale Certificate Dated 16.11.2022;
c. Pass such orders or directions in respect of Terms of Implementation of Acquisition as this Hon’ble Adjudicating Authority deems fit and proper;
d. Direct closure of liquidation in accordance with sale Certificate dated 16.11.2022;
e. Pass such orders as deemed fit and proper by this Hon’ble Adjudicating Authority in the facts and circumstances of the case and in the interest of justice;
Facts in Brief
The CIRP in respect of the Corporate Debtor (CD) commenced vide order dated 12.06.2019 and applicant was appointed as the IRP of the CD.
Despite extension in CIRP period by 90 days granted by this Adjudicating Authority, no resolution plan was approved by the CoC and in the 13th CoC meeting held on 05.03.2020, the CoC resolved that an application be filed with the Adjudicating Authority for seeking liquidation of the CD.
Vide order dated 19.06.2020, this Adjudicating Authority ordered liquidation of the CD. Thereafter applicant made public announcement in Form B of schedule II, of the IBBI (Liquidation Process) Regulations, 2016 (the Liquidation Regulations) inviting claims from the creditors of the CD and the applicant received 48 claims from the creditors of the CD.
The applicant prepared a list of stakeholders in accordance of Regulation 31 of the (Liquidation) Regulations and constituted the Stakeholders Consultation Committee of the CD in accordance with Regulation 31A of the (Liquidation) Regulations.
In terms of Regulation 32A of the IBBI (Liquidation Process) Regulation, 2016 applicant initiated the process for sale of the CD as a going concern. However, even after conducting the E-Auction process for sale of the CD as a going concern four times on 30.09.2020, 26.10.2020, 10.11.2020 and 27.11.2020 including by reducing the reserve price in accordance with Para 1 of schedule I to Regulation 33 read with Regulation 32A of the (Liquidation) Regulations, no bidder came forward to participate in the E-Auction.
Thereafter again, the applicant made three attempts to sell the assets of CD by E-Auction, but again no bidder came forward to participate in the E-Auction. Seven attempts made by the applicant to sell the CD as a going concern did not result in sale by way of Auction as a mode of sale.
Thereafter, drawing guidance from Para 2 of schedule I to Regulation 33 read with Regulation 32A of the (Liquidation) Regulations, and keeping in view the object of the Code to maximise the value of assets of the CD and to prevent it from corporate death, the applicant commenced efforts to sell the CD as a going concern by mode of private sale.
Three prospective buyers were shortlisted and a limited E-auction process was conducted on 17.06.2021 among the three prospective/potential buyers who had submitted their offers, with a reserve price of Rs. 153 Crores, for the sale of the CD as a going concern. Rimjhim Ispat Limited jointly with Synergy Steels Limited with a bid of Rs. 177.50 Crores was declared as the highest bidder.
The applicant filed IA 3871/2021 for approval of sale of CD before this Tribunal on 02.09.2021. During the pendency of IA 3871/2021, Jindal Stainless Limited (JSL) filed IA 4489/2021 seeking consideration of their proposal for acquisition of CD as going Concern.
Both, IA 3871/2021 and IA 4489/2021 were disposed of by this Adjudicating Authority vide order dated 28.09.2022. The operative part of the order is reproduced below:
i.To establish the bonafides of the applicant (JSL) and to ensure that such a belated offer shall not cause prejudice to any of the parties, we direct the applicant to deposit INR 50 crores less EMD paid, if any, within 3 days of the pronouncement of this order.
ii.On receipt of this sum from M/s Jindal Stainless Ltd. Respondent/Liquidator is directed to proceed to hold another auction between Applicant, Successful Bidder M/s Rimjhim Ispat Ltd & Anr. and the other two namely, M/s Aadya Overseas Limited in collaboration with Shri Karshni Alloys Private Limited @ Asteroid Shelters Home Private Limited and Bansal Wires Limited within 7 days of this order.
iii.The reserve price of this auction shall be INR 201 Crores. The procedure of auction and the terms of payment will be laid down by the liquidator.
iv.The applicant in case of failure to pay the above mentioned amount of INR 50 Crores less EMD paid, if any, within 3 days from the date of pronouncement of this order will not be entitled to participate in the bid. If M/s Jindal Stainless Ltd fails to deposit as ordered, the EMD will be forfeited towards the cost of litigation to the benefit of liquidation estate.
v.In the event of M/s Jindal Stainless Ltd. not fulfilling the predeposit condition then the liquidator can confirm the sale to the highest bidder, M/s Rimjhim Ispat & Anr and proceed to collect the balance amount as per time period specified excluding the time consumed in this application.
vi.If the auction as ordered above takes place then as per terms to be refixed by the liquidator, the highest bidder will be confirmed as the purchaser and dealt with accordingly for such reliefs.
vii.After the auction concludes, liquidator shall be duty bound to return the EMD along with accrued interest (if any) to unsuccessful bidder.
viii.Liquidator shall give a report on conclusion of the auction to this Adjudicating Authority on or before 14.10.2022.
ix.Based on the report of the liquidator, matter will be proceeded further by this Adjudicating Authority. The copy of the order is attached and marked as ANNEXURE A7.”
In compliance of order dated 28.09.2022, the applicant convened the meeting of Stakeholders Consultation Committee (SCC) on 29.09.2022 and incorporated all the terms as directed by this Adjudicating Authority. Thereafter the applicant circulated the Limited E-Auction Process Information Document (hereinafter referred to as the ‘Process Document 1’) as approved by the SCC, to all the four prospective bidders on 29.09.2022 for conducting the E-Auction on 03.10.2022.
On 30.09.2022 JSL deposited Rs 50 crores (Rs 20.10 crores and Rs 29.90 crores vide RTGS) in the liquidation account of Rathi Super Steel Ltd with Canara Bank, and the draft of Rs. 19 crores deposited by them earlier with the liquidator, was returned to them after receipt of Rs. 50 crores.
One of the prospective bidders Rimjhim Ispat Limited, in consortium with Synergy Steels Limited, filed an appeal bearing Company Appeal (AT)(Ins.) No. 1212-1213 of 2022 before the Hon’ble NCLAT against the order dated 28.09.2022 passed by this Adjudicating Authority. On 21.10.2022 Hon’ble NCLAT dismissed the appeal filed by Rimjhim Ispat Limited, in consortium with Synergy Steels Limited. The relevant extract of the order passed by Hon’ble NCLAT is reproduced as under:
“We thus are of the view that the Adjudicating Authority did not commit any error in the passing of the Impugned order. The Impugned order gives an opportunity to both Appellants and Respondent-Jindal Stainless Limited and other two bidders to participate and Adjudicating Authority has also put condition to deposit INR 50 Cr. by Jindal Stainless Limited to ensure the bonafide as pre-deposit of the Jindal Stainless Limited, we thus do not find any good ground to interfere with Impugned Order in exercise of our Appellate Jurisdiction. The Appeal is dismissed. No Cost”
A meeting of SCC members was convened on 21.10.2022 and the copy of the order dated 21.10.2022 passed by Hon’ble NCLAT was placed before the SCC. The SCC discussed the order in detail and it was decided by the SCC, to conduct limited E-Auction on 27.10.2022, by keeping the last date of deposit of Earnest Money Deposit (“EMD”) as 26.10.2022. One of the other Prospective Bidders- Bansal Wires Industries Ltd deposited Rs. 20.10 crores on 26.10.2022, as EMD
The liquidator received a mail from Rimjhim Ispat Ltd on 25.10.2022 requesting for postponement of the E-auction till 03.11.2022 and also sought for refund of their EMD deposits of Rs. 7.65 crores each, similar mail was also received from Synergy Steel Ltd, the other consortium partner. The liquidator replied to the mails received from Rimjhim Ispat Limited and Synergy Steel Ltd vide email dated 29.10.2022.
As the EMD was received only from two bidders by 26.10.2022, i.e., the last date of receipt of EMD, namely Bansal Wire Industries and JSL, the limited E-auction was conducted among the two bidders by the E-Auction Service provider by keeping a reserve price of Rs. 201 crores. The auction started at 10 AM and concluded at 12:13:16 with 4 bids in total. The lowest bid was for Rs. 201 crores and highest bid at Rs. 205 crores. As the highest bid of Rs. 205 crores was received from JSL, it was declared as the Successful Bidder.
The applicant/liquidator thereafter issued LOI dated 01.11.2022 to JSL, which was executed by JSL on 03.11.2022. In the meantime, Rimjhim Ispat Ltd & Anr filed an appeal against the order of Hon’ble NCLAT dated 21.10.2022 before the Hon’ble Supreme Court.
JSL deposited the balance sale consideration of Rs. 155 crores (Rs. 205 crore less Rs. 50 core) on 16.11.2022 with Canara Bank in the account of Rathi Super Steel Ltd i.e. the CD (in liquidation) through RTGS and the applicant issued sale certificate on 16.11.2022 to JSL.
The applicant thereafter, handed over the possession of the factory of the CD to JSL on “as is where is basis, as is what is basis, whatever there is basis, and no recourse basis” on 18.11.2022.
In the Final Report attached with the application, the liquidator has mentioned the Fair value of CDas Rs. 263,66,59,189/- (Rupees Two hundred sixty-three crores sixty-six lakhs fifty-nine thousand and one hundred and eighty-nine) and Liquidation value as Rs. 184,14,13,879/- (Rupees One Hundred eighty-four crores fourteen lakhs thirteen thousand eight hundred and seventy-nine).
The liquidator also submits that there were two bank accounts which were being maintained by the Liquidator, one in Jammu and Kashmir Bank and the second in Canara Bank. While the bank account in Canara Bank was opened for receipt and distribution of sale proceeds, the remaining balance amount in this account shall be distributed in accordance with Section 53 of the Code. Further the amount of Rs, 7,66,896/- lying in Jammu and Kashmir Bank account is to meet the cost of liquidation process, in the event any amount survives after meeting the cost, the same shall be distributed among the secured financial creditors.
The liquidator also submits that the total sale consideration of Rs. 2,05,03,67,550/- (Two hundred Five Crore rupees only received from JSL as sale consideration for the CD as a going concern and Rs. 3,67,550/- received from the sale of vehicles of the CD during liquidation process) less the net CIRP cost Rs. 1,91,43,003/- and net liquidation cost Rs. 5,43,72,958/- was distributed to secured financial creditors on 25.11.2022, 28.11.2022 and 11.01.2023 in accordance with Section 53 of the Code.
As per Form-H submitted by the liquidator with this application, the liquidator distributed the total amount received to stakeholders as per section 52 & 53 of the Code as under:
(Amount in Rs. Lakh)
| Sl. No. | Stakeholdersu/s 53(1) | Amount Claimed | Amount Admitted | Amount Distributed | Amount Distributed to the Amount Claimed (%) | Remarks |
|---|---|---|---|---|---|---|
| 1 | (a): CIRP Costs | 191.43 | 191.43 | Total CIRP cost Rs. 288.76 less recovered Rs. 97.32 Net Amount 191.43 | ||
| 2 | (a): Liquidation Costs | 543.73 | 543.73 | Liquidation Cost 650.65 upto 15.11.2022, interest earned/ misc receipt 106.92 | ||
| 3 | 53(1)(b)(i) (Workmen) upto 24 months | |||||
| 4 | (b)(ii) Secured Financial Creditors | 107882.5 4 | 104506.48 | 197,65.50 | 3.01 | |
| 5 | (c) Employees upto 12 months | 89.87 | 7.88 | |||
| 6 | (d) Unsecured Financial Creditors | 805.12 | 805.12 | |||
| 7 | (e)(i) Operational Creditors (Government Dues) 2 years | 17.68 | 16.37 | |||
| 8 | (e)(ii) Debt owed to a secured creditor for any amount unpaid following the enforcement of security interest | |||||
| 9 | (f) Any remaining debts and dues (i) Operational Creditors | 14190.14 | 8837.75 | The claims of both claimants not admitted as it was not submitted in value terms, it is for return of goods | ||
| 10 | (g) | |||||
| 11 | (h) | |||||
| Total | 122985.36 | 114173.6 | ||||
Reliefs and Concessions as sought in the terms of Implementation of Acquisition
We would now like to examine each of the reliefs and concessions asked for and as enumerated in the terms of implementation of acquisition of Rathi Super Steel Limited.
The first relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Directions to ROC: The Adjudicating Authority to approve and direct the Jurisdictional RoC to take on record the (i) increase / decrease in authorised share capital of the CD as required by the Successful Bidder; (ii) issuance of equity shares or such other securities by the CD to the Successful Bidder; (iii) conversion of residual debts / liabilities owed by CD to the Creditors into equity; (iv) Capital Reduction: (v) removal of members of the existing Board of the CD. if any and appointment of Directors identified by the Successful Bidder on the Board (as applicable), without requiring compliance with the applicable provisions, including provisions pertaining to the imposition of any penalty or penal action, of the Companies Act, 2013 and any other Applicable Law and without requiring consent of any person; (vi) change in status of the CD in the records / master data of the RoC from being ‘Under Liquidation’ to ‘Active.’”
Through this relief, the Successful Bidder is seeking various directions from this Adjudicating Authority to direct the ROC to grant the above stated reliefs. We are inclined to grant this Relief.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Reliefs available under Applicable Laws including taxation statutes for resolution plan to apply mutatis-
mutandis to the Terms of Implementation Of
Acquisition: All the reliefs and concession statutorily available to a ‘resolution plan’ under any of the Applicable Law including taxation statutes shall apply mutatis mutandis to the acquisition of the CD as a going concern by the Successful Bidder under the liquidation process of the CD, including all attendant benefits, privileges and exemptions under various laws, including but not limited to benefit of any tax holiday, exemption. deduction, carry forward of losses of any prior years and set-off against the income of any financial year as available to the CD. Accordingly, the Central Board of Direct Taxes (“CBDT”) and all other relevant Governmental Authorities shall be directed to exempt the Successful Bidder and the CD from the applicability of and payment of all taxes under- the Income Tax Act, 1961 (including Section 115JB/ Section 56(2)(x) etc.) or Central Goods and Services Tax Act, 2017 pertaining to the period on or before the Acquisition Date. Any requirements to obtain waivers from any Tax Authorities including in terms of Section 79 and Section 115JB or any other applicable provisions of the Income Tax Act, 1961, shall be deemed to have been granted upon approval of these Terms of Implementation of Acquisition by the Adjudicating Authority. In addition, the requirement of affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner of the CD under Section 79 of the Income Tax Act, 1961, shall be deemed to have been fulfilled upon approval of these Terms of Implementation of Acquisition by the Adjudicating Authority. Further, the Successful Bidder shall be allowed to carry forward business losses and capital losses and the unabsorbed depreciation, after taking over the CD under Income Tax Act. 1961 and the jurisdictional Principal Commissioner or Commissioner shall provide necessary reliefs. The Successful Bidder shall be allowed to utilize MAT credit available under Income Tax Act, input credit available under the Applicable Law and relevant Government Authority shall provide relief as to said effect”
The reliefs and concession sought are required to be considered under the provisions of the Income Tax Act, of 1961, therefore, we are not inclined to grant such relief. Accordingly, the relief sought is declined.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Exemptions under Tax statutes: In order to ensure that the Successful Bidder acquires the CD as a going concern on a ‘clean slate’ basis, the CD shall stand exempted from:(a) applicability of Section 281 of the Income Tax Act. 1961 including obtaining no-objection certificate from income Tax authorities in respect of all the pending proceedings and dues (including interest and penalty) of the CD arising for periods up to the Acquisition Date (including such proceedings and dues for periods prior to the Acquisition Dale that may crystallize subsequent to the Acquisition Date); (b) all tax liabilities (including interest and penalty) and Tax proceedings arising in respect of periods up to the Acquisition Date or arising out of sale of CD as a going concern under liquidation, including such liabilities/ proceedings for periods up to the Acquisition Date that may crystallize subsequent to the Acquisition Date in respect of on-going or potential income tax litigation at all levels; and (c) applicability of section 170 of the Income-Tax Act, 1961, in the hands of the Successful Bidder, which deals with successor liability of the Successful Bidder in respect of outstanding Tax liabilities of the CD in respect of transactions arising as a result of giving effect to the Terms of Implementation of Acquisition”
Through this relief, the Successful Bidder is seeking directions from this Adjudicating Authority for seeking exemptions under the Tax Statutes. Since the relief sought is with respect to exemption from the applicability of Section 281 and 170 of the Income Tax Act, 1961 and other Tax liabilities which has neither been crystalized nor an opportunity of hearing to the relevant Governmental Authorities including the Income Tax Department was available, we are not inclined to grant such a relief. However, the Successful Bidder is given liberty to explore the reliefs available under the relevant statutes
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Discharge under Section 53 not to lead to additional Tax liabilities for the CD: The distribution of the Bid Amount by the Liquidator in accordance with Section 53 of the Code and /or the implementation of these Terms of Implementation of Acquisition, shall discharge the CD of all Tax liabilities including any additional Tax liabilities, whether claimed / levied on account of the discharge / settlement/ treatment of residual liabilities of the CD in compliance with these Terms of Implementation of Acquisition. Further, no Tax shall be levied on the CD and / or the Successful Bidder under the Income Tax Act, 1961 and rules made thereunder, on: (a) Capital Reduction of the CD, in order to provide exit to the existing shareholders of the CD; and (b) the issuance of securities of the CD or receipt of any new debt or funds infusion by other funding mechanism for implementation of the Terms of Implementation of Acquisition;”
Through this relief, the Successful Bidder is seeking directions from this Adjudicating Authority to direct that the discharge under Section 53 of the code will not lead to additional tax liabilities for the CD. We are not inclined to grant this relief as it would not be apt for this Adjudicating Authority to interfere with the jurisdiction of Governmental Authorities especially the taxation statutes who have the capacity to adjudicate upon them.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Handover of documents by erstwhile personnel: The erstwhile directors, key managerial personnel and/or the promoters of the CD shall handover all documents pertaining to the CD lying in their possession, including but not limited to, all statutory records, proprietary information, layouts, plant design, drawings pertaining to the plant, notices. consents. licenses. approvals. right of way (if any). all Tax related assessment orders/ demands/ notices / intimations. to the Successful Bidder latest within 15 (fifteen) days from the NCLT Order Date”
Through this relief, the Successful Bidder is seeking directions from this Adjudicating Authority to direct for handover of documents by the erstwhile personnel of the CD. We are inclined to grant this Relief.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Recasting of accounts and drawal of Balance Sheet: Based on the audited receipt and payments alongwith the audited statement of Assets and Liabilities as on 15-11-2022 and the audited balance sheet as on the liquidation commencement date as provided / to be provided by the Liquidator, the Successful Bidder / CD shall be permitted to (i) recast the accounts and draw the balance sheet of the CD(ii) claim all the reliefs and concessions relating thereto, including no penal interest, charges etc. to be levied or liability of whatsoever (including any tax liability) to accrue for any non-compliance of any regulatory provision including Companies Act or any non-filing under any statutory provisions for the period prior to Acquisition Date”
We note that there are relevant provisions available under the Companies Act for seeking the above stated relief, applicant is at liberty to follow the same.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Time period of one year for approvals/consents/compliances: The CD shall be entitled to a period of one year’s moratorium from the NCLT Order Date for obtaining all requisite approval/ consent/ permit/ licenses/ entitlements/ privileges (or similar rights and interests) (including renewals thereof) and for meeting all other compliance requirements as may be required under Applicable Law to ensure the acquisition and maintenance of the CD as a going concern in compliance with Applicable Law (including the remedying of any existing non- compliances). During such period all approvals, consent/ permits/ licenses/ entitlements/ privileges (or similar rights and interests) granted and subsisting by any Governmental Authorities in favour of the CD, shall be deemed to continue without any disruption, and the CD and its assets shall stand protected from an coercive action by any Governmental Authorities, including any termination action in respect of any consents/ permits/ licenses/ entitlements/ privileges (or similar rights and interests) of the CD or charging of any fines/ penalties./ charges/ damages or levy of any nature whatsoever, notwithstanding any non- compliance by the CD or expiry/ termination of pre- existing consents/ permits/ licenses. Accordingly, the Governmental Authorities shall stand directed to waive all past non- compliances and delays and not take or give effect to any coercive action against the CD for non- compliances occurring prior to the Acquisition Date and to grant the renewal/ continuance of all requisite approvals/ consents/ permits/ licenses/ entitlements/ privileges (or similar rights and interests) whether under law, contract, lease or license, as may be required by the CD for managing its affairs as a going concern, without insisting for payment of dues pertaining to period prior to Acquisition Date or dues arising on account of these Terms of Implementation of Acquisition.
Without prejudice to the aforesaid, the Uttar Pradesh Pollution Control Board or any other relevant authority shall be specifically directed to grant the no objection / consent/ clearance in connect with the plant of the CD waiving any past non-compliances which may have occurred prior to the Acquisition Date.
We find that there is no provision under any law (except as specified in Section 32A of IBC, 2016) by which immunity in relation to any non-compliance with applicable law can be granted. Hence, we are not inclined to grant this relief. However, the Successful Bidder would be at liberty to proceed in accordance with law.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Exemption from transfer related charges and stamp duty for increase of authorised share capital: The Collector of Stamps, Revenue Department, of relevant state government(s), the Ministry of Corporate Affairs and all other relevant Governmental Authorities to exempt the Successful Bidder and the CD, from the levy of stamp duty. fees, levies, Taxes. surcharges, cess, fees, transfer charges. Registration charges, transfer premiums, and surcharges that arise from or are applicable in relation to these Terms of Implementation of Acquisition including any stamp duty applicable on the acquisition of shares and increase in the authorised share capital of the CD, if required, by the Successful Bidder”
Through this relief, the Successful Bidder is seeking directions from this Adjudicating Authority to grant exemption from transfer related charges and stamp duty for increase of authorized share capital. We find that Granting this relief will cause a loss of revenue to the Public Exchequer, we are not inclined to grant this relief. However, liberty is given to the successful bidder to approach the concerned authorities for grant of this relief.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Performance of obligation under existing contracts: In view of discharge of the obligation of the CD in accordance with these Terms of Implementation of Acquisition, the counter parties of all contracts entered into by the CD which is subsisting on the Acquisition Date, shall be liable to perform their obligations under the existing contracts without any deviation whatsoever (unless otherwise agreed to by the CD in writing) and the non- payment of any past liabilities shall not be a ground for non- performance of such contractual counter parties on and after the Acquisition Date. The CDs hall not be liable in any manner under any such contractual arrangements, until and unless the counterparty agrees and is in readiness to perform its contractual obligation after the Acquisition Date. Without prejudice to the aforesaid, the Adjudicating Authority to direct GAIL (India) Limited to resume the supply of gas under the agreements already entered into with the CD without insisting on any past dues or imposing any liability on CD for any past dues including any penalty. minimum take or pay. etc.”
Through this relief, the Successful Bidder is seeking directions from this Adjudicating Authority to direct that counter parties of all contracts as entered into by the CD which is subsisting on the Acquisition Date, shall be liable to perform their obligations under the existing contracts.
We find that there is no provision under any law (except as specified in Section 32A of IBC, 2016) by which immunity in relation to any non-compliance with applicable law can be granted. Hence, we are not inclined to grant this relief. However, the Successful Bidder would be at liberty to proceed in accordance with law.
Further, in so far as the question of giving Directions to GAIL (India) Limited to resume the supply of gas is concerned, we note that during the course of hearing on 9th May, 2023 in IA- 1485/2022 following order was passed:
1.Ld. Counsel Mr. Pushpendra Singh appeared on behalf of the Liquidator along with the Liquidator in person.
2.It is an admitted fact that the contract between M/s. GAIL (India) Ltd. and the Corporate Debtor for the supply of gas has been cancelled by the Liquidator on 20.11.2020. Now the situation is that the Corporate Debtor has been sold as a going concern by order of this Tribunal dated 28.09.2022. As the sale of Corporate Debtor as a going concern has already been done and the Liquidator has cancelled the agreement between M/s. GAIL (India) Ltd. and the Corporate Debtor, it is open to M/s GAIL (India) Ltd. to take back their goods without any further restraint or demand.
3.Having noticed the above, we also take note of the fact the Corporate Debtor in this case has been sold as a going concern by virtue of a private sale and the plant is a steel plant which needs to be kept as a going concern, it will always be necessary for the auction purchaser to run the unit and for that it needs the gas which can be provided either by M/s. GAIL (India) Ltd. or any other agency. Since M/s. GAIL (India) Ltd. has already established the gas equipment, it will be in the fitness of things that we permit the auction purchaser to approach M/s. GAIL (India) Ltd. for entering into a fresh agreement for the supply of gas and both the parties are ad-idem on this. We leave it to the parties to negotiate for a mutual agreement on gas supply. We grant 30 days’ time to the parties to work out the modalities if they are able to reach an agreement for this.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“Terms of Implementation of Acquisition to prevail over inconsistent provisions: The provisions of the Terms of Implementation of Acquisition shall prevail over the provisions of all other agreements / arrangements / purchase orders / work orders, etc. entered into by the CD as well as all other Applicable Laws, to the extent of any inconsistencies. No Governmental Authority (including regulatory, judicial and quasi-judicial authority) shall issue any orders, directions, decrees, judgments etc. that will be in contravention of the provisions of the Terms of Implementation of Acquisition”
We find that this Adjudicating Authority does not have the authority to grant the above stated relief. However, the Successful Bidder would be at liberty to proceed in accordance with law.
The next relief and concession sought in the Schedule I of the Reliefs and Concession are:
“No further Government Approval: Any approvals that may be required from Governmental Authorities (including Tax authorities) in connection with change in ownership/ control/ voting power of the CD, shall be deemed to have been granted on the Acquisition Date”
There is no provision under any law by which blanket immunity can be granted to the Successful Bidder for seeking the above stated relief. We are not inclined to grant this Relief. However, the Successful Bidder would be at liberty to proceed in accordance with law.
Order
In light of the above, prayer ‘b’ stands allowed and prayer ‘c’ is disposed of in terms of above order. However, pertaining to the prayer ‘d’, this application i.e. IA-1126/2023 shall be heard with other pending applications for which date of hearing has already been granted.
List this application i.e. IA-1126/2023 on 25.07.2023 with other pending applications.