Simhapuri Energy Limited. vs Madhucon Infra Limited.

The present writ appeal has been filed by Simhapuri Energy Limited through its Liquidator being aggrieved by interim order passed by learned Single Judge in W.P.No.13519 of 2022 dated 01.04.2022.

The facts of the case reveal that M/s. Madhucon Infra Limited has preferred a writ petition before the learned Single Judge being aggrieved by the action of official liquidator appointed vide order dated 06.10.2021 by the National Company Law Tribunal (NCLT), Hyderabad Bench-1, in IA(IBC)/427/2021 arising out of CP (IB) No. 13/7/HDB/2020 (liquidation order). Before the learned Single Judge, the writ petitioner made a statement on affidavit that in the year 2018, the writ petitioner has offered Rs.800 crores as One Time Settlement and the same was not accepted by the financial institutions. He has stated that the property of the company is being sold for Rs.335 crores.

The prayer made in the writ petition is reproduced as under:

“For the reasons stated in the accompanying affidavit, it is hereby prayed that this Hon’ble Court may be pleased to issue a WRIT OF MANDAMUS or any other appropriate Writ declaring the action of the Respondent No.1 and 2 Bank in diminishing the value of the Respondent No.5 company/assets lessor than the OTS proposal dated 13.07.2018, as being arbitrary, illegal and in violation of the fundamental rights and pass such other order or orders as this Hon’ble Court may deem fit and proper in the interest of justice.”

The learned Single Judge has passed an interim order directing the company-in-liquidation represented through official liquidator not to finalise the auction proceedings by undervaluating the amount less than the OTS proposal dated 13.07.2018. Undisputedly, the OTS proposal was for Rs.800 crores. It is nobody’s case that the writ petitioner has offered Rs.800 crores before the learned Single Judge. He simply wanted the auction proceedings, which are taking place on account of the orders passed by NCLT to be stayed. Undisputedly, there is a remedy before the NCLT under the Insolvency and Bankruptcy Code, 2016 (for short, ‘the Code of 2016’). A remedy of appeal is also available under the Code of 2016.

Learned counsel for the petitioner has placed reliance on the decisions in the cases of Alchemist Asset Reconstruction Company v. Hotel Gaudavan Private Limited and others (2018) 16 Supreme Court Cases 94, Innoventive Industries Limited v. ICICI Bank and another (2018) 1 Supreme Court Cases 407, M/s. Golden Jubilee Hotels Limited v. M/s EIH Ltd. and another C.R.P.Nos.4881 and 4884 of 2018, and L.N.Sharma v. M/s. EIH Ltd. and another C.R.P.Nos.4885 and 4886 of 2018.

However, this Court is of the opinion that the matter deserves to be decided on merits by the learned Single Judge and the auction proceedings also deserves to be continued by virtue of the order passed by the NCLT.

Resultantly, the interim order passed by learned Single Judge is hereby set aside.

Office is directed to list W.P.No.13519 of 2022 before the learned Single Judge having roster on 25.04.2022, on which date the parties shall appear before the learned Single Judge and the learned Single Judge is requested to decide the matter at an early date as expeditiously as possible. It is made clear that this Court has not observed anything on merits. All contentions raised by the parties are left open.

With the aforesaid, the Writ Appeal stands allowed.

The miscellaneous applications pending, if any, shall stand closed. There shall be no order as to costs.