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Insolvency and Bankruptcy Code, 2016 – ss. 7, 33, 34, 35, 61 – Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 – r. 4 – Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 – Regulations 8, 31A, 32, 33, 33(2)(d), Schedule-I u/Regulation 33 – Gujarat Maritime Board (GMB) leased out a parcel of land to Corporate Debtor for a period of thirty years – ICICI Bank Ltd. moved an application for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor – Interim Resolution Professional (IRP) was appointed – Application moved by the IRP for initiating liquidation proceedings – Adjudicating Authority (NCLT) ordered liquidation of the Corporate Debtor and appointed Respondent No.2 as the Liquidator – Five e-auctions were conducted by the respondent No.2 to sell the consolidated assets of the Corporate Debtor but first four were unsuccessful – In the fifth e-auction, respondent No.2 offered sale of the assets on a stand-alone basis or singly or in smaller lots, besides compositely – Except for the sale of two residential assets, no purchasers stepped forward to purchase the other assets – Respondent no. 2 moved an application before NCLT for permission to sell the assets of the Corporate Debtor through Private Sale, allowed – The Swiss Challenge Process was adopted for sale of the assets of the Corporate Debtor through Private Sale – The first Swiss Challenge Process was unsuccessful – In the second round, as against the base price of ` 460 crores fixed for the Dahej Material and scrap, the appellant made a bid of ` 431 crores that was accepted – Thereafter, the respondent No. 2 published an advertisement inviting bidders to submit their bids against the Anchor Bid in response whereto, the appellant, respondents No. 3, 4, 5, and 6 submitted their bids, but before the process could be taken further, on an application moved by the respondent No. 1, NCLT passed an order directing the respondent No. 2 to carry forward the stage upto announcement of the highest bidder, while deferring the rest of the process – Matter pending before the NCLT, the respondent No. 2 was approached by the respondent No.7, who evinced interest in purchasing the immovable and movable assets of the Corporate Debtor – NCLT was approached for permission to undertake a composite sale of the Dahej Material and the Shipyard, which was duly granted – Challenged by appellant before NCLAT, dismissed – However, modifying the said order,the NCLAT directed respondent no. 2 to restart the entire process of Private Sale after issuing an open notice to prospective buyers instead of confining the process to those parties who had participated in the process earlier – On appeal, held: Merely because the appellant had submitted a bid under the Anchor Bid Document and was declared as the Anchor Bidder in the Second Swiss Challenge Process, could not vest a right on it for it to insist that the said process must be taken to its logical conclusion – Given the terms and condition of the Anchor Bid Document and the Second Swiss Challenge Process Document, read collectively with the unqualified undertaking given by the appellant acknowledging that the respondent No.2 was well empowered to cancel/modify or even abandon the said process, it does not lie in the mouth of the appellant to urge that once it was set into motion, there was no justification to discontinue the Second Swiss Challenge Process – Decision taken by the respondent No.2 cannot be treated as arbitrary, capricious or unreasonable for interference by this Court – The said decision is tempered with sound reason and logic – It is a purely commercial decision centered on the best interest of the stakeholders – The stakeholders having unanimously endorsed the view of the respondent No. 2, it is not for Supreme Court to undertake a further scrutiny of the desirability or the reasonableness of the said decision or substitute the same with its own views – Impugned judgment passed by NCLAT to the extent that it modified the order passed by the NCLT and directed restraining of the Private Sale Process, is quashed and set aside.Insolvency and Bankruptcy Code, 2016 – Swiss Challenge Process – Held: An Anchor Bidder has no vested right beyond the Right of First Refusal (ROFR), being the origination of the proposal – The Swiss Challenge Process is just another method of private participation recognized for its transparency – Ultimately, the IBC has left it to the discretion of the Liquidator to explore the best possible method for selling the assets of the Corporate Debtor in liquidation, which includes Private Sale through direct negotiations with the object of maximizing the value of the assets offered for sale. Insolvency and Bankruptcy Code, 2016 – Jurisdiction of the NCLT and the NCLAT – Held: Powers vested in and the duties cast upon the Liquidator have been made subject to the directions of the Adjudication Authority (NCLT) u/s. 35 – Once the Liquidator applies to the Adjudicating Authority (NCLT) for appropriate orders/ directions, including the decision to sell the movable and immovable assets of the Corporate Debtor in liquidation by adopting a particular mode of sale and the Adjudicating Authority (NCLT) grants approval to such a decision, there is no provision in the IBC that empowers the Appellate Authority (NCLAT) to suo motu conduct a judicial review of the said decision – The jurisdiction bestowed upon the Adjudicating Authority [NCLT] and the Appellate Authority [NCLAT] are circumscribed by the provisions of the IBC, they cannot act as a Court of equity or exercise plenary powers to unilaterally reverse the decision of the Liquidator based on commercial wisdom and supported by the stakeholders.Constitution of India – Judicial Review – Scope of – Commercial Matters – Held: It is a well-settled principle that in matters relating to commercial transactions, tenders, etc., the scope of judicial review is fairly limited and the court ought to refrain from substituting its decisions for that of the tendering agency. |
