National Company Law Appellate Tribunal, New Delhi: While partly allowing the appeal, a bench comprising of Ashok Bhushan*, J. and Barun Mitra (Technical Member) held that after attachment of the assets of the corporate debtor under PMLA Act, the Successful Auction Purchaser is not required to deposit the entire sale amount and the Adjudicating Authority can order for refund of EMD and first instalment but without interest.
Factual Matrix
In the instant, the Corporate Debtor, PSL Ltd. filed an application under S. 10 of the Insolvency and Bankruptcy Code, 2016 (IBC) and an order of liquidation was passed vide order dated 11-09-2020. The appellant, Liquidator, issued a sale notice of Corporate Debtor via e-auction to be scheduled for 28-12-2020 but later was rescheduled for 28-01-2021 after republishing of sale notice. On 25-01-2021, the appellant was asked via e-mail from Directorate of the Enforcement, PMLA (ED), who is investigating under PMLA Act, 2002 regarding the payment of Rs. 300 crores sanctioned by Bank of Baroda to the Corporate Debtor, to not proceed with the sale of the assets of the Corporate Debtor. Vide an interim order dated 17-03-2021, the Delhi High Court allowed the appellant to proceed for the sale of the Corporate Debtor. The respondent no. 1, successful Auction Bidder was declared as highest bidder in the e-auction and paid the first installment of Rs. 30 Crores. The Adjudicating Authority vide order dated 08-09-2021 approved the sale of the Corporate Debtor and directed the respondent no. 1 to pay the balance payment within 30 days from the date of the order. Respondent no. 1 filed an application to withdraw from the e-auction process and to refund the EMD and first instalment deposited. Vide order dated 02-11-2022, the Adjudicating Authority allowed the application. Aggrieved by the Adjudicating Authority impugned order, the petitioner preferred an appeal before this Tribunal challenging the same.
Moot Point
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Whether even after attachment of the assets of the corporate debtor under PMLA Act, the Successful Auction Purchaser is required to deposit the entire sale amount?
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Whether Adjudicating Authority can order for refund of EMD and first instalment with interest?
Observation
The Tribunal observed that the respondent no. 1 has a genuine case for not proceeding with the deposit of the balance bid amount due to attachment of the assets of the corporate debtor, moreover, 90 days period as allotted by the Adjudicating Authority had not even come to an end so there was no violation of the terms and conditions by respondent no. 1.
The Tribunal observed that the Adjudicating Authority was right in passing an order permitting the Successful Bidder to withdraw from the auction as the appellant is not in a position to hand over the custody of the units of the corporate debtor for which e-auction was held and maintain the status quo as directed by the Division Bench of the High Court.
The Tribunal observed that the Adjudicating Authority’s direction to refund EMD of Rs. 5 Crore and Rs. 30 Crore was absolutely correct, but the respondent no. 1 is not entitled for interest on the amount of EMD and First Installment.
Decision
Partly allowing the appeal, the Tribunal set aside the direction to refund the amount with interest by the Adjudicating Authority and upheld the permission to the respondent no. 1 to withdraw from e-auction and direction for refund of the EMD of Rs. 5 crores and 1st Installment of Rs. 30 crores.
[Nitin Jain v. Lucky Holdings (P) Ltd., 2023 SCC OnLine NCLAT 21, decided on 18-01-2023]
*Judgment by Justice Ashok Bhushan.
Messiah of the sufferers: Bidding adieu to Justice Ashok Bhushan
Advocates who appeared in this case :
Mr. Krishnendu Datta (Senior Advocate), Mr. Aditya Gauri, Ms. Varsha Himatsingka, Mr. Amar Vivek, Mr. Abhinav Tyagi, Mr. Dhananyaja Sud, Mr. Chaitanya Bansal, Ms. Damini Sreshta and Mr. Shalya Agarwal, Counsel for the Appellant;
Mr. Ramji Srinivasan (Senior Advocate), Mr. Kanisk Khetan and Ms. Shruti Pandey, Counsel for the Respondent No. 1;
Mr. Neeraj Malhotra (Senior Advocate), Ms. Vidhisha Haritwal, Mr. Nimish Kumar and Ms. Shreya, Counsel for the EARC.
*Ritu Singh, Editorial Assistant has put this report together.
