NCLAT dismisses fresh E-auction review plea

NCLAT dismisses fresh E-auction review plea

Appellant is to first approach the Adjudicating Authority for redressal of their grievance for any irregularity and only thereafter can approach the Appellate Tribunal

The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed u/S 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Appellant concerning fresh e-auction.

The Principal Bench of NCLAT comprising Justice Jarat Kumar Jain and Dr Ashok Kumar Mishra dealt with this matter titled as D.R. Corporation (Proprietorship Firm) v Shri Ravi Kapoor (Liquidator) And Anr.

The factual background of this matter is that the National Company Law Tribunal (NCLT) at the Ahmedabad Bench ordered the liquidation of the Corporate Debtor – City Tiles Ltd and directed the Respondent – Ravi Kapoor to act as the Liquidator. The Appellant – D.R. Corporation (Proprietorship Firm) submitted that they were declared as the highest bidder for Lot No. 4, as per the auction conducted on 12 April 2021 pursuant to the public announcement on 26 March 2021.

The Appellant, thereafter, deposited 25 per cent of the bid amount in the bank. It was further submitted by the Appellant that the Respondent – Liquidator had announced another e-auction even though the Appellant was the successful bidder for the Lot No.4. The Seazone Granito Pvt Ltd who is the other Respondent in this appeal contended that he could not upload the revised offer in the bidding process as there were technical glitches.

The bench while reiterating the settled principle that an auction should be transparent and visible to other bidders, made the following observation:

"The 'Object of the Code' is 'Resolution'. If this concept fails, then the objective shifts to 'maximization of the value of assets of the Corporate Debtor'."

The bench observed that the Appellant had no vested right and no sale certificate issued to him in terms of the e-auction and that there appeared to be some technical glitches but the same was not supported by the certificate of the administrator of the E-auction service provider.

The Regulation 31-A of IBBI (Liquidation Process) Regulations, 2016 was noted by the bench which provides that the stakeholder's consultations committee is to advise the Liquidators on the matters relating to sale under Regulation 32. Regulation 31A has elaborately provided the method to be followed by the stakeholder's consultations committee and the Liquidator.

The bench, however, noted that this was a case where the Respondent – Liquidator had gone for e-auction based on the advice of the stakeholder's consultation committee and this action is yet to be approved or disapproved by the NCLT. This case was considered not right for review by this Tribunal since no order was passed by the Adjudicating Authority.

The bench concluded that the Appellant is to first approach the Adjudicating Authority for redressal of their grievance for any irregularity and only thereafter can approach this Appellate Tribunal under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 (IBC).

Therefore, this appeal was dismissed for having no merit.