Back
2025 Supreme(Online)(NCLT) 1820
NATIONAL COMPANY LAW TRIBUNAL
Smt. Madhu Sinha, Member (Technical), Shri. Vinay Goel, Member (Judicial)
M/s. Chrysalis Communications Pvt. Ltd. – Appellant
Versus
Mr. Lukose Joseph, Liquidator of Green Gateway Leisure Limited – Respondent
MA (IBC)/3/KOB/2024 IN CP(IBC)/46/KOB/2022
For the Appellants/Petitioners: Mr.Isaac Thomas
For the Respondents: Mr. A C Venugopal, Mr. C P Anil Raj
The Liquidator has discretion to reject bids in liquidation proceedings, and the Stakeholders' Committee's decision to initiate a fresh auction after new valuation was justified under the Insolvency and Bankruptcy Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5)(c) - Liquidation proceedings - Application for stay of resolution passed by Stakeholders' Committee regarding re-tender for sale of corporate debtor - Applicant claimed to be highest bidder but bid rejected by Stakeholders' Committee - Liquidator's discretion upheld as per Regulation 33 of IBBI (Liquidation Process) Regulation - The decision to initiate fresh auction after new valuation was justified. (Paras 1, 9, 32)
(B) Corporate Debtor - The corporate debtor was a public company established for a resort project - Financial difficulties led to initiation of Corporate Insolvency Resolution Process (CIRP) and subsequent liquidation. (Paras 2, 3)
(C)
Findings of Court:
The Stakeholders' Consultation Committee acted within its authority in rejecting the bid and opting for a re-tender, ensuring compliance with the regulations. (Paras 31, 32)
(D)
Issues: Whether the Stakeholders' Committee had the authority to reject the highest bid and call for a fresh valuation - Whether the Applicant was a related party affecting eligibility. (Paras 8, 18) (E)
Ratio Decidendi: The court emphasized that the Liquidator has the discretion to reject bids to protect stakeholder interests, and the Stakeholders' Committee's decision to re-tender was within its powers. (Paras 20, 32) (F)
Result: Application dismissed.
| Table of Content |
|---|
| 1. background of corporate debtor and financial issues (Para 2 , 3 , 4 , 5 , 6) |
| 2. arguments against bid rejection and re-tendering (Para 8 , 9 , 10 , 11 , 18) |
| 3. liquidator's authority and auction process (Para 12 , 13 , 14 , 15 , 16 , 17) |
| 4. respondent's justification for bid rejection (Para 20 , 21) |
| 5. court's observations on scc's decision (Para 22 , 30 , 32) |
| 6. final order and dismissal of application (Para 33 , 34 , 35 , 36) |
ORDER
Per Coram
1. The present Application has been filed by M/s. Chrysalis Communications Pvt. Ltd under section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 (hereinafter ‘the Code’) seeking the following relief:
(a) stay the operation and implementation and all further proceedings with respect to the resolution passed in the Stakeholders Committee Meeting for retender for the sale of the corporate debtor as a going concern.
(b) quash the resolution passed by the Stakeholders Committee with respect to re-tendering and any subsequent action taken with respect to the retender for the sale of the corporate debtor as a going concern.
(c) declare that the Applicant as the successful bidder with respect to the e-auction proceedings for the sale of the Corporate Debtor as a going concern.
(d) to take on record the documents annexed hereto as Annexures A1 to A6.
2. The Applicant submitted that Green Gateway Leisure Limited (hereinafter ‘Corporate Debtor’) is a public company incorporated on 28.09.2004, with its registered office located in Thiruvananthapuram, Kerala. The company was initially set up as a Special Purpose Vehicle to develop a resort project in Bekal, Kasargod, focusing on blending Kerala heritage and luxury. The project was to be situated on a leased land of 55.33 acres from the Bekal Resorts Development Corporation Limited (BRDCL), a government-owned entity.
3. It is submitted that Respondent No.2, Union Bank of India had provided a General Term Loan of Rs. 25 crores to the Corporate Debtor to set up the resort. However, the company faced financial difficulties, leading the bank to file an application under Section 7 of the Code for initiating the Corporate Insolvency Resolution Process (hereinafter ‘CIRP’). The application was admitted by this Adjudicating Authority on 25.01.2023, and Mr. Rajmohan R. was appointed as the Interim Resolution Professional, later confirmed as the Resolution Professional vide order dated 22.06.2023.
4. The Applicant stated that despite efforts to resolve the financial situation, no prospective resolution applicants came forward. As a result, this Tribunal allowed the liquidation proceedings vide order dated 24.11.2023 to initiate the liquidation of the Corporate Debtor and Respondent No.1 was appointed as the liquidator.
5. It is stated that an appeal against the liquidation order was filed before the Hon'ble National Company Law Appellate Tribunal, and the appeal was dismissed by the NCLAT vide order dated 24.01.2024. Following this, a Stakeholders' Consultation Committee (SCC) was formed in line with the liquidation process, with Union Bank of India, as the sole financial creditor, holding the majority of voting shares in the committee.
6. The Applicant submitted that, in the SCC an e-auction for the sale of a corporate debtor as a going concern was discussed. The e- auction process, detailed in the sale process memorandum, specified that the highest bid would generally determine the successful bidder, with the Liquidator having the discretion to reject any bid. The Applicant made a bid of Rs. 25,50,000, which was above the reserve price and confirmed as the highest bid.
7. Further submitted that, after the bid the Liquidator clarified the Applicant's eligibility under the Code and relevant regulations, affirming that the Applicant met the eligibility requirements. Despite this, on 23.05.2024, the Applicant received an email from the Liquidator stating that the SCC had decided to reject the bid and proceed with a re-tender after conducting a fresh asset
