ORDER

1. The present application has been filed by M/s State Bank of India (hereinafter referred to as the applicant) seeking the following reliefs:

a. Replace the existing Liquidator i.e., Mr. Kari Venkateswarlu and appoint Mr. Madhusudan Rao Gonugunta, IBBI Reg No. IBBI/IPA- 001/IP-P00181/2017-2018/10360 as the new Liquidator;

b. Impose an exemplary cost on the Liquidator for ill-will intention and contravention of rules and regulations of IBC.

2. The application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) filed by M/s. Bay-Forge Private Limited (hereinafter referred as “Operational Creditor”) was admitted on 22.01.2018 against M/s. Nawa Engineers and Consultants Private Limited (hereinafter referred as “Corporate Debtor”) for initiating Corporate Insolvency Resolution Process (“CIRP”).

2.1 The Committee of Creditors (“COC”) in its 6^th meeting on 21.06.2018 decided to liquidate the corporate debtor. As a result, the corporate debtor was placed under liquidation on 10.10.2018 and Mr. Venkateswarlu Kari was appointed as the Liquidator.

2.2 The applicant is the only secured financial creditor of the corporate debtor holding 100% security on all the assets of the corporate debtor. The applicant had relinquished its security in favour of the liquidation estate in accordance with the provisions of the Section 52 of IBC, 2016.

2.3 The liquidation value of the corporate debtor is Rs.10,55,10,420/- (Rupees Ten Crores Fifty Five Lakhs Ten Thousand Four Hundred and Twenty Only) and the liquidator has admitted the claim of the applicant at Rs.23,62,37,466.76 (Rupees Twenty Three Crore Sixty Two Lakhs Sixty Seven Thousand Four Hundred and Sixty Six and Paise Seventy Six Only).

2.4 During February, 2019, the liquidator sold, realized and distributed an amount of Rs.3,01,60,026.56 (Rupees Three Crores One Lakh Sixty Thousand Twenty-Six and Paise Fifty-Six Only) to the applicant.

2.5 For the remaining assets of the corporate debtor, the liquidator conducted auction on 01.03.2019, but refused to confirm the bid of successful highest bidder of certain plant and machinery put up for auction and allegedly cancelled the bid arbitrarily.

2.6 The successful bidder i.e., M/s. Keshan Trading Corporation approached this Authority by filing IA Nos. 181, 334 & 335 / 2019 seeking suitable directions to the liquidator to confirm his bid.

2.7 This Authority vide order dated 09.09.2019 directed the liquidator to issue letter of award in respect of Lot Nos. 1 & 2 in favour of M/s. Keshan Trading Corporation and further directed the registry to send the documents relating to the allegations of bribe against the liquidator to the Insolvency and Bankruptcy Board of India (“IBBI”) for starting appropriate enquiry/action in the matter, if warranted so. Against the said order, the liquidator filed an appeal before the Hon’ble NCLAT and the same is still pending.

2.8 The Disciplinary Committee of the IBBI issued a show cause notice (“SCN”) to the liquidator for violation of Section 208(2)(a) and (e) of the Insolvency and Bankruptcy Code, 2016 read with regulation 33(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”), Clause 12 of Schedule I under Regulation 33(1) of the Liquidation Regulations, Regulation 7(2)(h) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (“IP Regulations”) and Clauses 1, 2 ,3, 5, 9 and 14 of the Code of Conduct as specified in the First Schedule of the IP Regulations.

2.9 The IBBI on 24.05.2022 passed order observing that the liquidator should not have rejected the highest bid in the auction process and has also commented upon his act and conduct. The plea of the liquidator that the highest bid was not accepted because of certain reasons, was rejected and at the same time held that the delay in liquidation took place because of the liquidator. Finally, penalty equal to 25% of the fee was also imposed on the liquidator.