In the Matter at hand, Aamrit Designers Ltd. v. Gian Chand Narang Apex Buildsys Ltd. was ordered to be liquidated by the adjudicating authority, which resulted in a notification of an electronic auction for the sale of the debtor. A Sale Licence was given once the winning bidder was determined to be the highest bidder. For the transaction, the appellant requested relief and accommodations. Without granting the desired reliefs, the adjudicating authority dismissed the case, simply giving the ROC one directive: to alter the debtor’s situation from under-liquidated to taking action on the applicant’s claim. The appellant claimed that they had the right to request the proper redress from the concerned department. The order was appealed by the appellant to the NCLAT, who contested the judgement.
Whether a successful bidder in liquidation proceedings is permitted to pray for guidance
Analysis of Court Decision
A division bench of Justice Ashok Bhushan and Justice Naresh Salecha, a technical member of the NCLAT, held that a successful bidder of a sale as a going concern may request any necessary reliefs or concessions from the adjudicating authority in the liquidation proceedings that are commensurate with and in compliance with the conditions and terms of the process document.
The NCLAT has emphasised the significance of the E-Auction Proceeding Documentation for establishing previous obligations when selling a corporate debtor as a continuing concern. The terms and circumstances of the e-auction, comprising all obligations, claims, risks, and previous creditor claims—both known and unknowable—must be expressly stated in the process document. On an application made in accordance with Section 60(5)(c) of the IBC, the Adjudicating Authority may offer the appropriate instructions and explanations. According to the procedure paperwork, the winning bidder would get new equity shares issued in their name once the whole shareholding is written off. The NCLAT allowed the appellant the freedom to submit a request for concessions, directives, or relief for the corporate debtor’s operationalization in line with its procedure document. Only requests for relief or concessions that are consistent with the conditions and rules of the procedure document may be made by the winning bidder.
The NCLAT held that a successful bidder who qualifies as a successful bidder of the auction as going concerned can seek accessibility of the adjudicating authority and can ask for the necessary instructions in accordance with and in accordance with the process document in the liquidation process. The NCLAT awarded autonomy to the applicant to file a fresh application looking for relief that needs concern by the adjudicating authority.
CASE NAME – Asamrit Designers Ltd. v. Gian Chand Narang, CA (AT) (Insolvency) No. 258 of 2023