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Karnataka High Court
Insolvency And Bankruptcy Board Of ... vs Mr. Konduru Prashanth Raju on 15 December, 2025
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RP No.557/2023
HC-KAR
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF DECEMBER, 2025
PRESENT
THE HON'BLE MRS. JUSTICE K.S.MUDAGAL
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
REVIEW PETITION NO.557/2023
IN
WRIT PETITION NO.12140/2023
BETWEEN:
INSOLVENCY AND BANKRUPTCY
BOARD OF INDIA,
REPRESENTED BY GENERAL MANAGER,
7TH FLOOR, MAYUR BHAVAN,
CONNAUGHT PLACE,
NEW DELHI-110001. ...PETITIONER
(BY SRI. K. ARVIND KAMATH, SENIOR ADVOCATE FOR
SMT. ANUPAMA HEGDE, ADVOCATE)
Digitally AND:
signed by K S
RENUKAMBA
Location:
1. MR. KONDURU PRASHANTH RAJU
High Court of LIQUIDATOR FOR BASE CORPORATION LTD.
Karnataka HAVING ITS REGISTERED OFFICE AT
FLAT NO. 52, 2ND FLOOR,
NO. 13, LOHAN'S REGENT,
SUNDARMURTHY ROAD,
COX TOWN, BANGALORE - 560005.
2. M/S NDR UNIQUE SPACE PVT LTD
A COMPANY REGISTERED UNDER THE
COMPANIES ACT 1956,
HAVING ITS OFFICE AT 54,
B BLOCK-103,
SREEKARAM APARTMENTS,
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RP No.557/2023
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PALLAVAN NAGAR,
MADHURAVOYAL,
THITUVALLUVAR, CHENNAI,
TAMIL NADU-600095,
REPRESENTED BY ITS
AUTHORIZED REPRESENTATIVE,
MR. NAIDU AMRUTESH REDDY ... RESPONDENTS
(BY SMT. LAKSHMI MENON, ADVOCATE FOR R1
SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR
SRI. M.V. SUNDARA RAMAN, ADVOCATE FOR R2)
THIS REVIEW PETITION IS FILED UNDER SECTION 114 R/W
ORDER XLVII RULE 1 OF THE CPC, 1908, PRAYING TO CALL FOR
RECORDS OF W.P. No.12140/2023, REVIEW THE FINAL ORDER
DATED 15.06.2023 PASSED BY THIS HONBLE COURT IN WP No.
12140/2023 AT ANNEXURE -A AND NATIONAL COMPANY LAW
APPELLATE TRIBUNAL.
THIS PETITION HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON 14.11.2025, COMING ON FOR PRONOUNCEMENT OF
ORDER, THIS DAY, K.S.MUDAGAL.J AND POONACHA.J., MADE THE
FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE K.S.MUDAGAL
and
HON'BLE MR. JUSTICE C.M. POONACHA
CAV ORDER
(PER: HON'BLE MRS. JUSTICE K.S.MUDAGAL &
HON'BLE MR. JUSTICE C.M. POONACHA)
1. The present review petition is filed by Review
Petitioner-Insolvency and Bankruptcy Board of India1 under
Section 114 read with Order XLVII Rule 1 of the Code of Civil
hereinafter referred to as 'IBBI'
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Procedure, 19082 seeking to review the order dated 15.06.2023
passed in WP No.12140/2023 (GM-RES) wherein, a Co-ordinate
Bench of this Court disposed of the writ petition filed by
respondent No.2 [writ petitioner] - M/s NDR Unique Space Pvt
Ltd.,3 and directed respondent No.1 - liquidator [respondent in
the writ petition] to receive the balance sale consideration in
terms of the auction dated 20.03.2023 from NDR. IBBI was not
a party to the writ petition.
2. The admitted fact situation can be stated to be as
under:
i. The Corporate Insolvency Resolution Process4 with
respect to Base Corporation Ltd.,5 was admitted by the
National Company Law Tribunal6 vide order dated
2.8.2019. Pursuant to the CIRP proceedings initiated
against BCL an Interim Resolution Professional7, was
appointed and subsequently confirmed to be the
Resolution Professional8;
hereinafter referred to as 'CPC'
hereinafter referred to as 'NDR'
hereinafter referred to as 'CIRP'
hereinafter referred to as 'BCL'
hereinafter referred to as 'NCLT'
hereinafter referred to as 'IRP'
hereinafter referred to as 'RP'
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ii. An e-auction notice dated 9.9.2021 was issued
under the provisions of the Securitisation And
Reconstruction Of Financial Assets And Enforcement Of
Security Interest Act, 20029 auctioning the immovable
properties belonging to one of the promoters of BCL
located at Hosur, comprising a factory building and
machinery was issued by a creditor of the promoter. The
said property was situated abutting the property of BCL;
iii. BCL, represented by its RP filed IA No.373/2021
before the NCLT seeking to cancel the e-auction notice
dated 09.09.2021 contending, inter alia, that if the said
land was sold without the property of BCL being brought
to sale, the same would depreciate the value of the
property of BCL;
iv. The auction sale, pursuant to the sale notice dated
9.9.2021 was concluded on 19.10.2021 and a sale
certificate dated 16.2.2022 was issued for a total sale
consideration of `10,29,00,000/-;
v. Since the resolution plan was not accepted by the
Committee of Creditors10, an application came to be filed
hereinafter referred to as SARFAESI Act
hereinafter referred to as 'COC'
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for liquidation of BCL, consequent to which the
adjudicating authority/NCLT ordered for liquidation of BCL
vide its order dated 26.4.2022 and appointed respondent
No.1 as the liquidator of BCL. Respondent No.1 conducted
the first Stakeholders Consultation Committee11 meeting
on 14.09.2022;
vi. Respondent No.1 - liquidator issued an e-auction
notice dated 08.11.2022 for sale of the assets of BCL
including the plant and machinery at Hosur. However,
since certain members of the SCC raised objections
regarding the valuation, consequent to which respondent
No.1 issued a corrigendum dated 16.11.2022 withdrawing
the e-auction sale notice dated 08.11.2022;
vii. Vide order dated 5.1.2023, IA.No.373/2021 was
dismissed by the NCLT. Appeal No.73/2023 was filed by
respondent No.1 - liquidator before the National Company
Law Appellate Tribunal12 on 17.2.2023 challenging the said
order dated 5.1.2023;
viii. Respondent No.1 - liquidator issued a fresh e-
auction notice dated 13.2.2023 for sale of the plant and
hereinafter referred to as 'SCC'
hereinafter referred to as 'NCLAT'
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machinery and building of the Hosur unit of BCL as a going
concern, fixing the date of auction as 20.03.2023;
ix. On 20.3.2023 the auction was held in terms of the
auction notice dated 13.2.2023, wherein NDR was the
highest bidder and 25% of the bid amount of
`16,53,50,000/- was deposited by NDR;
x. On 05.04.2023 respondent No.1 - liquidator filed an
application (IA No.218/2023) before the NCLT seeking
confirmation of sale in favour of NDR;
xi. Since the IBBI received a complaint alleging
discrepancies in the e-auction of BCL conducted by
respondent No.1, the IBBI appointed an Investigating
Agency to investigate the said complaint. On 12.04.2023
the Investigating Agency issued a notice of investigation
to respondent No.1 calling upon him to submit his para-
wise reply along with supporting documents with respect
to the complaint made. Respondent No.1 submitted his
reply on 20.4.2023;
xii. The Investigating Agency submitted a detailed
investigation report to IBBI stating, inter alia, that
respondent No.1 had contravened the provisions of the
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Insolvency and Bankruptcy Code, 201613, Insolvency and
Bankruptcy Board of India (Liquidation Process)
Regulations, 201614 as well as the Code of Conduct as
specified in Schedule I of the Insolvency and Bankruptcy
Board of India (Insolvency Professionals) Regulations,
201615. The conclusions of the Investigating Agency were,
inter alia, that the valuator appointed by respondent No.1
to value the property of BCL had expertise only in the
valuation of securities/financial assets categories;
Respondent No.1 failed to reconstitute the SCC and that,
only financial creditors were made constituents of the 4th
and 5th SCC meetings, while operational creditors, such as
workmen, shareholders, etc., did not participate in the
said meetings; Respondent No.1 submitted three progress
reports to the IBBI vide its e-mail dated 14.03.2023 after
being reminded by IBBI vide its e-mail dated 14.3.2023,
while the 4th progress report was not filed; that
respondent No.1 failed to protect and preserve the value
of BCL;
hereinafter referred to as 'IBC'
hereinafter referred to as 'Liquidation Process Regulations'
hereinafter referred to as 'Insolvency Professionals Regulations'
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xiii. The IBBI issued a show cause notice dated
21.4.2023 to respondent No.1 seeking his response as to
why suitable actions should not be taken, which was
replied vide reply dated 2.5.2023. Vide order dated
19.5.2023, IBBI suspended respondent No.1 from the role
of liquidator for a period of two years w.e.f., 30 days from
that date;
xiv. Being aggrieved, respondent No.1 filed
W.P.No.11056/2023 and a learned Single Judge of this
Court vide interim order dated 30.5.2023 stayed the order
dated 19.5.2023 passed by IBBI. Being aggrieved by the
interim order of stay dated 30.5.2023 granted by the
learned Single Judge, IBBI has preferred Writ Appeal
No.982/2023, which is pending consideration;
xv. NDR, who was the highest bidder pursuant to the
auction conducted on 20.3.2023 filed W.P.No.12140/2023.
A coordinate Bench of this Court vide order dated
15.6.2023 (order under review) disposed of the said writ
petition, consequent to which, NDR paid the balance sale
consideration within the stipulated time and respondent
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No.1 issued sale certificate dated 17.6.2023 in favour of
NDR with respect to the auction conducted on 20.3.2023;
xvi. The IBBI filed SLP (Civil) Diary No.30197/2023
challenging the order dated 15.6.2023 passed in
W.P.No.12140/2023 before the Hon'ble Supreme Court,
which was disposed of by order dated 6.9.2023 granting
liberty to IBBI to approach this Court. Thereafter, IBBI
filed the present review petition;
xvii. Respondent No.1 withdrew Appeal No.73/2023,
which was pending before the NCLAT on 26.4.2024;
xviii. The IBBI issued a show cause notice dated
11.07.2024 to respondent No.1, consequent to receipt of
investigation report dated 3.7.2024. Respondent No.1 filed
W.P.No.20276/2024 challenging the show cause notice
dated 11.7.2024 as well as the investigation report dated
03.07.2024. This Court, vide interim order dated
29.07.2024 has stayed the said show cause notice and
investigation report.
3. At this juncture, it is pertinent to note that NDR-
auction purchaser filed W.P.No.12140/2023, contending, inter
alia, that it was the highest successful bidder in the auction
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dated 20.03.2023, wherein the Hosur unit of BCL was auctioned
as a going concern and that NDR had paid 25% of the total bid
amount in a sum of ₹16,53,50,000/-. That the sale of the
assets of BCL was done pursuant to Regulation 32A and 33 of
the Liquidation Process Regulations, wherein Clause 1(12) of
Schedule I states that the highest bidder ought to pay the total
sale consideration within 90 days, failing which the sale was to
be cancelled. Hence, NDR was required to pay the entire sale
consideration within 90 days from 20.3.2023 i.e., on or before
19.06.2023. It was further contended that although NDR had
addressed a letter dated 31.03.2023 to respondent No.1 -
liquidator (respondent in W.P.No.12140/2023) seeking certain
clarifications, the liquidator filed an application under Sections
34 and 60(5) of the IBC on 05.04.2023 seeking permission to
register the sale certificate and convey the property in favour of
the NDR subject to the reliefs and exemptions sought for and
although NDR had filed an affidavit before the NCLT stating its
willingness to purchase the property without any waivers and by
paying the balance sale consideration, no orders were passed by
the NCLT on the said application. Hence, the said writ petition
(W.P.No.12140/2023) was filed seeking for the following reliefs:
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"i) ISSUE a writ of MANDAMUS or any other
appropriate writ directing the Hon'ble National Company
Law Tribunal, Bangalore, to pass orders on I.A.No.218 of
2023 in C.P.No.220 of 2018 on or before 16.06.2023;
ii) DIRECT that the time period to make payment of
the balance sale consideration shall stand extended until
the Hon'ble National Company Law Tribunal passes an
order on I.A.No.218 of 2023 in C.P.No.220 of 2018;
iii) DIRECT that the Petitioner is not liable to pay
interest at the rate of 12% on the balance sale
consideration until the Hon'ble National Company Law
Tribunal passes an order on I.A.No.218 of 2023 in
C.P.No.220 of 2018;
iv) OR IN THE ALTERNATIVE, DIRECT, the Respondent
to receive the balance sale consideration and issue and
register a certificate of sale or sale deed to transfer the
Hosur unit of Base Corporation Ltd in favour of the
Petitioner in terms of Clause 13 of Schedule 1 of the
Insolvency and Bankruptcy Board of India (Liquidation
Process) Regulations, 2016 without reference to I.A.No.218
of 2023 in C.P.No.220 of 2018 or any of the reliefs claimed
thereunder and on the basis of the auction sale notice
dated 13.02.2023;
v) PASS any such other order/s as this Hon'ble Court
may deem fit and proper in the facts of the case in the
interests of justice and equity."
4. Respondent No.1 - liquidator, who was arrayed as a
respondent in the said writ petition, entered appearance and
filed a memo dated 15.6.2023 placing on record various
documents. Considering the same, a coordinate Bench of this
Court, vide order dated 15.6.2023 (order under review)
disposed of the writ petition and passed the following order:
"Heard the learned Senior counsel Sri Dhyan
Chinnappa along with Sri Sundara Raman M V for the
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petitioner. The learned counsel Smt. Lakshmi Menon takes
notice on behalf of the liquidator, the respondent herein.
2. The petitioner is before this Court in a very
peculiar circumstances. Having heard the learned Senior
counsel and the learned counsel Smt. Lakshmi Menon for
the respondent, though we were not initially inclined to
entertain the request of the learned counsel for the
petitioner, but keeping in consideration the predicament
that the parties will be placed in and also the fact that it
would involve re-doing the exercise of bringing about sale
of properties, the writ petition is taken up for disposal on
concession made by the petitioner and the consent of the
learned counsel for the respondent.
3. The facts are not in dispute. One Base
Corporation Limited was treated as a Corporate Debtor and
the CIRP proceedings came to be initiated by the NCLT on
02.08.2019 and as the resolution plans did not find favour
with the NCLT, the application for liquidation of the
Corporate Debtor came to be allowed on 26.04.2022 and at
which time the respondent was appointed as the
liquidator. Consequently the assets of the Corporate Debtor
including the asset at Hosur was put up for e- auction
under the sale notice published on date 13.02.2023. The
date of e-auction was fixed as 20.03.2023. Pursuant to the
same the petitioner turned out as the highest bidder and in
terms of the conditions of auction 25% of said amount i.e.
totaling to Rs.16,53,50,000/- was deposited and the sale
was to be concluded within 90 days thereafter. It appears
that the petitioner thereafter entertained certain doubts
and also sought for certain clarifications/concessions from
the respondent liquidator, which resulted in the respondent
liquidator filing an application with the NCLT for clarification
of the same.
4. It is submitted that the said application is
pending and the NCLT has been adjourning the same and
there being no resolution the petitioner is constrained to
approach this Court or otherwise he is likely to lose the
sum of Rs.16 crore and odd deposited by him for not
having completed the sale process within the stipulated
time as noted supra.
5. It is his case that the liquidator having filed the
application on his instance is now reluctant to abide by the
conditions of sale as the liquidator is apprehensive about
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the reaction of the NCLT bench in trying to comply with the
sale conditions. It is submitted that, after the 18th of June,
the application would be rendered infructuous.
6. We have queried the learned counsel
representing the respondent. Learned counsel for the
respondent fairly concedes that in terms of the auction sale
conditions, the sale is to be concluded within 90 days and
the last day falls on 18.06.2023. Though the reluctance is
bonafide and in deference to the application pending before
the NCLT it is stated that, if directed the respondent has no
objection to receive the balance sale consideration.
7. The learned Senior counsel on instructions of
his client, who is present in the Court, submits that the
balance amount due in entirety would be paid into or
transferred into the liquidator's account by tomorrow. It is
further submitted by the learned Senior counsel that the
petitioner would not be making any demands for any
concessions and that he would abide by the conditions
imposed under the e-auction notice.
8. The submission of the learned Senior counsel is
placed on record. The learned counsel for the respondent
liquidator submits that she is willing to receive the amounts
as stipulated as per the letter of intent dated 20.03.2023.
Copy of the letter of intent is also placed before this Court
by the respondent and the same is taken on record.
9. We have perused the conditions. Clause 11 and
14 would indicate that the petition is not baseless. Be that
as it may, the present situation is of the making of the
petitioner himself which has resulted in expending valuable
judicial time. Hence, we are of the considered opinion that
the instant writ petition can be disposed of by directing the
respondent to receive the balance sale consideration, if the
same is made within 18.06.2023, subject to payment of
cost.
10. Accordingly there shall be a direction directing
the respondent to receive the balance sale consideration if
the same is made by the petitioner on or before
18.06.2023.
11. In the event payment is not made within the
stipulated date i.e., 18.06.2023, then the petitioner shall
not have the benefit of this order.
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12. In view of our above observation, learned
Senior counsel on behalf of the petitioner submits that the
petitioner volunteers to deposit a sum of Rs.2,00,000/-
(Rupees Two Lakh only) into the account of the Karnataka
State Legal Services Authority. That the deposit shall be
made within two weeks.
13. It is made clear if the balance sum as indicated
in the letter of intent is deposited within the stipulated
date, the liquidator shall issue a sale certificate within a
week thereafter.
14. Petition stands ordered accordingly."
5. It is forthcoming that this Court considered the
submissions of NDR that since the sale was required to be
concluded within 90 days; that NDR had undertaken to pay the
entire amount into the account of the liquidator without making
any demands for any concessions and that the auction
purchaser would abide by the conditions imposed under the e-
auction; also noticed that the liquidator was willing to receive
the amounts in terms of the letter of intent dated 20.3.2023,
which was issued to the auction purchaser after he was declared
as the highest bidder in the auction held on 20.3.2023. Hence,
the writ petition was disposed of by directing the liquidator to
receive the balance sale consideration.
6. Pursuant to the said order dated 15.06.2023, passed
in WP.No.12140/2023, NDR paid the balance sale consideration
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of `49,64,50,000/- along with the interest on 16.06.2023 and
respondent No.1 - liquidator issued a sale certificate dated
17.06.2023 in favour of NDR confirming the sale of the Hosur
property of BCL.
7. IBBI preferred SLP (Civil) Dairy No(s).30197/2023
before the Supreme Court challenging the order dated
15.06.2023 passed in WP No.12140/2023. The Supreme Court,
vide order dated 06.09.2023 dismissed the said petition as
withdrawn and passed the following order:
"Learned counsel for the petitioner - Insolvency
and Bankruptcy Board of India seeks permission to
withdraw the present special leave petition with liberty
to approach the High Court by way of application for
review/recall.
In view of the statement made, the special leave
petition is dismissed as withdrawn.
We also record that the petitioner- Insolvency and
Bankruptcy Board of India will be entitled to challenge
the order dated 15.06.2023, in case the application for
review/recall is dismissed.
We clarify that we have not made any
comments/observations on the merits of the case."
8. Thereafter, the present review petition is filed.
9. Learned Senior Counsel Sri Arvind Kamath appearing
along with learned counsel Smt. Anupama Hegde, for IBBI
contends:
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i. That by virtue of the order dated 15.6.2023 (order
under review) wherein respondent No.1 - liquidator did not
oppose the request made by NDR, the acceptance of the
balance amount by the liquidator from NDR pursuant to
the order dated 15.6.2023 resulted in a situation where
there was no maximization of the value of the assets of
BCL in liquidation;
ii. That NDR and liquidator did not disclose the true and
correct facts before this Court in W.P.No.12140/2023, as a
result of which the order dated 15.06.2023 is liable to be
reviewed;
iii. That if the true and correct facts were placed on
record by the parties in WP No. 12140/2023, this Court
would not have passed the order dated 15.06.2023;
iv. IA.No.373/2021 was filed by the then RP, who was
the predecessor of respondent No.1 - liquidator to cancel
the e-auction dated 19.10.2021 auctioning the immovable
property of the promoter of BCL, which was conducted
under the provisions of the SARFAESI Act. That the said IA
No.373/2021 was dismissed by the NCLT vide order dated
05.01.2023. Being aggrieved, respondent No.1 - liquidator
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preferred an appeal in CA(AT)(INS) No.73/2023 on
15.02.2023, before NCLAT. The respondent No.1 issued
sale notice dated 13.02.2023 for sale of the assets of BCL
including the land at Hosur, wherein NDR was the highest
bidder. Hence, it is contended that respondent No.1,
having filed the appeal before the NCLAT ought not to
have brought the property of BCL at Hosur for auction,
which resulted in the assets of BCL being sold for a price
far below than the price that it ought to have fetched;
v. That various provisions of the IBC as well as the
Insolvency and Bankruptcy Board of India (Inspection and
Investigation) Regulations, 201716 have been referred, to
contend that IBBI is empowered to interfere in the present
situation, more particularly, when the object of the IBC,
i.e., maximization in the value of assets has not been
achieved due to the actions of respondent No.1;
vi. That due to the irregularities committed by
respondent No.1, a show cause notice dated 21.4.2023
was issued for alleged contravention of various provisions
of the Liquidation Process Regulations as well as the
Insolvency Professionals Regulations. Being aggrieved,
hereinafter referred to as 'Inspection & Investigation Regulations'
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respondent No.1 referred W.P.No.11056/2023 and this
Court vide order dated 30.05.2023 has granted stay of the
order dated 19.05.2023 passed by the disciplinary
committee, which was enquiring into the actions of
respondent No.1. That, being aggrieved by the stay
granted in W.P.No.11056/2023, IBBI has preferred
W.A.No.982/2023 before a coordinate Bench of this Court.
It is thus contended that respondent No.1 had not referred
regarding the pendency of W.P.No.11056/2023 in
W.P.No.12140/2023. That since respondent No.1 was
carrying out its functions merely on account of the stay
having been granted by a learned Single Judge of this
Court in W.P.No.11056/2023, respondent No.1 ought not
to have proceeded to issue the sale notice dated
13.02.2023.
10. Hence, it is contented that the relief sought for in
the review petition ought to be granted and the order dated
15.06.2023 passed in WP No.12140/2023 (GM-RES) is required
to be reviewed/recalled.
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11. Learned counsel Smt. Lakshmi Menon appearing for
respondent No.1 - liquidator submits as under:
i. That IBBI has no locus standi to file the review
petition in order to question the order dated 15.06.2023
(order under review) since IBBI has no role to play in the
liquidation process;
ii. That by virtue of Regulation 31A of the Liquidation
Process Regulations, the liquidator is bound to complete
the liquidation process in a time-bound manner and is
bound only by the instructions of the SCC;
iii. All facts have been brought on record before this
Court in W.P.No.12140/2023 and the allegation that there
has been suppression of facts by respondent No.1 -
liquidator is vehemently contested;
iv. The SCC as well as the adjudicating authority, which
is the NCLT have not found fault or any irregularity in the
sale process conducted by respondent No.1 pursuant to
the auction notice dated 13.02.2023 and hence, IBBI has
no locus standi to question the same;
v. Even if the factum regarding the pendency of the
appeal before the NCLAT where the order dated
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05.01.2023 passed on IA No.373/2021 was challenged,
was placed on record in W.P.No.12140/2023, the same
would not have resulted in a different order, as has been
passed vide order dated 15.06.2023 (order under review);
vi. That respondent No.1 - liquidator has followed the
requisite procedure and has complied with all the
stipulations under the IBC during the liquidation process;
vii. That since an interim order of stay was granted by a
learned Single Judge of this Court vide order dated
30.5.2023 passed in W.P.No.11056/2023, there was no
impediment for respondent No.1 - liquidator to proceed
further with the liquidation process and hence, there was
no wrong doing on the part of the liquidator in accepting
the balance sale consideration and issuing the Sale
Certificate so as to complete the sale process pursuant to
the auction sale notice dated 13.02.2023.
12. Hence it is contended that IBBI is not entitled to the
relief sought for in the review petition.
13. Learned Senior Counsel Sri Dhyan Chinnappa
appearing along with learned counsel Sri M.V.Sundara Raman
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for NDR adopts the submissions of the learned counsel for
respondent No.1 with regard to the locus standi of IBBI and its
role to interfere with the insolvency process. In addition, it is
contended:
i. That the sale of the property pursuant to the sale
notice dated 13.02.2023 has been completed and
admittedly, NDR having been the highest bidder has, paid
the bid amount, consequent to which the Sale Certificate
dated 17.06.2023 has been issued. That NDR has also
been put in possession of the property purchased by it
vide Possession Letter dated 19.06.2023;
ii. That NDR, consequent to having purchased the said
property, has availed various credit facilities from banks
and financial institutions and has developed the property
purchased by it and is running its business of carrying out
warehousing activities in the said property;
iii. There is no suppression of facts either by NDR or by
respondent No.1 - liquidator in W.P.No.12140/2023 and
that all the relevant facts have been placed on record;
iv. That by virtue of the order dated 15.06.2023 (order
under review), rights of the parties have not been
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adjudicated upon and this Court merely permitted NDR to
pay the balance amount within the stipulated time in
terms of the sale notice dated 13.02.2023;
v. That NDR has participated in the e-auction notice
dated 13.2.2023, wherein the NDR being the highest
bidder has merely complied with all the rules and
regulations of the auction process.
14. Hence, the learned counsel seeks for dismissal of the
review petition.
15. In response to the submissions made on behalf of
the respondents, it is sought to be contended on behalf of IBBI
that the fact that respondent No.1 and NDR are ad idem in their
opposition to the review petition itself demonstrates the
wrongdoing in the insolvency process conducted by respondent
No.1 and more particularly, wrongdoing in the sale conducted by
respondent No.1 vide sale notice dated 13.02.2023, under which
NDR has acquired right, title and interest in the property
purchased by it.
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16. The assertion made by IBBI alleging wrongdoing by
respondent No.1 along with NDR, is vehemently contested by
the respondents.
17. Various judgments/citations have been relied upon
by the learned counsels for the parties in the course of their
submissions, which shall be referred, to the extent that the
same is required for the purpose of adjudicating upon the
question that falls for consideration in the present review
petition. The questions that would arise are:
i) Whether IBBI has locus standi to file the
present petition?
ii) Whether the order dated 15.06.2023 passed in WP
No.12140/2023 (GM-RES) is liable to be reviewed?
Reg. question No.(i):
18. In this context, it is pertinent to note that the
present review petition is filed under Section 114 read with
Order XLVII Rule 1 of the CPC. It is a settled proposition of law
that a review petition will lie only if the order under review is
passed by the Court having exercised the jurisdiction not vested
in it by law; if the Court failed to exercise jurisdiction; or the
Court has acted in exercise of its jurisdiction illegally or with
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material irregularity. Further, IBBI is required to demonstrate
that there was a mistake or error apparent on the face of the
record.
19. Before considering the contentions put forth by the
learned counsels, it is necessary to notice the relevant statutory
provisions of the IBC:
i. The IBC has been enacted to "consolidate and
amend the laws relating to reorganization and
insolvency resolution of corporate persons,
partnership firms and individuals in a time bound
manner for maximization of value of assets of such
persons, to promote entrepreneurship, availability of
credit and balance the interests of all stakeholders
including ........... ".
ii. Section 3(1) defines the 'Board' as the IBBI
established under Section 188;
iii. Section 196 enumerates powers and functions of the
IBBI. Sub-section (1)(aa) of Section 196 stipulates
that the IBBI may, inter alia, "regulate, the working
and practices of insolvency professionals, insolvency
professional agencies, .....";
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iv. Section 217 stipulates that a complaint may be
made to the IBBI regarding the functioning of an
Insolvency Professional or Agency;
v. Section 218 enables the IBBI to appoint a person/s
to act as an investigating authority to conduct an
inspection or investigation of the insolvency
professional/agency;
vi. Section 219 of the IBC permits the IBBI to issue a
show cause notice;
vii. Section 220 enables the IBBI to constitute a
disciplinary committee vis-à-vis action proposed to
be taken pursuant to a report of investigation
conducted under Section 218;
viii. Chapter II (Sections 6 to 32A) stipulates regarding
CIRP; and Chapter III (Sections 33 to 54) stipulates
regarding liquidation process;
ix. Section 33 stipulates as to when a liquidation should
be initiated which, inter alia, contemplates
liquidation be initiated if there is violation of a CIRP;
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x. Section 34 deals with appointment of a liquidator
and Section 35 enumerates the powers and duties of
the liquidator;
xi. Section 36 deals with liquidation estate; Sub-section
(2) of Section 36 specifically stipulates that the
"liquidator shall hold the liquidation estate as a
fiduciary for the benefit of all the creditors"; Sub-
section (3) of Section 36 stipulates as to what
comprises the liquidation estate;
20. Liquidation Process Regulations deals with various
stages of the liquidation process as contemplated under Chapter
III of the IBC. The following provisions of the Liquidation
Process Regulations are required to be noticed:
i. Chapter V (Regulations 16 to 31A) deals with claims
during the liquidation process;
a. Regulation 16 deals with submissions of
claims;
b. Regulations 17 to 20 deal with claims by
various persons;
c. Proof of a claim is stipulated under Regulations
21 to 29;
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d. Regulation 31 stipulates that a liquidator shall
prepare a list of stakeholders, category-wise on the
basis of proof of claims submitted and accepted.
Regulation 31A stipulates that "the liquidator shall
constitute a Consultation Committee consisting of
Creditors of the Corporate Debtor within 60 days
from the liquidation commencement date based on
the list of stakeholders permitted under Regulation
31", which consultation committee is known as the
SCC;
ii. Chapter VI (Regulations 32 to 40) deals with
realization of assets;
a. Regulation 35 contemplates valuation of assets
or business intended to be sold in the liquidation
process;
b. Regulation 32 specifies regarding sale of
assets;
c. Regulation 33 specifies regarding mode of
sale;
d. Regulation 36 contemplates preparation of an
asset sale report;
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e. Regulation 32A contemplates sale as a going
concern;
f. Regulation 32B contemplates conduct of
meetings of the Consultation Committee wherein, it
is stated the stipulation contained regarding the
meetings of the COC during the CIRP proceedings
shall apply mutatis mutandis to the meetings of the
consultation committee i.e., SOC (during the
liquidation proceedings)
21. With regard to the contention of locus standi raised
by the respondents, it is pertinent to note that one of the
functions of IBBI as enumerated in Section 196 of the IBC is as
stipulated in sub-section (1)(aa) which is to regulate, the
working and practices of Insolvency Professionals, Insolvency
Professional Agencies, etc. Further, Section 217 of the IBC
stipulates that a complaint can be made to the IBBI regarding
the functioning of an Insolvency Professional or Agency. Section
218 enables the IBBI to carryout an investigation with regard to
the complaint. Sections 219 and 220 of the IBC also enable the
IBBI to issue a show cause notice and constitute a disciplinary
committee pursuant to the report of investigation. It is clear
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that the provisions of the IBC as noticed above amply empower
the IBBI to take such action as may be necessary vis-à-vis the
functioning of an Insolvency Professional/ Liquidator. Hence, it
cannot be held that the petitioner has no locus standi to file the
present review petition. Accordingly, question No.(i) framed for
consideration is answered in the Affirmative.
Reg. question No.(ii):
22. IA.No.373/2021 filed by the RP, inter alia, seeking
for setting aside of the e-auction notice dated 9.9.2021 issued
under the provisions of the SARFAESI Act was dismissed by the
NCLT, vide order dated 5.1.2023. Subsequently, pursuant to a
member of the SCC advising respondent No.1 - liquidator to file
an appeal, Appeal No.CA(AT)(INS)73/2023 was filed by the
liquidator before the NCLAT. In the meanwhile, in the 4th SCC
meeting held on 9.2.2023, the discussion regarding the sale of
the property of BCL took place, wherein the valuation report of
the said assets was discussed. It was noticed that the fair
market value was `1,04,59,21,905/- and the liquidation value
was `76,54,96,450/-. It was decided that the e-auction be
conducted by getting the fair market value. The
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process/manner of e-auction was also discussed and agreed
upon. In the 5th SCC meeting held on 28.3.2023, the action
taken by the liquidator with regard to sale of the property of BCL
was noticed and it was also noticed that in the auction
conducted on 19.10.2021 the highest bidder (NDR) had quoted
a sum of `66,18,00,000/- with respect to the unit of BCL at
Hosur, which was auctioned as a going concern. A sum of
`16,53,50,000/- was deposited in terms of the said auction.
The balance sale consideration of `49,64,50,000/- was to be
paid within 30 days from 20.3.2023. It was placed on record of
the said meeting the request made by the bidder. In the 13th
meeting of the SCC held on 18.3.2024, it is noticed that the
aspect regarding the appeal filed before the NCLAT was
discussed. Subsequently, vide order dated 26.4.2024 the
appeal before the NCLAT was dismissed as withdrawn. In the
17th meeting of the SCC held on 22.7.2024 the action regarding
withdrawal of the appeal pursuant to the 13th SCC meeting was
noticed, as also the withdrawal of the said appeal on 26.4.2024
and the consent of the SCC was accorded to the same.
23. It is also pertinent to note here that in
W.P.No.12140/2023 filed by the NDR, respondent No.1 -
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liquidator had filed a memo dated 15.06.2023 placing on record
various documents as under:
1. Memo producing documents submitted by the
Respondent.
2. Document No.1: A copy of the e-auction process
information document.
3. Document No.2: A copy of the e-auction notice dated
13.02.2023.
4. Document No.3: A copy of the BDF dated 27.02.2023
and other documents submitted by the Petitioner.
5. Document No.4: A copy of the Bank Statement of
Base Corporation Ltd. for the period from 14.02.2023 to
13.03.2023.
6. Document No.5: A copy of the minutes of 4th
Stakeholders' Committee Meeting.
7. Document No.6: A copy of NCLT order dated
11.04.2023 in CP (IB) No.11/BB/2018.
8. Document No.7: A copy of NCLT order dated
01.06.2023 in CP (IB) No.11/BB/2018.
9. Document No.8: A copy of the Minutes of 5th
Stakeholders' Committee Meeting.
10. Document No.9: A copy of the order of the
Disciplinary Committee of the IBBI dated 19.05.2023.
11. Document No.10: Daily orders and interim order
dated 30.05.2023 by the Hon'ble Single Judge, High Court
of Karnataka in W.P.No.11056/2023.
12. Document No.11: A copy of e-auction sale notice
timelines under IBC 2016 dated 13.02.2023.
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24. NDR has also contended that pursuant to it being the
highest bidder in the auction conducted 20.03.2023, it paid the
total sum of ₹16,53,50,000/- in two instalments on 13.03.2023
and 24.03.2023 which amounted to approximately 25% of the
total bid value. Thereafter, NDR addressed the letter dated
31.03.2023 to respondent No.1 - liquidator seeking certain legal
clarifications relating to stamp duty in connection with the
purchase of the said auctioned property (Hosur property) as a
going concern and respondent No.1 indicated that NDR is
required to seek the approval of the NCLT. NDR was required to
pay ₹ 49,64,50,000/-, being the balance sale consideration at
the time of execution of the sale deed.
25. Respondent No.1 - liquidator filed I.A.No.218/2023
before the NCLT seeking permission to register the sale
certificate and conveyance the auctioned property in favour of
NDR. The said application was listed before the NCLT on
01.06.2023, wherein NDR entered appearance, filed an affidavit
stating that it is willing to purchase the property without any
waivers and by paying the balance sale consideration and
sought for completion of the sale. Both respondent No.1 -
liquidator and NDR auction purchaser jointly prayed for the
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application to be allowed and also informed the NCLT of the
urgency to dispose of the application having regard to the
timeline of the completion of the same, despite which the said
application was not considered. In the said context, NDR filed
the writ petition (WP No.12140/2023).
26. It is placed on record by NDR that consequent to the
order dated 15.06.2023 passed in WP No.12140/2023, NDR paid
the balance sale consideration along with interest on 17.6.2023
and respondent No.1 issued a sale certificate on 17.6.2023
conveying the property as also issued a possession certificate.
It is also stated that consequent to the purchase of the property,
NDR has developed the said property by availing loans in a
cumulative sum of `1,70,00,00,000/-. The loan sanction letters
have also been placed on record. It is also stated that the
property, which was in a dilapidated and neglected condition has
been repaired, refurbished and developed and NDR is carrying
on its business of providing warehousing business on the said
property.
27. It is clear that consequent to the e-auction dated
20.03.2023 conducted by respondent No.1, third party rights
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have been created in respect of the Hosur property of BCL,
which was the subject matter of the said e-auction.
28. Regulation 44 of the Liquidation Professionals
Regulations stipulates that the liquidation process is required to
be completed within a period of one year. Further, Regulation
31A of the Liquidation Professionals Regulations stipulates that
the liquidator shall constitute a SCC, which has been done in the
present case. Further, as noticed above, the liquidator has
placed all the aspects pertaining to the sale of the assets of BCL
before the SCC and suitable decisions have been taken by the
SCC periodically. The entire process of the sale of the property
of BCL was being done by the liquidator in terms of the decisions
taken by the SCC. It is also pertinent to state here that at no
point of time, the SCC had passed any resolution for
changing/replacing the liquidator.
29. In this context, it is relevant to notice the judgment
of the Hon'ble Supreme Court relied upon by the learned counsel
for respondent No. 1 in the case of State Bank of India &
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Ors., vs Consoritum of Murari Lal Jalan & Florian Fritsch &
anr.,17 wherein it has been held as under:
"27. SBI has stated that the lenders have been saddled
with huge recurring expenditure every month to maintain
the remaining airline assets of the corporate debtor. The
lenders have been embroiled in litigation before NCLT
and NCLAT with little progress on this ground towards
implementing the resolution plan. Such a state of affairs
cannot be permitted to continue interminably as it defeats
the very object and purpose of the provisions of and
timelines under the IBC. The timely resolution of insolvency
cases is vital for sustaining the effectiveness and credibility
of the insolvency framework. Therefore, concerted efforts
and decisive actions are imperative to break the deadlock
and ensure the expeditious implementation of the resolution
plan."
(emphasis supplied)
30. It is also pertinent to notice the judgment of the
Hon'ble Supreme Court relied upon by the learned counsel for
respondent No.1 in the case of Kridhan Infrastrcuture (P)
ltd., v. Venkatesan Sankaranarayan18 wherein it has been
held as under:
"11. The appellant has been unable to raise the
funds. The fact of the matter, as it emerges from Mr
Viswanathan's submissions, is that the appellant will be
unable to raise funds from the term lenders who are
insisting that the status of the Company should change
from a company under liquidation to an active status.
The order of liquidation has not been set aside.
Ultimately, what the request of the appellant reduces
itself to, is that it would raise funds on a mortgage of the
(2024) 8 SCC 1
(2021) 6 SCC 94
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assets of the Company and unless the Company is
brought out of liquidation, it would not be in a position to
raise the funds. This is unacceptable. At this stage, the
order of liquidation has only been stayed, but a final view
was, thus, to be taken by this Court. Sufficient
opportunities were granted to the appellant earlier during
the pendency of the proceedings both before the NCLT
and NCLAT. The orders of the NCLT and NCLAT make it
abundantly clear that despite the grant of sufficient time,
the appellant has not been able to comply with the terms
of the resolution plan. Since 9-10-2020, despite the
passage of almost five months, the appellant has not
been able to deposit an amount of Rs 50 crores. Time is
a crucial facet of the scheme under IBC [Innoventive
Industries Ltd. v. ICICI Bank19. To allow such proceedings
to lapse into an indefinite delay will plainly defeat the
object of the statute. A good faith effort to resolve a
corporate insolvency is a preferred course. However, a
resolution applicant must be fair in its dealings as well.
The appellant has failed to abide by its obligations. In
that view of the matter, we see no reason or justification
to entertain the civil appeal any further. The
consequence envisaged under the order of this Court
shall accordingly ensue in terms of the forfeiture of the
amount of Rs 20 crores. As a consequence of this order,
the management shall revert to the liquidator for taking
steps in accordance with law. The civil appeal is
accordingly dismissed".
(emphasis supplied)
31. With regard to the contention put forth on behalf of
IBBI that due to the action of respondent No.1 - liquidator, the
sale of the assets of the BCL has not fetched the maximum
value, it is pertinent to note that in terms of Regulation 31A of
(2018) 1 SCC 407, paras 12-16 : (2018) 1 SCC (Civ) 356
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the Liquidation Process Regulations, the liquidator is required to
constitute a SCC and in terms of Regulation 32B, conduct
periodical meetings of the SCC, wherein appropriate decisions
will be taken with regard to the sale of the assets. Further, the
liquidator, in terms of Section 35 of the IBC, shall apply to the
adjudicating authority (NCLT) for appropriate orders regarding
sale of the assets of the Corporate Debtor in liquidation. The
SCC and the adjudicating authority (NCLT) have not found any
error or wrongdoing in the sale process as conducted by
respondent No.1 - liquidator. Even the roles of the adjudicating
authority (NCLT) as well as the appellate authority (NCLAT) are
clearly defined. In this context, it is pertinent to notice the
judgment of the Hon'ble Supreme Court relied upon by the
learned counsel for respondent No.1 in the case of
R.K.Industries (Unit-II) LLP vs. H.R.Commercials Pvt.Ltd.
and ors.,20 wherein it has been held as under:
"79. The powers vested in and the duties cast upon the
liquidator have been made subject to the directions of
the adjudicating authority (NCLT) under Section 35
IBC. Once the liquidator applies to the adjudicating
authority (NCLT) for appropriate orders/directions,
including the decision to sell the movable and
immovable assets of the corporate debtor in liquidation
by adopting a particular mode of sale and the
adjudicating authority (NCLT) grants approval to such a
decision, there is no provision in IBC that empowers
(2024) 4 SCC 166
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the appellate authority (NCLAT) to suo motu conduct a
judicial review of the said decision. The jurisdiction
bestowed upon the adjudicating authority (NCLT) and
the appellate authority (NCLAT) are circumscribed by
the provisions of IBC and borrowing a leaf from Essar
Steel India Ltd. (CoC) v. Satish Kumar Gupta21 , they
cannot act as a court of equity or exercise plenary
powers to unilaterally reverse the decision of the
liquidator based on commercial wisdom and supported
by the stakeholders. The Court has also observed in the
captioned case that "from the legislative history, there
is contra-indication that the commercial or business
decisions of the financial creditors are not open to any
judicial review by the adjudicating authority or the
appellate authority". A similar reasoning has prevailed
with the respondent in K. Sashidhar v. Indian Overseas
Bank22, AMTEK Auto Ltd. (CoC) v. Dinkar T.
Venkatasubramanian , Kalpraj Dharamshi v. Kotak
Investment Advisors Ltd.24, Ghanashyam Mishra & Sons
(P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.25
and Jaypee Kensington Boulevard Apartments Welfare
Assn.,26.
80. The aforesaid view will apply with equal force to
any commercial or business decision taken by the
liquidator for conducting the sale of the
movable/immovable assets of the corporate debtor in
liquidation. The appellate authority cannot don the
mantle of a supervisory authority for overseeing the
validity of the approach of Respondent 2 liquidator in
opting for a particular mode of sale of the assets of the
corporate debtor."
(emphasis supplied)
(2020) 8 SCC 531
(2019) 12 SCC 150
(2021) 4 SCC 457
(2021) 10 SCC 401
(2021) 9 SCC 657
(2022) 1 SCC 401
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32. It is clear from the aforementioned that the
commercial decisions of respondent No.1 - liquidator are
governed by the requisite decisions taken in the SCC as well as
the appropriate orders passed by the adjudicating authority
(NCLT). Although, the IBBI has a supervisory role in terms of
sub section 1(aa) of Section 196 of the IBC, to regulate the
working and practices of Insolvency Professionals, the IBC and
the Regulations clearly demarcate the scope of the decision
making process of the liquidator, which is subject to overview by
the SCC and the adjudicating authority (NCLT). In the absence
of any interjection to the sale process by the SCC or the
adjudicating authority (NCLT), it is not open for this Court to
intervene in the same in the present review petition.
33. The contention of the petitioner that if all the
material were placed on record in W.P.No.12140/2023, the
order dated 15.6.2023 would not have been passed, does not
deserve acceptance having regard to the admitted position that
respondent No.1 in the Memo dated 15.6.2023 filed in the said
W.P.No.12140/2023 had placed all the relevant records
including a copy of the stay order dated 30.5.2023 passed in
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W.P.No.11056/2023, which had stayed the show cause notice
and investigation report.
34. It is further pertinent to note that vide the order
under review, this Court merely permitted the sale proceedings
to be completed in terms of the sale notice dated 13.2.2023 and
no adjudication of the rights of the parties was made vide the
order under review.
35. Although, it is the vehement contention on behalf of
the petitioner that there is suppression of material facts and
fraud has been played, which is a good ground for a review as
also that the fraud vitiates all acts and various judgments have
been relied upon in support of the said contention, as noticed
above, the relevant material with regard to the auction as also
the proceedings initiated against respondent No.1 - liquidator
was placed on record in W.P.No.12140/2023.
36. In the aforementioned circumstances, the petitioner
has not made out any ground to review the order dated
15.6.2023 passed in W.P.No.12140/2023. Accordingly, question
No.(ii) framed for consideration is answered in the Negative.
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37. We clarify that this order shall not come in the way
of any action initiated by IBBI against respondent No.1.
38. Subject to the aforesaid observations, the present
review petition stands dismissed.
Pending IAs stand disposed of.
Sd/-
(K.S.MUDAGAL)
JUDGE
Sd/-
(C.M. POONACHA)
JUDGE
ND /List No.: 1 Sl No.: 1
