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NITIN JAIN
(Liquidator of PSL Limited)
Having address at:
E-10A, Kailash Colony
New Delhi - 110048 ...Appellant
Versus
For Appellant: Shri Krishnendu Datta, Sr. Advocate with Mr. Aditya
Gauri, Ms. Varsha Himatsingka, Mr. Amar Vivek, Mr.
Abhinav Tyagi, Mr. Dhananyaja Sud, Mr. Chaitanya
Bansal, Ms. Damini Sreshta and Mr. Shalya Agarwal,
Advocates.
For Respondent: Mr. Ramji Srinivasan, Sr. Advocate with Mr. Kanisk
Khetan and Ms. Shruti Pandey, Advocates for R-1.
Mr. Neeraj Malhotra, Sr. Advocate Ms. Vidhisha Haritwal,
Mr. Nimish Kumar and Ms. Shreya, for EARC.
JUDGMENT
ASHOK BHUSHAN, J:
1. This Appeal has been filed by the Liquidator challenging the Order
process and to refund the EMD and first installment deposited, has been
allowed.
notice for selling the corporate debtor as a going concern. A sale notice
under PMLA Act, 2002 regarding the payment of Rs. 300 Crores
liquidator not to proceed with the sale of the assets of the Corporate
Debtor. Liquidator filed a writ petition no. 3261 of 2021 before the
was fixed for 09th April, 2021. On 09th April, 2021, the Respondent No.
(iv) First installment of Rs. 30 Crores was paid by the Respondent No.1 to
that with effect from 09.10.2021 the Respondent No. 1 is liable to pay
(vii) After order dated 02.12.2021 passed by the ED attaching assets of the
Corporate Debtor, I.A. No. 828 of 2021 was filed by the Respondent
petition no. 3261 of 2021 filed by the liquidator in the Delhi High
Court was heard by High Court on 06th and 07th December, 2021. An
allowed. The Delhi High Court vide its judgment and order dated
effect:
Bench of the Delhi High Court issued notice in the Letter Patent
the Respondent No.1 Lucky Holdings Pvt. Ltd. was impleaded as one of
(ix) In the Letter Patent Appeal, an Application was filed CM No. 9111 of
wishes to exit by withdrawing its bid from the e-auction. The said
(x) An I.A. No. 240 of 2022 was filed by the Successful Auction Bidder
in this Appeal.
4. We have heard Mr. Krishnendu Dutta, Sr. Advocate for the Appellant,
Mr. Ramji Srinivasan, Sr. Advocate for the Respondent No. 1 and Mr. Neeraj
Appellant submits that the Respondent No. 1 failed to deposit the total bid
the Corporate Debtor. In the process sale notice “as is where is”, “as is what
auction fully knowing well about the email dated 25.01.2021 received from
violated the terms and conditions of sale notice and entire amount deserved
division bench of the High Court only noticed the statement on behalf of the
Respondent No. 1 that they wish to withdraw from e-auction. The e-auction
EMD and amount of Rs. 30 Crore deposited as first installment whereas the
Respondent No. 1 having not complied with terms and conditions of the sale
refund of the amount along with interest where as per the sale notice no
No. 1
for the Appellant contends that the Adjudicating Authority did not commit
any error in allowing the Application of Respondent No. 1 vide Order dated
02.11.2022 that is subsequent to approval of the e-auction and the time for
payment of the entire bid having not over by that time the Respondent No. 1
could not be asked to make the payment of balance bid amount. The assets
position to hand over the assets or to complete the sale. The Order dated
start only from 05.10.2021. It is submitted that against the Judgment of the
Delhi High Court dated 15.12.2021, Letter Patent Appeal has been
entertained and Order of status quo has been passed. The sale in favour of
the Respondent No. 1 can never be concluded. The Respondent No. 1 had
therefore made statement before the division bench of the Delhi High Court
auction. Hon’ble High Court having noted the aforesaid fact, the
submits that the liquidator himself has made an application before the High
Court seeking a permission to proceed with the sale of the assets of the
Corporate Debtor which has not been attached by the Order dated
with the sale and liquidator having sold the assets it is clear that the auction
financial creditor has given their consent before the Division Bench for
to sale proceeds.
not deposited the balance bid amount within 90 days from approval of
the e-auction sale, the EMD and the first installment paid deserved to
iii. Whether the Adjudicating Authority while directing for refund of the
along with the interest since as per the terms and conditions of
10. The above three questions being inter related are being taken together.
11. Before we enter into rival submissions of Learned Counsel for the
parties it is relevant to notice sale notice issued for e-auction on 09th April,
2021 and certain terms and conditions of the sale notice. E-auction sale
notice issued has made reference to the Order of the Delhi High Court dated
17th March, 2021 as well as Email dated 25th January, 2021 issued from
the company was ‘as is where is basis’. It is useful to extract following part of
Auction held on 09th April, 2021 and auction was approved on 08.09.2021
Auction Purchaser to make the payment within 30 days from the date of
after 30 days and within 90 days was required to be paid along with interest.
amount. The Successful Bidder has deposited the amount of Rs. 30 Crore as
the First Installment within the time and it was entitled to deposit the entire
balance amount along with interest within 90 days. The most important
event which took place subsequent to the approval of the auction is the
attachment of the assets of the corporate debtor under the PMLA, 2002 by
Act. After attachment of the assets of the corporate debtor it was not within
the power of the liquidator to hand over the assets to the Respondent No. 1
assets of the corporate debtor. The judgment of the Hon’ble Delhi High Court
allowing the writ petition was passed on 15.12.2021 which was after the
expiry of period of 90 days from approval of auction. The Single Judge of the
Delhi High Court has stayed the proceedings before the Adjudicating
Authority of the PMLA Court however said judgment of single judge is under
challenge in the Letter Patent Appeal No. 512 of 2021 before the Division
Bench of the Delhi High Court wherein Interim Order dated 24.12.2021 has
“Issue notice.
Mr. Sidharth Chopra, learned counsel accepts
notice on behalf of the respondent.
Ms. Maneesha Dhir, learned counsel for the
auction purchaser i.e. Lucky Holdings Pvt. Ltd.
and Mr. R.P. Agarwal, learned counsel for the
secured creditors led by Edelweiss Asset
Reconstruction Company Ltd. state that though
their clients were parties before the leared
Single Judge, yet they have not been
impleaded as parties to the present appeal.
13. We may also notice that in the order dated 24.12.2021 statement on
that Successful Auction Purchaser is not making any further payment to the
its bid from the e-auction. Statement was recorded and accepted by the
the Liquidator has filed a writ petition in the Delhi High Court being writ
well as final judgment by the Single Judge was passed and thereafter orders
were passed in LPA. Division Bench of the High Court is clearly seized with
the matter on an Appeal filed by the ED where the High Court has recorded
statement, we are of the view that in view of the orders of the Delhi High
Purchaser wishes to exit, liquidator cannot insist that the auction sale in
02.11.2022.
15. Learned Counsel for the Appellant placed reliance on the terms and
conditions of the e-auction notice which provides for forfeiture of the Earnest
16. There can be no dispute to the clear terms and conditions of the
02.12.2021, the auction purchaser was required to deposit the entire sale
the amount since first installment was deposited within time and the
successful purchaser had 90 days time to deposit the balance amount and
before expiry of 90 days the assets of the corporate debtor were attached. In
Liquidator can neither complete the sale, can issue sale certificate nor can
hand over the assets of the corporate Debtor to the Successful Auction
Purchaser and due to aforesaid event the Application was filed by the
Successful Auction Purchaser to withdraw from auction and for refund of the
Purchaser has genuine case for not proceeding with the deposit of the
balance bid amount due to attachment of the assets of the corporate debtor
on 02.12.2021 as noted above. The 90 days period had not even come to an
considering the submissions of parties has taken the views that as on today
the liquidator is not in a position to hand over the custody of the units of the
corporate debtor for which e-auction was held and the Division Bench of the
High Court on 24.12.2021 has directed parties to maintain status quo. The
Bidder to withdraw from the auction and directed to refund of the amount of
17. Now we come to the submission of Learned Counsel for the Appellant
that Adjudicating Authority ought not to have directed for refund of the
amount along with the interest. Learned Counsel for the Appellant has
referred to the terms and conditions of the E-Auction Sale Notice where it
was contemplated that even in the case of non-approval of the sale by the
said amount refunded to the Successful Bidder. Clause 15.5 of the Terms
18. Even in a case where Successful Auction Bid as going concern is not
approved, Successful Auction Bidder is not entitled for any Interest on the
EMD and 1st Installment. We are of the view that the Successful Auction
Bidder is not entitled for interest on the amount of EMD and First
has issued direction for refund of the EMD and 1st Installment along with
interest.
19. In view of the foregoing discussion, we are of the view that the
Purchaser to withdraw from e-auction and directed for refund of the EMD of
Rs. 5 Crores and 1st Installment of Rs. 30 Crores. We further are of the view
that the direction to refund the amount of Rs. 5 Crores and 30 Crores along
the amount with interest. The rest of the Order of the Adjudicating
Authority including the direction to refund EMD of Rs. 5 Crore and Rs. 30
Basant