National Company Law Appellate Tribunal
Startree Retailors Private Limited vs Mr. Anil Kumar Birla on 17 August, 2022
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
I.A. No. 121 of 2021
in
Company Appeal (AT) (CH) (INS) No. 49 of 2021
&
Company Appeal (AT) (CH) (INS) No. 49 of 2021
In the matter of:
Startree Retailors Private Limited
Having its Registered Office at
217, A.J.C. Bose Road, Ground Floor,
Wing A, Kolkata - 700017,
West Bengal, India ..... Applicant/
Appellant
v
Mr. Anil Kumar Birla,
Liquidator of Ennore Coke Limited,
`Maheswari & Associates',
Chartered Accountants,
`Park Plaza', 1st Floor, No. 1 Park Road,
Bangalore - 560051
Also at C/o. Sumedha Management
Solutions Pvt. Ltd. Ideal Plaza,
S-405, 4th Floor, 11/1, Sarat Bose Road,
Kolkata - 700020. ..... Respondent No.1/
Respondent No.1
M/s. Linkstar Infosys Private Limited,
(Through Mr. Dixit Prajapati Himmatlal,
Director),
9/C, Vardan Exclusive,
Near Vitthalbhai Patel Colony,
Near Lakhudi Talavadi, Navrangpura,
Ahmedabad, Gujarat - 380014. ..... Respondent No.2/
Respondent No.2
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 &
Comp. App (AT) (CH) (INS) No. 49 of 2021
Page 1 of 88
Mahalaxmi Wellman Fuel LLP,
(Through Mr. Naveen Kumar Gupta,
Director), 5th Floor, Cube Building,
G.S. Road, Christian Basti, Guwahati,
Kamrupm, Assam - 781005. ..... Respondent No.3/
Respondent No.3
Present:
For Appellant : Mr. Arun Kathpalia, Senior Advocate
For Mr. Jishnu Chowdhury, Advocate
For Respondent No.1 : Mr. Vishnu Mohan, Advocate
For Respondent No.2 : Mr. Atul Sharma, Advocate
For Respondent No.3 : Mr. Abhrajit Mishra, Senior Advocate
For Mr. S. Karunamoorthy, Advocate
ORDER
(Virtual Mode) Justice M. Venugopal, Member (Judicial):
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021:
According to the Applicant/Appellant, it seeks leave of this `Tribunal' in I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 to rely on the pleadings, in regard to the subject matter of the instant proceedings. The Appellant/Applicant had engaged KPMG Assurance and Consulting Services LLP (`KPMG') for the ambit of work Viz., (i) in reviewing the documents and electronically stored information available with the client, as regards the `Auction' and `Bidding Process', I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 2 of 88
(ii) in reviewing the documents given by the Liquidator, as part of the ongoing `litigation process', (iii) in reviewing the supporting documentation, logs and metadata to identify potential instances of bid rigging or manipulation in the auction process (iv) to perform document review procedures and attempt to identify misrepresentation, if any. (v) in reviewing the System general `Auction Logs', `User Logs' and analysis of all relevant Data generated from `Auction Website' and (vi) to provide a `Fact Finding Report Basis Review' conducted, to be submitted to this `Appellate Tribunal' as part of the `Litigation Proceedings'.
2. The Learned Counsel for the Applicant / Appellant submits that the `KPMG' was engaged by the `Appellant' for its `Expert Review and Analysis' and that the `Independent Report' dated 24.04.2021 contains numerous vital observations, which are necessary for the Appellant/Applicant's case. Further, no prejudice would be caused to the Respondents, if I.A. No.121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021, is allowed by this `Tribunal'.
3. It is the plea of the 1st Respondent that `Applicant/Appellant' has exhibited its `Legal Bias' and the `Fraudulent Actions' are visible from the `Reports' filed by the 2nd Respondent.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 3 of 88
4. It is the stand of the 2nd Respondent that the `Report' dated 20.03.2021 of Tata Communications (vide Annexure 27 of the `Appeal Paper Book') and the `Independent Auditor's Report dated 24.04.2021 secured from the `Third Party' is `inadmissible' and not to be taken on record in the instant `Company Appeal' at the `Appellate stage' by this `Tribunal', for the reason, that they were not part of the `Records' before the `Adjudicating Authority' and also they were not there, at the time of `Adjudication' by the `Adjudicating Authority'. Hence, the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 is liable to be dismissed, to secure the `ends of justice'.
5. The Learned Counsel for the 3rd Respondent contends that the `Appellant' the `Project Pursuit Report' is dated 24.03.2021, but the `impugned order' assailed in the Comp. App (AT) (CH) (INS.) No. 49 of 2021 is dated 18.03.2021. In fact, the Applicant/Appellant was not possessing the said `Report' and that the `Applicant/Appellant' being an `Unsuccessful Bidder' cannot destabilise a fairly conducted `E-auction Process' and cannot place reliance upon the `Report' dated 20.03.2021 of Tata Communications (vide Annexure A-27 of the Annexure Paper Book) and the `Independent Auditor's Report' dated 24.04.2021 at the `Appellate stage' of the `Appeal' before this `Tribunal', especially, when I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 4 of 88 it had failed to establish any reason for not bringing the `Additional Documents' / `Evidence' before the `Adjudicating Authority' at the appropriate time.
6. It is to be pointed out that a `Party' negligent in preferring the documents and not filing the same, despite knowledge at appropriate time, the `Additional Record'/`Evidence' would not be admitted. When an `Applicant' had knowledge of document earlier, a `Party' cannot be permitted to file the `Additional Document(s)'/`Evidence', to fill up the gaps in a given case.
7. A mere assertion in the `Application'/`Petition' is not good enough to establish that inspite of due diligence, additional evidence could not be produced / filed before the `Adjudicating Authority'. If no satisfactory explanation is offered for non-production of additional documents before the `Appellate Authority', then, the `Interlocutory Application' is liable to be dismissed.
8. If the `Appellate Tribunal' can determine the `Appeal' (based on the available materials on record), without the production of the `Additional Documents' / `Additional Evidence', in a given case, and I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 5 of 88 pronounced its judgment, then, the Interlocutory Application for letting in additional documents in a given proceeding before the `Appellate Tribunal', does not arise.
9. As far as the present case is concerned, this `Tribunal' on a careful consideration, respective contentions, keeping in mind of the `Report' dated 20.03.2021 of M/s. Tata Communications and the Independent Auditor's Report dated 24.04.2021, are from `Third Parties' and these additional materials admittedly have come into existence, after the `impugned order' dated 18.03.2021, passed by the `Adjudicating Authority', based on the `Principle' that an `Appellate's stage' is not meant to remove the lacunae in the evidence or to plug the loopholes in a case and even resting upon the existing, available material on record, comes to a consequent conclusion that in the instant Comp. App (AT) (CH) (INS) No. 49 of 2021, it can pronounce `Judgment', in the present case at the `Appellate's stage' (in the absence of additional documents/materials forming part of disputed question of facts) in furtherance of substantial cause of justice. Viewed in that perspective the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021, filed by the `Applicant/Appellant' is not a `Bonafide one' and the same is `dismissed' to promote `substantial cause of justice'. No costs. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 6 of 88 JUDGMENT (Virtual Mode) Comp. App (AT) (CH) (INS) No. 49 of 2021:
Background:
10. The Appellant/Applicant has preferred the instant Comp. App (AT) (CH) No. 49 of 2021 before this `Tribunal', as an `Aggrieved Person', as against the `impugned order' dated 18.03.2021 in IA/74/2021 in CP/508/IB/2017, passed by the `Adjudicating Authority' (`National Company Law Tribunal'), Division Bench - I, Chennai, in dismissing the `Interlocutory Application'.
11. Earlier, the `Adjudicating Authority' (`National Company Law Tribunal'), Division Bench - I, Chennai, while passing the `impugned order' dated 18.03.2021 in IA/74/2021 in CP/508/IB/2017 at paragraphs 44 to 59, had observed the following:
44.``Ld. Advocate for the Applicant vehemently stressed that a fraud has been played upon by R1 and R2 being in cahoots with each other in declaring R3 as the successful bidder. For this purpose Annexures-7A and 7B are sought to be relied upon insistently on the part of the Applicant to establish that the E-
auction process has been closed at the time as reflected in Annexures-7A and 7B enclosed at page Nos. 79 and 80 of the typed set filed by the Applicant.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 7 of 88
45. In relation to Bids History as produced at page No. 83 by the Applicant it is seen that at 17:37:33 hour IST the bid amount has been disclosed as Rs.17,80,00,000/-. It is also evident from page Nos. 79 and 80 being Annexures-7A and 7B of the typed set filed along with the Application that the snapshots of the screen seem to have been taken at 05:43:17 hour IST on 21.01.2021.
46. It is further evident from the said Annexures-7A and 7B that the screen has also been shared as ``you are screen sharing'' is being displayed at the top of the page. As rightly pointed out by the Respondents namely, R2 and R3 the snapshots evidence which has been predominantly produced being system generated by the Applicant to sustain its plea that the auction itself has been closed at the time viz., 05:43:17 hour IST is not supported by a certificate as required under the provisions of Section 65-B (4) of the Indian Evidence Act, 1872.
47. In fact, none of the screenshots which are system generated as relied before this Tribunal by the Applicant is supported by the certificate as are mandatory under the provisions of Section 65-B (4) of the Indian Evidence Act, 1872 which it is required of, in order to place reliance, as held by the Hon'ble Supreme Court in the decision of Arjun Panditrao Khotkar -vs- Kailash Kushanrao Gorantyal (2020) 7 SCC 1. Further, the Hon'ble Supreme Court also held in Anvar P.V - vs - P.K. Basheer (2014) 10 SCC 473, a certificate must accompany the electronic record like computer printout, compact disc, video compact disc, pendrive, etc., when the same is relied upon as an evidence.
48. Even perusal of the Bids History Report as filed before this Tribunal annexed at page No. 99 of the Application discloses that consistently commencing from the start of the bid at 15:06:33 hour IST from the reserve price of Rs.16,20,00,000/- as fixed by the Liquidator/R1, subsequent thereof the IP address in relation to each of the bids placed by the respective parties has been disclosed clearly by mentioning the IP address from which the Applicant is I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 8 of 88 seen to have operated as given as 14.142.203.190 in relation to all the bids placed by it.
49. In relation to R3, the IP address given, reads as 103.224.185.96. This continues until the final bid which was placed by the Applicant at 17:37:34 hour IST at Rs.17,80,00,000/- as the bid amount and it is also evident from the Bids History Report that at 17:41:01 hour IST the final bid which has been placed by R3 and also incidentally has become the successful bid which states as that of Rs.17,90,00,000/-
50. Strangely, in relation to Annexures-7A and 7B the system (IP address) from which a snap-shot has been taken is also not available even after a careful perusal of the said Annexures-7A and 7B. In the circumstances, as rightly pointed out by the Ld. Advocate for the Respondents it is required of the Applicant to have identified the system or equipment from which the snapshots have been generated by way of the certificate as required under Section 65-B of The Indian Evidence Act, 1872 r/w The Information Technology Act, 2000.
51. Primarily the Applicant places reliance on these documents for alleging that there has been a fraud which is alleged to have been committed in relation to the e-auction process. In the circumstances, we are unable to consider the Annexures-7A and 7B as valid evidence and based on which the Applicant places a reliance before this Tribunal.
52. It is also to be seen that in relation to the Annexure as filed at page Nos. 102 to 104 of the typed set of the Application there seems to have been no activity on the part of the Applicant between 17:37:34 hour IST till 17:57:59 hour IST. The transcriptions as produced by R2 along with the typed set it is seen that the Applicant has had the problem of getting logged out frequently for whatever reasons only known to the Applicant. Further, the terms and conditions of the E-auction as circulated to the bidders also specified that the auction screen during the active auction session should not be shared with the third party application, however, in I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 9 of 88 the instant case ``ZOOM'' sharing of screen is seen to have been carried which also gives a scope for internet connectivity issue as rightly contended by R2 which makes the connectivity not seamless which it is required of, particularly during the E-auction process of the nature involved presently before this Tribunal as these are commercial transactions of high value and hence it is required of the Applicant to be vigilant.
53. In the circumstances, it is for the Applicant to have its connectivity of its system to be constantly logged in into the E- auction of the process and portal consistently and remained continuously vigil and not to have logged out at any point of time. Further, the Applicant it also seen that for a long time (in view of the E-auction process) where minutes matter, had not been reacting as referred to in paragraph supra and the Applicant being a bidder is not required to wait till last moment just before the expiry of five minutes duration within which the bids are required to be refreshed, in view of any connectivity issue or any technical glitch that may arise on the side of the Applicant thereby scuttling his effort of bidding being a bidder in the E-auction process.
54. The Respondent namely, R2 had clearly established that the Applicant had logged out for a period of 20 minutes at 17:37:34 hour IST upto 17:57:59 hour IST during which time it is seen that R3 has escalated the bid by another Rs.10,00,000/- to Rs.17,90,00,000/- and by virtue of the log out on the part of the Applicant whether it be due to an internet connectivity issue or system generated problem from its part, has failed to offer to bid further beyond Rs.17,90,00,000/-.
55. However, due to the lapse on his part, viz. the Applicant, the Applicant cannot try to find fault in the E-auction process as conducted by R2 and also vehemently insisted upon by the Ld. Advocate for R2 that the entire E-auction process is encrypted from end to end and there is no chance of interference from any third party including R1 and R2 and only in allowing the participants in the E-auction process viz., the Applicant and R3. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 10 of 88
56. From the commencement of the E-auction process it is seen to have been working smoothly and seamlessly till the bidding process was completed. In fact, from the time the bidding amount had been escalated from the minimum bidding price of Rs.16,20,00,000/- up to Rs.17,90,00,000/- with increment of Rs.10,00,000/- in between, the bid of the respective parties namely, the Applicant and R3 is clearly reflected. In the circumstances, we do not find any fraud to have cropped up as alleged by the Applicant, to have been played by the Respondents in the E-auction process.
57. The Hon'ble Supreme Court in the matter of Valji Khimji and Co. -vs- Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd (MANU/SC/3408/2008 : 2008(9) SCC 299) relied on by the Hon'ble Supreme Court while rendering its judgement in Pegasus Assets Reconstruction P. Ltd -vs- Haryana Concast Limited & Ors (MANU/SC/1489/2015) dated 29.12.2015 made the following observation as reproduced as under:
32. ``On considering the submissions of parties, we find that the sale confirmed in favour of M/s. Venus Realcon for Rs. 32 crores does not require any interference particularly at the instance of Petitioner-Vinod Rajaliwala. There was no illegality or irregularity established against the conduct of auction and once it is found that the offer of Rs. 32 crores was a fair offer in a competitive bid conducted fairly and the offer has been accepted and the sale confirmed, it would not be proper for this court to undermine the value of such auction sale conducted not only by the secured creditor but also by the Official Liquidator who was permitted to be associated with the whole process of finding out of valuation as well as the conduct of sale. M/s. Venus Realcon has rightly placed reliance upon the judgments of this court in the case of Valji Khimji & Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd.
MANU/SC/3408/2008 : 2008 (9) SCC 299 and Vedica Procon Private Limited v. Balleshwar Greens P. Ltd. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 11 of 88 MANU/SC/0870/2015 : 2015 (8) SCALE 713. In Valji Khimji, the law was enunciated in Paragraph 28 in the following words:
"If it is held that every confirmed sale can be set aside the result would be that no auction-sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. It could have been a different matter if the auction had been held without adequate publicity in well-known newspapers having wide circulation, but where the auction-sale was done after wide publicity, then setting aside the sale after its confirmation will create huge problems. When an auction-sale is advertised in well-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they will be themselves to be blamed if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed after the bidding (or confirmation) is over to offer a higher price. Of course, the situation may be different if an auction- sale is finalized, say for Rs.1 crore, and subsequently somebody turns up offering Rs.10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, then an inference can be drawn that an attempt had been made to acquire that property/asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done."
In this connection, the decision as cited by the Ld. Senior Advocate for the Applicant in the matter of Ram and Shyam Company -vs- I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 12 of 88 State of Haryana & Ors (1985) 3 SCC 267 stands distinguished and may not apply.
58. It is also pertinent to note that the Liquidator was appointed under the provisions of IBC, 2016, by this Tribunal as also he is a registered Insolvency Professional with the Insolvency and Bankruptcy Board of India. In relation to E-auction process the Liquidator has not chosen to file any Application before this Tribunal as required under Clause 10 of Schedule-I of the Liquidation Process Regulations, 2016, which clause reads to the effect that if the Liquidator is of the opinion that an auction where the bid amounts are not visible is likely to maximise realizations from the sale of assets and is in the best interest of the creditors, he may apply in writing to the Adjudicating Authority viz., this Tribunal for its permission to conduct an auction in such manner. However, no such application has been filed by the Liquidator to the effect that the bid amounts were not visible as alleged by the Applicant.
59. As already pointed out, the lapses on the part of the Applicant cannot be claimed to be an act of fraud played upon on the part of the Respondents.'' and was constrained to dismiss the `Application', but without costs. Appellant's contentions:
12. According to the Learned Senior Counsel for the Appellant/Applicant, the `Adjudicating Authority' had erroneously dismissed the IA/74/2021 in CP/508/IB/2017 (Filed by the Applicant/Appellant under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (`IBC'), read with Regulation 33 (1) of the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 13 of 88 Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (`Liquidation Regulations') read with Rule 11 of the National Company Law Tribunal Rules, 2016.
13. It is represented on behalf of the Appellant/Applicant that, the Applicant/Appellant was declared as `H1 Successful Bidder' with the highest bid on the date of the e-auction, i.e., on 21.01.2021, when the e-
auction was closed at 17.42 hours and that the 1st Respondent (Liquidator) had refused to act on the result of the auction and contended that there was a higher bid received at 17.41 hours after the last bid of the Appellant at 17.37 hours (which alleged higher bid of the 3rd Respondent who was not visible to the Appellant on the e-auction portal), in the event a higher bid was actually placed before the expiry of five minutes from the Appellant's last bid at 17.37 hours and the same was not visible to the Appellant at 17.41 hours., there should have been a re-auction held by the Liquidator to maximize the value since the Appellant had raised the objection on the very same day, when the Liquidator informed the Appellant that it is not the highest bidder.
14. The Learned Counsel for the Appellant/Applicant points out that since the Liquidator had not responded, the Appellant filed an I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 14 of 88 `Application' before the `Adjudicating Authority', prayed for a re-bid, in case the higher bid of the 3rd Respondent was actually received. In fact, the Liquidator, instead of waiting for the outcome of the `Application' had proceeded to issue a Sale Certificate to the 3rd Respondent on 17.02.2021, a day before the scheduled date of hearing on 18.02.2021 before the `Adjudicating Authority' and this was in spite of a pre- application correspondence with the Liquidator from 22.01.2021 to 25.01.2021 seriously objecting to the manner of conducting the e-auction and the declaration of the 3rd Respondent as the higher bidder.
15. The Learned Counsel for the Appellant takes a stand that the prayer made in the application on 25.01.2021 was to have a re-bid to maximize the value and the repeated submissions made during the hearing before the `Adjudicating Authority' by the Appellant that it is willing to increase the value of the bid, if a fair and transparent re-auction is held as soon as possible.
16. The Learned Counsel for the Appellant refers to Clause 9 to Schedule 1 of Regulation 33 of the Liquidation Regulations which enjoins that `an auction shall be transparent and the highest bid at any given point shall be visible to the other Bidders' and this is an absolute and I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 15 of 88 unqualified mandate and furthermore Clause 10 provides that if the bids are not visible, the Liquidator has to order the re-auction to maximize the value.
17. The Learned Counsel for the Appellant submits that the Respondents No. 1 and 2 have failed to produce any evidence of the live / actual recording of e-auction to prove that the last so called bid of the 3rd Respondent at 17.41 hours was visible to the Appellant. Added further, it is the plea of the Appellant that the 1st Respondent has acted quite contrary to the mandates of the I & B Code, 2016 / Regulations. Moreover, the 2nd Respondent in its Counter Affidavit nowhere stated that the Appellant was logged out for 20 minutes, as was mentioned in the `impugned order'. In fact, the 2nd Respondent had admitted that higher bid of the 3rd Respondent might not have been visible to the Appellant.
18. The categorical plea projected on the side of the Appellant is that, there is no evidence to contradict its position that the purported bid of the 3rd Respondent was visible to the Appellant, when it was placed at 17.41 hours on 21.01.2021. Apart from that, in the absence of evidence, withholding the best evidence in the light of evidence produced by the Appellant including the `Project Pursuit Report by KPMG', any proof and I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 16 of 88 in the interest of the integrity of the process, the 1st Respondent should have held a further auction between the Appellant and the 3rd Respondent, especially, when the Appellant was ready and willing to outbid the 3rd Respondent by increasing its bid amount substantially.
19. The Learned Counsel for the Appellant adverts to Clause 11 to Schedule I of Regulations 33 of the Liquidation Regulations which provides that `the Liquidator may conduct multiple rounds of auctions to maximize the realization from the sale of the assets, and to promote the best interests of the creditors'. Further, the 1st Respondent / Liquidator being the `custodia legis' was obligated as per Regulations 33 of the Liquidation Regulations of the Code, to conduct a further round of e-bidding to obtain the maximization of value before it had issued the Sales Certificate. Also that, the Appellant had communicated to the Liquidator on the same day and following day of e-auction that `there was gross violation of process and the manner in which the auction was conducted, the process of selection of `Successful Bidder' seems to be an `arbitrary' and not `transparent'.
20. The Learned Counsel for the Appellant proceeds to point out that the 1st Respondent/Liquidator has committed `perjury' by placing reliance I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 17 of 88 on, but not placing on record a purported `Report' / or `Screenshot' of the 2nd Respondent has mentioned at Paragraph 19 of the 1st Respondent's Counter. In fact, in the Counter of the 1st Respondent at Paragraph 19 of the Counter that `when the bid is closed, the option to submit any further bid will disappear or deactivate' and `screenshot' of the same is given in the `Report' of the 2nd Respondent after the last bid from the 3rd Respondent.
21. It is the stand of the Appellant that no such `screenshot' or `report' of the 2nd Respondent was produced till date by any of the Respondents, which would have supported the Authenticity of the plea of the Respondents that the 3rd Respondent was the highest bidder, when the `E- auction' was closed.
22. The Learned Counsel for the Appellant contends that the 1st Respondent has not contested or assailed or disputed the veracity of the `Screenshots', furnished by the `Appellant at Annexure A-7 and A-8 of the `Appeal' and made no statements pertaining to the absence of a Section 65B Affidavit (under the Indian Evidence Act, 1872), along with the `Screenshots' produced by the `Appellant'. Hence, according to the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 18 of 88 `Appellant', the 1st Respondent admits the genuineness of the `screenshots' as referred to supra.
23. The Learned Counsel for the Appellant contends that the 2nd Respondent is the party with best evidence, but has consistently avoided to produce any evidence of the happenings of the actual `E-Portal Website' as would be visible from a live recording which such `E-auction Providers' maintain for all `Auctions'. In fact, the highest bid purportedly, placed at 17.41 hours by the 3rd Respondent was really visible to all the `Bidders' in the normal course, was not provided by the 2nd Respondent and the `live recording' was not volunteered by the 2nd Respondent to produce the same before this `Tribunal', for its benefits.
24. The Learned Counsel for the Appellant comes out with a stand the 2nd Respondent produces the purported log reports which show the `login' and `logout' reports maintained in the 2nd Respondent System which cannot be verified by anyone and cannot be relied upon. Indeed, the 2nd Respondent continues to rely upon a `Demo' annexed as `Annexure R2 and R3' to the Counter Affidavit and the said `Demo' was produced before the `Adjudicating Authority' and in fact, there is no proof at all, on what actually transpired on that day.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 19 of 88
25. It is represented on behalf of the Appellant that the `Report' of the `Tata Communications' shows that the Internet Connectivity to the Appellant had no issues on 21.01.2021 at the time of `e-bidding'.
26. The Learned Counsel for the Appellant adverts to the inconsistencies in the `Reports' of the 2nd Respondent to the effect that;
a. ``The Log Report and Bid History Report provided by the Respondent No.2 pertaining to the E-auction of the asset block of Ennore Coke Limited, indicates a difference in the ``Bid date and time'' field of the Bid History Report and ``Audit Date field'' of Log Report. (Para 11 @ page 15 of IA No. 121 of 2021 -
Application to place on record Project Pursuit Report). b. Reports provided by the Respondent No. 2 are incorrect as there exists a difference in the ``Bid date and time'' field of the Bid History Report and ``Audit Date field'' of Log Report. There could not have existed any difference as both these fields are supposed to be connected to one parameter. (Para 11 @ page 15 of IA No. 121 of 2021 - Application to place on record Project Pursuit Report). c. The log details mentioned in the report of the Respondent No.2 are not in a chronological order based on time of these events. (Para 24 @ page 17 of IA No. 121 of 2021 - Application to place on record Project Pursuit Report).
d. The alignment of certain log entries for the Respondent No.3 are inconsistent which possibly indicates that the log entries have been not been obtain from the original source document. (Para 24 @ page 15, Para 31 @ pg. 18 and page 26 of IA No. 121 of 2021 - Application to place on record Project Pursuit Report). e. The spelling of the word ``Auction'' in the e-auction portal is inconsistent with the spelling in the log report which spells the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 20 of 88 same word as ``Aution''. (Para 22 @ page 16 of IA No. 121 of 2021 - Application to place on record Project Pursuit Report). f. One Priyanka Tiwari had converted the original log file, which was in .xlsx format to a PDF format as can be seen from the meta data of the log files shared by the Respondent No.2 (Para 36 @ page 19 of IA No. 121 of 2021 - Application to place on record Project Pursuit Report) g. On examination of properties for Auction Login Report, Bids History Report, and Itemwise Breakup report, it was observed that the PDF producer name for these files is `pdfmake'.(Para 37 @ page 19 of IA No. 121 of 2021 - Application to place on record Project Pursuit Report).''
27. The Learned Counsel for the Appellant urges before this `Tribunal' that the `Project Pursuit Report' dated 24.04.2021 at Paragraph 16 at Page 15 mentions that the `Inconsistencies as noted in the reports submitted by Linkstar to the `NCLT', raise concerns on the integrity of the entire e- auction process and credibility of the reports. Further, the screenshots taken by `Startree' raise additional doubts on the `integrity' of the `Auction Process'.
28. The Learned Counsel for the Appellant brings it to the notice of this `Tribunal' that in the `E-auction Process' document, nowhere provides any such requirement for refreshing the e-auction page and also that the 2nd Respondent's `E-auction Portal' had not given any I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 21 of 88 `Notification' to the `Appellant' for `Automatic Log Out', during the `E- auction Process'.
29. Added further, that it is the version of the Appellant that the times stamp on the e-auction page was running, as evident from the `screenshot' filed by the `Appellant' and there was no explanation as to how the time was running on the e-auction page as was captured by the Appellant which ultimately showed that after five minutes of 17.37 hours, the e- auction had closed at 17:42 hours, the Appellant being the highest bidder.
30. According to the Appellant, the 2nd Respondent does not say that a `Bidder' is notified if it is automatically `logged out' and in fact, the Liquidator has not challenged the correctness of the `screenshots' produced by the Appellant either before or after the initiation of the `Proceedings'.
31. The Learned Counsel for the Appellant contends that when an auction is a illegal one, the issuance of Sales Certificate will not vest any right upon the 3rd Respondent, if the entire facts and circumstances are examined and in the face of maximization of value, the issuance of Sales Certificate itself in circumstances that are suspect would not hinder this `Tribunal' to `Order' a `Re-auction'.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 22 of 88
32. The Learned Counsel for the Appellant submits that the `Adjudicating Authority' has looked into the extraneous documents to support its findings as argued by the 2nd Respondent that the Appellant was inactive between 17.37 hours and 17.57 hours. Moreover, there is no `iota of evidence' to exhibit that the `Appellant' had logged out after its last bid.
33. The Learned Counsel for the Appellant advances an argument that the Adjudicating Authority had relied upon extraneous facts, outside the ambit of the I & B Code, 2016, and the mandates of the Liquidation Regulations to reject the Appellant's plea for a fresh auction process. The other plea of the Appellant is that the interim order passed by the Adjudicating Authority is opposed to the `Principle of Maximization of Value of Assets of the Corporate Debtor'.
34. It is the contention of the Appellant that the Appellant is not required to take any steps if the 1st Respondent had filed an `Application' and per contra, the observation of the `Adjudicating Authority', in holding that the 1st Respondent under Clause 10 of Schedule I of the Liquidation Regulations had not filed any `Application' is an illogical one. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 23 of 88
35. Yet another argument projected on the side of the Appellant is that the `Adjudicating Authority' went wrong in holding that the `Appellant' had `logged out' for a period of 20 minutes at 17.37.34 hours IST upto 17.57.59 hours IST during which time it is seen that R3 has escalated the bid.....'', Appellant's Citations:
36. The Learned Counsel for the Appellant relies on the Judgment of the Hon'ble Supreme Court in Navalkha & Sons v. Ramanya Das, reported in 1969, 3 Supreme Court Cases at page 537 at Spl Page wherein at paragraph 7, it is observed as under:
7. ``In our opinion the learned Judge having decided on December 24, 1964 that the property should be put to auction should have directed auction by public sale instead of confining it to two persons alone. Since there was want of publicity and there was lack of opportunity to the public to take part in the auction the acceptance of the highest bid by the learned Judge was not a sound exercise of discretion. It is contended on behalf of the appellant that confirmation was discretionary with the Court and the Division Bench ought not to have interfered with the discretion exercised by the Company Judge. It is true that the discretion exercised by the Judge ought not to be interfered with unless the Judge has gone wrong on principle. As already pointed out the learned Company Judge having decided to put the property to auction went wrong in not holding the auction as a public auction after due publicity and this has resulted in prejudice to the Company and the creditors in that the auction did not fetch adequate price. The prejudice was inherent in the method adopted.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 24 of 88 The petition of Padam Chand Agarwal also suggests that want of publicity had resulted in prejudice. In these circumstances the Company Judge ought not to have confirmed the bid of the appellant in the auction held on December 24, 1964. We are accordingly of opinion that the Division Bench was right in holding that the order of the Company Judge dated February 19, 1965 should be set aside and there should be fresh sale of the property either by calling sealed tenders or by auction in accordance with law. The tender will be called or the auction will take place with the minimum offer or with the starting bid of ten lakh rupees.'' [Emphasis Added]
37. The Learned Counsel for the Appellant cites the decision of the Hon'ble Supreme Court in FCS Software Solutions v. La Medical Devices Ltd., reported in 2008 - 10 SCC at page 440 at Spl. Page 448, wherein at paragraph 34, 35 and 37, it is observed as under:
34. ``In Divya Manufacturing Co. (P) Ltd. v. Union Bank of India [(2000) 6 SCC 69], this Court held that even confirmed sale can be set aside. In that case, highest bid by a party was accepted by the Court and the sale was confirmed, but before possession was delivered to the auction purchaser and the execution of sale deed, other parties offered much higher price. The High Court required the subsequent bidders to deposit an amount of 25% which was done. Considering the facts in their entirety, the High Court set aside the confirmation of past highest bid. The said action was challenged in this Court. This Court held that in an appropriate case, even confirmed sale can be set aside. The Court in this connection, relied upon earlier two decisions in LICA (P) Ltd. (1) v. Official Liquidator, [(2000) 6 SCC 79 : (1996) 85 Comp Cas 788] and LICA (P) Ltd. (2) v. Official Liquidator [(2000) 6 SCC 82 : (1996) 85 Comp Cas 792] I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 25 of 88
35. The learned counsel for the appellant is no doubt right in submitting that in Divya [(2000) 6 SCC 69], there was a specific condition (Clause 11) which empowered the Court to set aside confirmed sale "in the interest of creditors, contributors and all concerned and/or in public interests". But the Court put the matter on principle and stated: (SCC p. 78, para 13) "13. It is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud.'' (emphasis supplied) It proceeded to observe: (SCC p.79, para 16) "16. .... Confirmation of the sale by a Court at grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the Court may prevent, to some extent, underbidding at the time of auction through Court.'' (emphasis supplied)
37. In the present case, it was alleged that there were several irregularities in the first auction. The tender notice did not state valuation of movable and immovable property; reserve price was not fixed, inventory of plant and machinery was not made available, etc. If on consideration of these facts, the Company Judge ordered fresh auction, in our considered opinion, no complaint can be made against such action.'' [Emphasis Added]
38. The Learned Counsel for the Appellant seeks in aid of the decision of the Hon'ble Supreme Court in Divya Mfg. Co. (P) Ltd. V Union Bank I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 26 of 88 of India (2000) (6) SCC at page 69 at Spl. Page 78, wherein at paragraph 13, it is observed as under:
13. ``From the aforesaid observation, it is abundantly clear that the Court is the custodian of the interests of the Company and its creditors. Hence, it is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud. As stated above, in the present case, the sale proceedings have a chequered history. The appellant started its offer after having an agreement with the Employees' Samity for Rs.37 lakhs. This was on the face of it under bidding for taking undue advantage of Court sale. At the intervention of the learned Single Judge, the bid was increased to Rs.85 lakhs.
Subsequently, before the Division Bench, the appellant increased it to Rs.1.30 crores. At that stage, Respondent 7 `Sharma' was not permitted to bid because it had not complied with the requirements of the advertisement. It is to be stated that on 26-6-1998, the Division Bench has ordered that offers of Eastern Silk Industries Ltd. and Jay Prestressed Products Ltd. would only be considered on 2-7-1998 and confirmation of sale would be made on the basis of the offers made by the two parties. Further, despite the fact that the appellant `Divya' had withdrawn its earlier offer, the Court permitted it to take part in making further offer as noted in the order dated 2-7-1998. In this set of circumstances, there was no need to confine the bid between three offerors only.'' [Emphasis Added]
39. The Learned Counsel for the Appellant points out the decision of the Hon'ble Supreme Court in LICA (P) Ltd. (1) v. Official Liquidator [(1996) 85 Comp Cas 788 (SC) at Page 79, wherein it is observed as under:
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 27 of 88
14. ``The purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large. The Court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case.
16. Further, there is a specific condition 11 in terms and conditions of sale as quoted above which empowers the Court to set aside the sale even though it is confirmed for the interests of creditors, contributories and all concerned and/or public interest.
In this view of the matter, it cannot be said that the Court became functus officio after the sale was confirmed. As stated above, neither the possession of the property nor the sale deed was executed in favour of the appellant. The offer of Rs.1.30 crores is totally inadequate in comparison to the offer of Rs.2 crores and in case where such higher price is offered, it would be in the interest of the Company and its creditors to set aside the sale. This may cause some inconvenience or loss to the highest bidder but that cannot be helped in view of the fact that such sales are conducted in Court precincts and not by a business house well versed with the market forces and price. Confirmation of the sale by a Court at a grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the Court may prevent, to some extent, underbidding at the time of auction through Court. In the present case, the Court has reviewed its exercise of judicial discretion within a shortest time.'' [Emphasis Added]
40. The Learned Counsel for the Appellant refers to the decision of the Hon'ble Supreme Court of India in LICA (P) Ltd. (No. 1) v. Official I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 28 of 88 Liquidator, (2000) 6 SCC 79 at Spl. Page 81 at paragraph 5, wherein it is observed as under:
5. ``The purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large. The Court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case. One of the terms of the offer in this case is that even confirmation of the sale is liable to be set aside by the High Court as per Clause 11 of the conditions of offer. The sale conducted was subject to confirmation. Therefore, mere acceptance of the offer of Mr. Shantilal Malik does not constitute any finality of the auction nor can be automatically confirmed. The appellant offered higher price even now at Rs. 45,00,000. Keeping in view the interest of the company and the creditors and the workmen to whom the sale proceeds would he applied, the Learned Company Judge was right in exercising her discretion to reopen the auction and directing Mr. Shantilal Malik as well to make a higher offer than what was offered by the appellant. In every case it is not necessary that there should be fraud in conducting the sale, though on its proof the sale gets vitiated and it is one of the grounds to set aside the auction sale.''
41. The Learned Counsel for the Appellant cites the decision of the Hon'ble Supreme Court of India in Bakemans Industries (P) Ltd. V New Cawnpore Flour Mills, (2008) 15 SCC 1 at pages 31 and 32 at paragraphs 76 to 78 and 81, wherein it is observed as under:
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 29 of 88
76. ``If the jurisdiction of a Company Judge is limited, any substantial deviation and departure therefrom would result in unfairness. When an order is passed in total disregard of the mandatory provisions of law, the order itself would be without jurisdiction. In this case, however, even otherwise a fair procedure was not adopted. We, however, very much appreciate the anxiety on the part of the Court to see that otherwise just dues of SICOM be realised. Conduct of a party plays an important role in the matter of grant of a relief. However, only because the conduct of a party was not fair, the same, by itself, cannot be a ground to adopt a procedure which is unjust or unfair, particularly, when by reason thereof, not only the Company itself but also other creditors are seriously prejudiced. We fail to see any reason as to why the hearing of the case was to be preponed. Why even a day's time could not have been granted when a prayer for adjournment was made. The jurisdiction of the Company Court is vast and wide. It can mould its reliefs. It may exercise one jurisdiction or the other.
It may grant a variety of reliefs to the parties before it. The parties before the Company Judge are not only the Company or the creditors who had initiated the proceedings but also others who have something to do therewith. Even in a given case a larger public interest may have to be kept in mind. The court may direct winding up. It may prepare a scheme for its restructuring.
77. We, therefore, are of the opinion that the Company Judge was not correct in its view and passed the impugned judgments only having regard to the wrongful conduct on the part of the appellant in obtaining an award from the Conciliation Tribunal or failure to bring a better offer from another bidder.
78. The question which is really an intricate one is what relief can be granted. On the one hand, the Company has committed wrongs, on the other, its property has been sold in auction. Even a part of the property has been permitted by us to be taken out of the country. The factory, we are told, has started operation. It has employed a large number of workmen. Would that itself mean that I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 30 of 88 we should refrain ourselves from granting any relief? Direction issued by this Court in a case of this nature need not be a narrow one. The court has to take into consideration the fate of not only those workmen who are working but also those who have a claim against the Company. We must also take into consideration the fate of the other creditors.
81. Till, however, a final order is passed, Ceylon Biscuits Pvt. Ltd. would continue to function not as an auction-purchaser but as a Receiver of the Company Court. Ceylon Biscuits Pvt. Ltd. shall file all statement of accounts in regard to the amounts which it had invested and all other requisite statements including the valuation of machinery it had taken out of the country before the Court. The Court may appoint a Chartered Accountant to verify the said statements. The court, if it thinks fit and proper, may, apart from the provisional liquidator, appoint another person to supervise the works and functioning of Ceylon Biscuits Pvt. Ltd. as a Receiver of the Court. As Ceylon Biscuits Pvt. Ltd. is being appointed as a Receiver, it goes without saying that it shall act strictly under the supervision of the court and abide by the orders which may be passed by it from time to time.''
42. The Learned Counsel for the Appellant adverts to the decision of the Hon'ble Supreme Court of India in Union of India V Ibrahim Uddin & Anr., reported in [2021] 8 SCC at page 148 at Spl. Page 164 at paragraph 24, wherein it is observed as under:
``Thus, in view of the above, the law on the issue can be summarized to the effect that the issue of drawing adverse inference is required to be decided by the court taking into consideration the pleadings of the parties and by deciding whether any document/evidence, withheld, has any relevance at all or omission of its production would directly establish the case of the other side. The court cannot I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 31 of 88 lose sight of the fact that burden of proof is on the party which makes a factual averment.'' ... ... ... ``In case one party has asked the court to direct the other side to produce the document and the other side failed to comply with the court's order, the court may be justified in drawing the adverse inference. All the pros and cons must be examined before the adverse inference is drawn. Such presumption is permissible, if other larger evidence is shown to the contrary.'' [Emphasis Added] 1st Respondent/Liquidator's Submissions:
43. The Learned Counsel for the 1st Respondent/Liquidator contends that in the instant case, an `Expression of Interest' (`EOI') was issued on 24.12.2020, inviting `Prospective Bidders' to bid for the `Assets' in (Liquidation) together with a `Process Memorandum', wherein a reserve price of Rs.16,20,00,000/- was fixed. In fact, the `Prospective Bidders' were required to pay 5% Earnest Money Deposit and upon acceptance of the `Bid' (within seven days) 25% of the total price and later, within one month the remaining amount was to be paid.
44. It is represented on behalf of the 1st Respondent/Liquidator that the Auction took place on 21.01.2021 with two Qualified Bidders Viz., The Appellant and the Third Respondent. In reality, the e-auction was conducted through the 2nd Respondent who is a `Professional E- auctioning Agency'. Furthermore, the `bidding' was to be kept open I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 32 of 88 between 3.00 P.M. to 5.00 P.M., with an automatic extension of five minutes (unlimited times), until a `Successful Bidder' is chosen and that the 2nd Respondent was required to open the Portal and manage the process and submit a `Report' to the Liquidator of the E-auction Results which would then be declared.
45. The Learned Counsel for the 1st Respondent/Liquidator proceeds to point out that on 21.01.2021 at 3.00 P.M., the bidding process had commenced and was scheduled to be completed by 5.00 P.M., subject to automatic extensions, if `Bids' were received within five minutes until one Bidder is ultimately declared as `Winning Bid'. Besides this, the 2nd Respondent's Report which was received by the `1st Respondent/Liquidator' mentions that the `Bidding Process' in the subject `e-auction' went on beyond 5.00 PM, as there were automatic extensions of five minutes, as and when Bids were received this time.
46. It is the version of the 1st Respondent/Liquidator that the 2nd Respondent's Report and the Log details furnished by the 2nd Respondent indicates that the `Bidding Process' was completed at 17:46:00 hours, the last `Bid' was submitted by the 3rd Respondent Viz., Mahalaxmi Wellman Fuel LLP., at 17:41:01 hours at Rs.17,90,00,000/-. In this connection, it is I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 33 of 88 pointed out by the 1st Respondent/Liquidator that as per the Report and Records of the 2nd Respondent, the last `Bid' was submitted by the `Appellant/Startree Retailers Private Limited' was at 17:37:33 hours amounting to Rs.17,80,00,000/- and within 4 minutes thereof, the 3rd Respondent had submitted a higher bid Rs.17:41:00 hours. Subsequently, no `Bids' were received in the System and the 3rd Respondent was automatically, declared as `Successful Bidder'.
47. According to the 1st Respondent/Liquidator, the Appellant's case is that it submitted a `Bid' for Rs.17,80,00,000/- at 17:37:33 hours and later, the `E-auction Portal' had not shown any further bid in the Appellant's System and in fact, it was shown as `Auction Closed'. Therefore, the Appellant had filed an IA/74/2021 in CP/508/IB/2017 before the Adjudicating Authority (NCLT), assailing the same, which was dismissed on 18.03.2021 by the Adjudicating Authority, who confirmed the e- auction sale to and in favour of the 3rd Respondent and consequently has filed the instant Comp. App (AT) (CH) (INS) No. 49 of 2021.
48. The Learned Counsel for the 1st Respondent/Liquidator submits that the 2nd Respondent is a Service Provider having over 500 satisfied clients and had completed over 200 Projects and many of them similar to I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 34 of 88 the instant one and other provisions of the I & B Code, 2016. Indeed, the present e-auction was conducted in terms of the `Process Memorandum' and the results were communicated to the 1st Respondent/Liquidator which is fully automated through the System and therefore, there is no irregularity in regard to the `conduct of the Auction'.
49. The Learned Counsel for the 1st Respondent/Liquidator brings it to the notice of this Tribunal that both the `Bidders' have taken part successfully in the `e-auction' which began at 3.00 P.M. and that the `auction' was not concluded at 5.00 P.M., since further `Bids' were received from either `Bidder', within five minutes. More importantly, the `Bidding' went on till 17:46:00 hours as per the Report of the 2nd Respondent and in terms of the `Process Memorandum' within five minutes extensions were permitted from the last `Bid' submission Viz., 17:41:01 hours till 17:46:00 hours, as last `Bid' was received 17:41:01 hours from the 3rd Respondent. Hence, as per the `Process Memorandum' if the System had not received any `Bids' within five minutes, then the System will automatically close the `e-auction'. In short, on multiple times, the `Requisite' five minutes extensions were provided to the `Parties' Viz., Appellant/Applicant and the 3rd Respondent who took part in the `Bidding'.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 35 of 88
50. Advancing his argument, the Learned Counsel for the 1st Respondent/Liquidator submits that the Report of the 2nd Respondent and its Records clearly mention that there was no `Bidding' activity recorded in the System / Portal by the e-auction Service Provider and the same is evident from the System generated report of the `E-auction Service Provider'. Also that, as per the information from the 2nd Respondent/E-auction Service Provider to the 1st Respondent/Liquidator, when the `Bid' is closed, the auction to submit any further `Bid' will disappear or deactivate and the screenshot of the same is given in the 2nd Respondent's Report, after the last `Bid' from the 3rd Respondent.
51. The Learned Counsel for the 1st Respondent/Liquidator comes out with a plea that the Appellant submitted its last `Bid' at 17:37:33 hours (in terms of the 2nd Respondent's Report and Log Reports) and from the Log Report of the 2nd Respondent it appears that the last `Login' of the `Appellant' was at 18:07:45 hours. The last `Login' of the 3rd Respondent was at 14:47:45 hours, which points out that the 3rd Respondent had logged continuously from the beginning till the end of the `auction'. Apart from that, in the case of the Appellant, it was `logged out' and `logged in' which activity indicates that it was not present through I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 36 of 88 `online' continuously from the beginning to the end of the `auction' bidding time, as per `Process Memorandum'.
52. The Learned Counsel for the 1st Respondent/Liquidator contends that the `activity' Log Report shows that the `Appellant's last `Bid' was at 17:37:33 hours for Rs.17,80,00,000/-, after which, there was no `activity' seen, on their `Login Account' until Login in again 17:57:51 hours, after the `Auction Process' was completed and that the 3rd Respondent was declared as the `Successful Bidder'. As such, in the interregnum, when the `Appellant'/`Applicant' was inactive, the 3rd Respondent had submitted the `Bid' at 17:41:01 hours and because of no further `activity' deducted till 17:46:00 hours, the `e-auction' was automatically closed and no further bids could be made.
53. The Learned Counsel for the 1st Respondent/Liquidator forcefully advances an argument that the Appellant/Applicant itself admittedly was able to see all the `Bids' until its last `Bid' was placed at 17:37:33 hours, which involved around eight rounds of `Bidding' by each party upto the stage. Further, in regard to the final bid, it is likely that the `Appellant' was unable to view the same, as it was logged out or had some issue from its end, which is evident from the fact that it had sought trouble shooting I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 37 of 88 assistance from the 2nd Respondent during the time of `e-auction', and it has admittedly not followed the specific instructions of the 2nd Respondent to `login' only from one `Browser' and not to open `multiple windows' while it was participating in the `e-auction process', therefore, it is the plea of the 1st Respondent / Liquidator that the `Appellant/Applicant' cannot assail the conduct of `e-auction process' for a technical error on its part.
54. The Learned Counsel for the 1st Respondent/Liquidator urges before this `Tribunal' that the `1st Respondent/Liquidator' had conducted the `e-auction' in good faith and was guided by the `2nd Respondent/Agency' (in-charge of e-auction) in announcing the results of `e-auction'. As a matter of fact, Section 233 of the I & B Code, 2016, `protection of action' taken in `Good Faith' by the `Liquidator in discharge of his duties under the Code.
55. The Learned Counsel for the 1st Respondent/Liquidator points out that `Time Sensitivity' of the process is more important, because of the fact that the `Liquidation of the Corporate Debtor' is to be completed within the extended period of Liquidation, as directed by the `Adjudicating Authority' (`Tribunal') on or before 30.08.2021, as per I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 38 of 88 `Order' dated 03.12.2020 in IA/838/2020 in CP(IB)/508/2017. In fact, the Sales Certificate was issued to the 3rd Respondent, in terms of the provisions of IBBI Liquidation Process Regulations and the `Sale' was over.
56. The other contention on behalf of the 1st Respondent/Liquidator is that the Appellant/Applicant cannot assail the `auction sale', after completion of the same by projecting a plea, that it is willing to offer a higher price and take shelter under the pretext of `Maximization of Value from the Sale of the Assets'. In fact, the Appellant/Applicant had the opportunity to provide the `Higher Bid' and failed to exercise the same. Furthermore, after the `Auction Process' was completed, the Appellant as an `Unsuccessful Party' cannot take a stand that it is willing to offer a `Higher Sum', than that of the `Successful Bidder'.
57. The Learned Counsel for the 1st Respondent/Liquidator adverts to the terms of Clause 13, Schedule I of Regulations 33 of the Liquidation Regulations which specifies that `on payment of full sum by the `Successful Bidder', the sale shall stand completed, and that, the Liquidator shall execute the `Sale Certificate' or `Sale Deed' to transfer such Assets and the Assets shall be delivered to the Successful Bidder, in I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 39 of 88 the manner specified in the `Sale Terms'. In fact, the amount was received and was disbursed as per the ingredients of Section 53 of the Code.
58. The Learned Counsel for the 1st Respondent/Liquidator contends that in the instant case before this `Tribunal' there is no material allegation of fraud and also there is no issue of any fraud in the conduct of an `Auction Sale' even according to the Appellant's averments. Further, the Appellant's endeavor to undermine the `Auction Sale' to secure a marginally better or higher price may prove a `self defeating exercise', since the `Bidders' will lose faith in the `Actual Sale' taking place. 1st Respondent / Liquidator's Citations:
59. The Learned Counsel for the 1st Respondent/Liquidator refers to the decision of the Hon'ble Supreme Court of India in Valji Khimji & Co. v. The Official Liquidator, (2008) 9 SCC at Page No. 299 at Spl. Pgs: 304 and 305, wherein at paragraphs 27 to 31, it is observed and held as under:
27. ``In our opinion the decision of this Court in Divya Mfg. Co.
(P) Ltd. [(2000) 6 SCC 69] cannot be treated as laying down any absolute rule that a confirmed sale can be set aside in all circumstances. As observed by one of us (Hon. Katju, J.) in his judgment in Rajbir Singh Dalal (Dr.) v. Chaudhari Devi Lal University [(2008) 9 SCC 284], a decision of a Court cannot be treated as Euclid's formula and read and understood mechanically. A decision must be considered on the facts of that particular case. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 40 of 88
28. If it is held that every confirmed sale can be set aside the result would be that no auction sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. It could have been a different matter if the auction had been held without adequate publicity in well known newspapers having wide circulation, but where the auction-sale was done after wide publicity, then setting aside the sale after its confirmation will create huge problems. When an auction sale is advertised in well-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they are themselves to be blamed if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed after the bidding (or confirmation) is over to offer a higher price. Of course, the situation may be different if an auction-sale is finalized, say for Rs.1 crore, and subsequently somebody turns up offering Rs. 10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, then an inference can be drawn that an attempt had been made to acquire that property/asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done.
29. In the present case we are satisfied that there is no fraud in the auction-sale. It may be mentioned that auctions are of two types - (1) where the auction is not subject to subsequent confirmation and (2) where the auction is subject to subsequent confirmation by some authority after the auction is held.
30. In the first case mentioned above, i.e. where the auction is not subject to confirmation by any authority, the auction is complete on the fall of the hammer, and certain rights accrue in favour of the auction-purchaser. However, where the auction is subject to subsequent confirmation by some authority (under a statute or terms of the auction) the auction is not complete and no rights accrue until the sale is confirmed by the said authority. Once, however, the sale is confirmed by that authority, certain rights accrue in favour of the auction-purchaser, and these rights cannot be extinguished except in exceptional cases such as fraud. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 41 of 88
31. In the present case, the auction having been confirmed on 30-7-2003 by the Court it cannot be set aside unless some fraud or collusion has been proved. We are satisfied that no fraud or collusion has been established by any one in this case.''
60. The Learned Counsel for the 1st Respondent/Liquidator refers to the decision of this `Tribunal' in Manjith Commercial LLP - Appellant SPM Auto Pvt. Ltd. (in Liquidation), (2019) SCC Online NCLAT 1173, wherein at paragraphs 7 to 11, it is observed as under:
7. ``In so far as the wide publicity was not given in the second e-
auction held on 15.04.2019 is concerned, the Liquidator has publicly advertised the auction notice in the Business Standard circulated in Delhi and Jaipur duly disclosing the asset for auctioning and followed the procedure as laid down in the Regulations 12 of (Liquidation Process Regulation). Hence we do not find any merit in the allegation.
8. In so far as the allegations of the Appellant with regard to reducing the time period is concerned, the Liquidator followed the procedures as contemplated in clause 3 of Schedule I of the Regulations, which provides that the Liquidator shall prepare the terms and conditions of sale, Regulation 2 of Schedule I and the Liquidator shall prepare a marketing strategy with the help of marketing Professionals, if required for sale of the Asset. The strategy may include releasing advertisement, preparing of information sheets for the asset, preparing a notice of sale and liaising with Agents. Moreover, in the code and in the liquidation Regulations, no time limit was specified for the auction process, other than the mode of Sale as prescribed in Schedule I of Liquidation Process Regulations, 2016. We do not find any merit in the allegation.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 42 of 88
9. Further, the Appellant vide e-mail dated 15.04.2019 addressed to the Liquidator wherein it was stated that the he intended to purchase the asset at a much higher price than the Reserve Price of Rs. 6.15 Crores. However, the Appellant instead of addressing letter to the Liquidator should have participated in the bid process on the date the Sale Notice was advertised in the newspapers and we are of the view that the Appellant was aware of the Sale Notice. However, to the reasons best known to the Appellant, he did not participate in the e-auction held on 15.04.2019. We also noticed that one of the ex-Director, Mr. Vikrant Mahajan by e-mail dated 20.04.2019 addressed to the Liquidator wherein it is stated that the conduct of second public e-auction with a shorter time given smell that the whole process was done to sell the property to a pre-settled buyer.
10. From the letter of the ex-Director dated 20.04.2019 and the earlier letter of the Appellant dated 15.04.2019, it is apparent that the Appellant may be related party to the ex-Director. However, we are not expressing any opinion with respect to the same. As per Regulation 33 (Liquidation Process Regulations, 2016) and as per sub-clause 3, the Liquidator shall not proceed with the sale of asset if he has reason to believe that there is any collusion between the buyer and creditor and the buyer shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties.
11. However, the Appellant did not participate in the e-auction and now making vague allegations without any substantial grounds cannot be accepted. As per Regulation 44(1) of the Liquidation Process Regulations, 2016, the Liquidator shall liquidate the 'Corporate Debtor' within a period of two years. We are of the view that there should not be any unnecessary delay and protract the liquidation process for undue advantage of some of individuals or group, which would adversely affect the liquidation process.'' I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 43 of 88
61. The Learned Counsel for the 1st Respondent/Liquidator points out to the decision of this `Tribunal' in State Bank of India Vs Maithan Alloys Ltd. & Others, (2020) SCC Online NCLAT 429 at paragraphs 29 and 30, wherein it is observed as under:
29. ``We have gone through the various submissions made by them.
Appellant, Respondent No. 1 and liquidator and we found that R-2 to R-4 did not participate in the e-auction and filed an application as objectors and offering a higher price in order to create a lust for worth maximisation and thereby vitiated the whole process. In any case R-1 has also withdrawn the offer without there being any corresponding provision in the IBC and NCLT was entitled to forfeit their entire amount. Regulation 32, 32(A) and 33 of Insolvency and Bankruptcy Board of India liquidation process regulation 2016, provides for the mode of liquidation. Regulation 32 of Insolvency and Bankruptcy Board of India Liquidation Process Regulation 2016 the liquidator should originally sell the Corporate Debtor through an auction and private auction is permitted only in certain classes of assets which are of perishable nature, assets likely to deteriorate in value if not sold immediately, if it is sold at a higher price than the Reserve Price of a failed auction etc. Regulation 33(3) states as follows:-
"The liquidator shall not proceed with the sale of an asset if he has reason to believe that there is any collusion between the buyers, or the corporate debtor's related parties and buyers, or the creditors and the buyer, and shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties."
30. Hon'ble Supreme Court has already observed in Valji and Khimji Company v Official Liquidator of Hindustan Nitro Product (Gujarat) Limited where bids were received and were opened in the Court. The highest bid was that of the appellant M/s. Valji Khimji I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 44 of 88 & Company amounting to Rs. 3.51 crores. With the consent of the learned advocates representing the secured creditors, the said bid was accepted and the sale was confirmed on 30.7.2003. The Court directed the appellant to deposit 25% of the purchase price i.e. Rs.63,98,000/- within 30 days from the said day and to deposit the balance amount within the next three months. The Court also directed that the amount may be deposited in instalments, but no instalment should be less than Rs.5 lakhs. Accordingly, Hon'ble Supreme Court confirmed the auction sale in favour of the Appellant.'' Second Respondent's pleas:
62. According to the Learned Counsel for the 2nd Respondent in the instant case, the `Reserve Price' was fixed at Rs.16,20,00,000/- and pursuant to the Appellant's submission of `Expression of Interest' (`EOI') on 15.01.2021, the 2nd Respondent on 16.01.2021 had approved the participation of the Appellant shared the necessary details, including username, password, confirm code, auction ID. In fact, with the Appellant, the 2nd Respondent had shared the `E-Auction Tutorial'.
63. It is represented on behalf of the 2nd Respondent that the `Auction' was to take place between 3.00 P.M. to 5.00 P.M., with an incremental bid of Rs.10,00,000/- and that the `Auction' might be extended for another five minutes for unlimited times, provided an `Incremental Bid' is placed by the `Bidder', in that, the extended period of five minutes, I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 45 of 88 thereby the `Auction' would go and on until the `Successful Bidder' chosen or no further `Bid' is placed by the other `Bidder' in the extended time of five minutes.
64. The Learned Counsel for the 2nd Respondent points out that the Appellant, although relies on the purported screenshots had not furnished the `Mandatory Certification' as per Section 65B of the Indian Evidence Act, 1872, for the reasons best known to it. As a matter of fact, the screenshots are inadmissible because of the fact that as per Section 65B (4) of the Indian Evidence Act, 1872, `Certificate' is a condition precedent for the admissibility of an `Electronic Record' as `Evidence'.
65. The Learned Counsel for the 2nd Respondent by referring to the Report dated 20.03.2021, prepared by Tata Communications and Auditor's Report dated 24.04.2021, secured from a `Third Party' and these Reports were not filed before the `Adjudicating Authority' for the purpose of `Adjudication' and these materials cannot be allowed to be received at the `Appellate's stage', before this `Tribunal' in the instant `Appeal' and for not filing the same before the `Adjudicating Authority', no tangible reasons are projected on the side of the Appellant.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 46 of 88
66. The Learned Counsel for the 2nd Respondent refers to the decision of the Hon'ble Supreme Court of India in the matter of N Kamalam v. Ayyasamy (2001) 7 SCC at Page 503, wherein at paragraph 19, it is observed as under:
19. ``Incidentally, the provisions of Order 41 Rule 27 have not been engrafted in the Code so as to patch up the weak points in the case and to fill up the omission in the Court of Appeal - it does not authorize any lacunae or gaps in evidence to be filled up. The authority and jurisdiction as conferred on to the appellate court to let in fresh evidence is restricted to the purpose of pronouncement of judgment in a particular way.'' and contends that the `Appellant' based on the `Reports' prepared by the `Private Auditors' / `Third Party', who are hired by the `Appellant' for the `litigation purpose' cannot sit in an `Appeal' seeking a fresh determination of his case.
67. The Learned Counsel for the 2nd Respondent points out that the Appellant cannot claim/derive any benefit because of its default/ negligence/lapses/inaction or issues including the aspect of `Internet Connectivity' related issues and in fact the `Appellant' was `inactive' and `logged out' from 17:32:34 till 17:57:59 hours.
68. The Learned Counsel for the 2nd Respondent submits that the 2nd Respondent had expressly directed the `Appellant' not to login from I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 47 of 88 multiple browsers and the `Appellant', had admittedly logged in from two browsers simultaneously, which is against the practice of `Public Auction'.
69. It is the contention of the 2nd Respondent that at no place, the purported screenshots mentions that the Appellant was declared as a `Successful Bidder'. Also, it is pointed out on behalf of the 2nd Respondent that the `Appellant' had breached the `terms' of the `E- auction' and the few illustrations in this regard are;
(i) The Appellant admitted that he was getting logged out every now and then and therefore, he had changed his internet connection.
(ii) The Appellant by utilizing the `Third Party - App Zoom' was simultaneously sharing the `E-Auction' screen.
(iii) The Appellant had opted not to `Refresh' in spite of specific directions of the 2nd Respondent.
(iv) The Appellant had admitted that he had chosen to simultaneously logged in from two Browsers, despite from the instructions from the 2nd Respondent.
70. The Learned Counsel for the 2nd Respondent brings it to the notice of this `Tribunal' that `E-auction' services offered by the 2nd Respondent I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 48 of 88 are end-to-end encrypted meaning thereby neither the 2nd Respondent nor the Liquidator or any other party whatsoever can interfere / intervene in the course of live action and hence the 2nd Respondent cannot have any access of any such screenshots.
71. The Learned Counsel for the 2nd Respondent submits that the 2nd Respondent being a `Service Provider' cannot be held responsible for the `System Error' or the `Appellant's Internet Connection'. Furthermore, the `Timer' associated with the `E-auction' is the `Client Based' / `Global Timer' which repeatedly upgrades and updates by sending the signals to and fro with the `Server' meaning that during the course of `E-auction' the signal will be shared with the Server repeatedly which in turn will upgrade the `Timer'. After the completion of `E-auction', System generated e-mail is sent to the `Successful Bidder' automatically. 2nd Respondent's Citations:
72. The Learned Counsel for the 2nd Respondent refers to the Judgment of the Hon'ble Supreme Court of India dated 14.07.2020 in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal, (vide in Civil Appeal Nos. 20825-20826 of 2017, wherein it is observed as under:
23. ``Under Sub-section (4), a certificate is to be produced that identifies the electronic record containing the statement and I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 49 of 88 describes the manner in which it is produced, or gives particulars of the device involved in the production of the electronic record to show that the electronic record was produced by a computer, by either a person occupying a responsible official position in relation to the operation of the relevant device; or a person who is in the management of relevant activities whichever is appropriate. What is also of importance is that it shall be sufficient for such matter to be stated to the best of the knowledge and belief of the person stating it. Here, doing any of the following things must be read as doing all of the following things, it being well settled that the expression any can mean all given the context (see, for example, this Courts judgments in Bansilal Agarwalla v. State of Bihar (1962) 1 SCR 331 and 1 3. The first contention is based on an assumption that the word any one in Section 76 means only one of the directors, and only one of the shareholders. This question as regards the interpretation of the word any one in Section 76 was raised in Criminal Appeals Nos. 98 to 106 of 1959 (Chief Inspector of Mines, etc.) and it has been decided there that the word any one should be interpreted there as every one. Thus under Section 76 every one of the shareholders of a private company owning the mine, and every one of the directors of a public Om Parkash v.
Union of India (2010) 4 SCC 172). This being the case, the conditions mentioned in sub-section (4) must also be interpreted as being cumulative.
24. It is now appropriate to examine the manner in which Section 65B was interpreted by this Court. In Anvar P.V. (supra), a three Judge Bench of this Court, after setting out Sections 65A and 65B of the Evidence Act, held:
14. Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65-A, can be proved only in accordance with the procedure prescribed under Section 65-B. Section 65-B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the section starts with a non obstante clause.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 50 of 88 Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, company owning the mine is liable to prosecution. No question of violation of Article 14 therefore arises. 2 70. Perusal of the opinion of the Full Bench in B.R. Gupta-I [Balak Ram Gupta v. Union of India, AIR 1987 Del 239] would clearly indicate with regard to interpretation of the word any in Explanation 1 to the first proviso to Section 6 of the Act which expands the scope of stay order granted in one case of landowners to be automatically extended to all those landowners, whose lands are covered under the notifications issued under Section 4 of the Act, irrespective of the fact whether there was any separate order of stay or not as regards their lands. The logic assigned by the Full Bench, the relevant portions whereof have been reproduced herein above, appear to be reasonable, apt, legal and proper. (emphasis added) without further proof or production of the original. The very admissibility of such a document i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions under Section 65-B(2).
Following are the specified conditions under Section 65- B(2) of the Evidence Act:
(i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer;
(ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity;
(iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 51 of 88 for some time, the break or breaks had not affected either the record or the accuracy of its contents; and
(iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity.
15. Under Section 65-B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied:
(a) There must be a certificate which identifies the electronic record containing the statement;
(b) The certificate must describe the manner in which the electronic record was produced;
(c) The certificate must furnish the particulars of the device involved in the production of that record;
(d) The certificate must deal with the applicable conditions mentioned under Section 65-B(2) of the Evidence Act; and
(e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device.
16. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, compact disc (CD), video compact disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 52 of 88
17. Only if the electronic record is duly produced in terms of Section 65-B of the Evidence Act, would the question arise as to the genuineness thereof and in that situation, resort can be made to Section 45-A opinion of Examiner of Electronic Evidence.
18. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65-B of the Evidence Act are not complied with, as the law now stands in India.
xxx xxx xxx
20. Proof of electronic record is a special provision introduced by the IT Act amending various provisions under the Evidence Act. The very caption of Section 65-A of the Evidence Act, read with Sections 59 and 65-B is sufficient to hold that the special provisions on evidence relating to electronic record shall be governed by the procedure prescribed under Section 65-B of the Evidence Act. That is a complete code in itself. Being a special law, the general law under Sections 63 and 65 has to yield.
21. In State (NCT of Delhi) v. Navjot Sandhu a two-Judge Bench of this Court had an occasion to consider an issue on production of electronic record as evidence. While considering the printouts of the computerised records of the calls pertaining to the cellphones, it was held at para 150 as follows: (SCC p. 714) 150. According to Section 63, secondary evidence means and includes, among other things, copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies. Section 65 enables secondary evidence of the contents of a document to be adduced if the original is of such a nature as not to be easily movable. It is not in dispute that the information contained in the call records is stored in huge servers which cannot be easily moved and produced in the court. That is what the High Court has also observed at para;
276. Hence, printouts taken from the computers/servers by mechanical process and certified by a responsible official of the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 53 of 88 service-providing company can be led in evidence through a witness who can identify the signatures of the certifying officer or otherwise speak of the facts based on his personal knowledge. Irrespective of the compliance with the requirements of Section 65- B, which is a provision dealing with admissibility of electronic records, there is no bar to adducing secondary evidence under the other provisions of the Evidence Act, namely, Sections 63 and 65. It may be that the certificate containing the details in sub-section (4) of Section 65-B is not filed in the instant case, but that does not mean that secondary evidence cannot be given even if the law permits such evidence to be given in the circumstances mentioned in the relevant provisions, namely, Sections 63 and 65. It may be seen that it was a case where a responsible official had duly certified the document at the time of production itself. The signatures in the certificate were also identified. That is apparently in compliance with the procedure prescribed under Section 65-B of the Evidence Act. However, it was held that irrespective of the compliance with the requirements of Section 65-B, which is a special provision dealing with admissibility of the electronic record, there is no bar in adducing secondary evidence, under Sections 63 and 65, of an electronic record.
22. The evidence relating to electronic record, as noted hereinbefore, being a special provision, the general law on secondary evidence under Section 63 read with Section 65 of the Evidence Act shall yield to the same. Generalia specialibus non derogant, special law will always prevail over the general law. It appears, the court omitted to take note of Sections 59 and 65-A dealing with the admissibility of electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Sections 65-A and 65-B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this Court in Navjot Sandhu case, does not lay down the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 54 of 88 admitted in evidence unless the requirements under Section 65-B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65-B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible.
23. When legal position is that additional evidence, oral or documentary, can be produced during the course of trial if in the opinion of the Court production of it is essential for the proper disposal of the case, how it can be held that the certificate as required under Section 65-B of the Evidence Act cannot be produced subsequently in any circumstances if the same was not procured along with the electronic record and not produced in the Court with the charge-sheet. In my opinion it is only an irregularity not going to the root of the matter and is curable. It is also pertinent to note that certificate was produced alongwith the charge-sheet but it was not in a proper form but during the course of hearing of these petitioners, it has been produced on the prescribed form."
56. In Kundan Singh (supra), a Division Bench of the Delhi High Court held:
"50. Anwar P.V. (supra) partly overruled the earlier decision of the Supreme Court on the procedure to prove electronic record(s) in Navjot Sandhu (supra), holding that Section 65B is a specific provision relating to the admissibility of electronic record(s) and, therefore, production of a certificate under Section 65B(4) is mandatory. Anwar P.V. (supra) does not state or hold that the said certificate cannot be produced in exercise of powers of the trial court under Section 311 Cr.P.C or, at the appellate stage under Section 391 Cr.P.C. Evidence Act is a procedural law and in view of the pronouncement in Anwar P.V. (supra) partly overruling Navjot Sandhu (supra), the prosecution may be entitled to invoke the aforementioned provisions, when justified and required. Of course, it is open to the court/presiding officer at that time to I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 55 of 88 ascertain and verify whether the responsible officer could issue the said certificate and meet the requirements of Section 65B."
58. It may also be seen that the person who gives this certificate can be anyone out of several persons who occupy a 'responsible official position' in relation to the operation of the relevant device, as also the person who may otherwise be in the 'management of relevant activities' spoken of in Sub-section (4) of Section 65B. Considering that such certificate may also be given long after the electronic record has actually been produced by the computer, Section 65B(4) makes it clear that it is sufficient that such person gives the requisite certificate to the "best of his knowledge and belief" (Obviously, the word "and" between knowledge and belief in Section 65B(4) must be read as "or", as a person cannot testify to the best of his knowledge and belief at the same time).
59. We may reiterate, therefore, that the certificate required under Section 65B(4) is a condition precedent to the admissibility of evidence by way of electronic record, as correctly held in Anvar P.V. (supra), and incorrectly "clarified" in Shafhi Mohammed (supra). Oral evidence in the place of such certificate cannot possibly suffice as Section 65B(4) is a mandatory requirement of the law. Indeed, the hallowed principle in Taylor v. Taylor (1876) 1 Ch.D 426, which has been followed in a number of the judgments of this Court, can also be applied. Section 65B(4) of the Evidence Act clearly states that secondary evidence is admissible only if lead in the manner stated and not otherwise. To hold otherwise would render Section 65B(4) otiose.''
73. The Learned Counsel for the 2nd Respondent cites the Judgment of the Hon'ble Supreme Court in India dated 18.09.2014 (Vide Civil Appeal No. 4226 of 2012) in Anwar PV v. P K Basheer, wherein it is observed as under:
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 56 of 88 ``A certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice.'' 3rd Respondent's Submissions:
74. The Learned Senior Counsel for the 3rd Respondent contends that the `Appellant' was solicited by the 2nd Respondent to refresh its System frequently and at least at intervals of ten minutes which the Appellant had accepted and stated `Yes, I will keep refreshing' (vide Vol. II Pages 261 to 262 of `Appellant's Paper Book' / `Typed Set of Papers').
75. It is represented on behalf of the 3rd Respondent, the Appellant, on 21.01.2021, after 17:37, logged in next time at 17:57:59, with a gap of more than 20 minutes. Also, that on earlier occasion, the Appellant remained logged out for a considerable stretch of time, when the 2nd Respondent had over `Whatsapp' messaging gave a reminder to it and the `Appellant' had through a `Whatsapp' message admitted that he was not refreshing the screen.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 57 of 88
76. The Learned Counsel for the 3rd Respondent points out that the `Appellant' after submitting its offer for Rs.17.80 Crores at 17:37:33, on 21.01.2021 had not logged in again till 17:57:59, knowing fully that time to outbid the higher offer was only five minutes. In fact, the Appellant knew that after 17:37:33, the 3rd Respondent had five minutes Viz. 17:42:33, to outbid it. Later, the `Appellant' had maximum five minutes to outbid the 3rd Respondent by 17:47:33 and the fact is that the Appellant had not logged in 17:57:59, which indicates that it was not interested in `bidding' anymore, after submitting its offer for Rs.17.80 Crores.
77. The Learned Counsel for the 3rd Respondent points out that the 3rd Respondent after obtaining the `Sales Certificate' from the 1st Respondent/Liquidator, had altered its position which is detriment by spending substantial money for reviving the `Plant' and took numerous steps for `Revival' of the same. Indeed, the Sale, which was conducted by the 2nd Respondent on behalf of the 1st Respondent, was properly conducted `E-auction Process' in a fair and transparent manner.
78. The Learned Counsel for the 3rd Respondent brings it to the notice of this `Tribunal' that the 3rd Respondent has spent various sums and in I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 58 of 88 fact old machineries were repaired at the cost of 3rd Respondent and new machineries were ordered for the `Plant'. The 3rd Respondent took possession of the factor and had applied for `Renewal of Licenses' before the different `Authorities' in fact, the 3rd Respondent had paid the `whole consideration' for the `Sale' and the `Sale' was completed.
79. The Learned Counsel for the 3rd Respondent vehemently takes a stand that if this `Tribunal' permits the subsequent `bid' to undue the `concluded sale', there will be no sanctity of a `Court Sale' through a `Public Auction' and an unscrupulous bidder would wait and watch on the wings. Moreover, an uncertainty in `Public Auction' would detract genuine and bonafide bidders by adopting an `unscrupulous practice'. 3rd Respondent's Decided Cases:
80. The Learned Counsel for the 3rd Respondent cites the decision of the Hon'ble Supreme Court in Pegasus Assets Reconstruction P Ltd. V. Haryana Concast Limited & Ors., reported in Manu/SC/1489/2015:
AIR2016 SC 494, wherein at paragraphs 32 and 33, it is observed as under:
32. `` On considering the submissions of parties, we find that the sale confirmed in favour of M/s. Venus Realcon for Rs.32 crores I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 59 of 88 does not require any interference particularly at the instance of Petitioner-Vinod Rajaliwala. There was no illegality or irregularity established against the conduct of auction and once it is found that the offer of Rs.32 crores was a fair offer in a competitive bid conducted fairly and the offer has been accepted and the sale confirmed, it would not be proper for this court to undermine the value of such auction sale conducted not only by the secured creditor but also by the Official Liquidator who was permitted to be associated with the whole process of finding out of valuation as well as the conduct of sale. M/s. Venus Realcon has rightly placed reliance upon the judgments of this court in the case of Valji Khimji & Co. vs. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. 2008 (9) SCC 299 and Vedica Procon Private Limited vs. Balleshwar Greens P. Ltd., 2015(8) SCALE 713. In Valji Khimji, the law was enunciated in Paragraph 28 in the following words:
If it is held that every confirmed sale can be set aside the result would be that no auction-sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. It could have been a different matter if the auction had been held without adequate publicity in well-known newspapers having wide circulation, but where the auction-sale was done after wide publicity, then setting aside the sale after its confirmation will create huge problems. When an auction-sale is advertised in well-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they are themselves to be blamed if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 60 of 88 after the bidding (or confirmation) is over to offer a higher price. Of course, the situation may be different if an auction-sale is finalized, say for Rs.1 crore, and subsequently somebody turns up offering Rs.10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, then an inference can be drawn that an attempt had been made to acquire that property/asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done.
33. In Vedica Procons case (supra) the aforesaid view was noticed and after considering many judgments in Paragraph 39, the Court approved the view taken in Navalkha and Sons vs. Sri Ramanya Das & Ors., 1969 (3) SCC 537 that there is a discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of sale is made. However, once the Company Court is satisfied that the price is adequate, the subsequent higher offer cannot be a ground for refusing confirmation. The price of immoveable property keeps on varying depending upon the market conditions and availability of a buyer. Such fluctuations may attract fresh higher offers but normally such offers cannot be made the basis for reopening the confirmed sale which was otherwise valid. In the present case, we are satisfied that the sale made in favour of M/s. Venus Realcon does not require any interference.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 61 of 88 There is no good reason why the full price paid by Venus Realcon should be ordered to be refunded with interest etc. and possession which was delivered to Venus Realcon at the time of sale should be disturbed after passage of so much time. In such circumstances, while granting leave in SLP(C) Nos.117-118, the consequent Civil Appeals are hereby dismissed but without any order as to costs. The money deposited in this case by the intervener M/s. Himalayan Infra Projects Private Limited should be refunded to it forthwith along with interest accrued thereupon.''
81. The Learned Counsel for the 3rd Respondent refers to the Judgment of this `Tribunal' dated 26.02.2020 in Comp. App (AT) (INS) No. 1245 - 1247 of 2019 in State Bank of India v. Maithan Alloys Ltd. & Ors., wherein at paragraphs 28 to 38, it is observed as under:
28. ``We have gone through the various submissions made by them.
Appellant, Respondent No. 1 and liquidator and we found that R-2 to R-4 did not participate in the e-auction and filed an application as objectors and offering a higher price in order to create a lust for worth maximisation and thereby vitiated the whole process. In any case R-1 has also withdrawn the offer without there being any corresponding provision in the IBC and NCLT was entitled to forfeit their entire amount. Regulation 32, 32(A) and 33 of Insolvency and Bankruptcy Board of India liquidation process regulation 2016, provides for the mode of liquidation. Regulation 32 of Insolvency and Bankruptcy Board of India Liquidation Process Regulation 2016 the liquidator should originally sell the Corporate Debtor through an auction and private auction is permitted only in certain classes of assets which are of perishable nature, assets likely to deteriorate in value if not sold immediately, I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 62 of 88 if it is sold at a higher price than the Reserve Price of a failed auction etc. Regulation 33(3) states as follows:-
"The liquidator shall not proceed with the sale of an asset if he has reason to believe that there is any collusion between the buyers, or the corporate debtor's related parties and buyers, or the creditors and the buyer, and shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties.
29. Hon'ble Supreme Court has already observed in Valji and Khimji Company vs. Official liquidator of Hindustan nitro product (Gujarat) limited and others. where bids were received and were opened in the Court. The highest bid was that of the appellant M/s. Valji Khimji & Company amounting to Rs. 3.51 crores. With the consent of the learned advocates representing the secured creditors, the said bid was accepted and the sale was confirmed on 30.7.2003. The Court directed the appellant to deposit 25% of the purchase price i.e. Rs.63,98,000/- within 30 days from the said day and to deposit the balance amount within the next three months. The Court also directed that the amount may be deposited in instalments, but no instalment should be less than Rs.5 lakhs. Accordingly Hon'ble Supreme Court confirmed the auction sale in favour of the Appellant.
CONCLUSION:
30. The appeal is, therefore, maintainable in view of the provision of Section 61 (1) of IBC as SBI has a large stake of Rs.469.29 cr.
31. The Auction is not challenged on the ground of fraud and/or irregularity.
32. There is no provision in the terms and condition of auction to withdraw from the auction process once it is agreed by the successful bidder (R-1) i.e m/s Maithan Alloys Limited.
33. Section 35 (1) (f) of the IBC empowers liquidator to sell the property of the corporate debtor in liquidation by public Auction.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 63 of 88 Hence there was no need for adjudicating authority to direct the liquidator for considering the proposal of R- 2 to R-4 who has approached the Adjudicating Authority after due date of finalisation of Auction.
34. NCLAT has also held in case of MAJIT COMMECIAL LLP VS SPM AUTO PVT.LTD (IN LIQUIDATION) CA(AT) (INSOLVENCY) No. 732 of 2019 that objectors are not to be allowed to unnecessary delay and protract the liquidation process for undue advantage of some of individuals or groups which would affect unnecessarily the liquidation process.
35. This is a case of unilaterally cancelling the contract may be with involvement of R-2 to R-4 and thereby putting the liquidation process into jeopardy.
36. Hence Appeal is allowed by setting aside, impugned order dated 25.09.2019, 23.10.2019 and 06.11.2019 in CA (IB) NO. 796/KB/2019 in CP (IB) No. 176/KB/2018, CA(IB) No. 1366/KB/2019 in CP(IB) No. 176/KB/2018, CA(IB) No. 293/KB/2019, CA(IB) No. 1165/KB/2018, CA(IB) No. 615/KB/2019, CA(IB) No. 625/KB/2019, CA(IB) No. 755/KB/2019, CA(IB) No. 883/KB/2019, CA(IB) No. 957/KB/2019, CA(IB) No. 1345/KB/2019 in CP(IB) No. 176/KB/2018 and directing Respondent No.1 i.e M/s Maithan Alloys Limited to complete sale transaction by paying sale consideration.
37. Respondent R-2 to R-4 is imposed a fine of Rs. 10 Lakhs each as they have hampered & derailed the liquidation process. The amount is to be deposited in favour of the Corporate Debtor i.e. Impex Metal & Ferro Alloys Limited (in Liquidation) and be handed over to Liquidator, Mr. Samir Kumar Bhattacharya within 30 days from the date of this Judgment.
38. If such dubious systems are permitted, the liquidation process will become unending leading to reduction in value of Asset of Corporate Debtor instead of Maximisation of value of Corporate Debtor.'' I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 64 of 88
82. The Learned Counsel for the 3rd Respondent adverts to the decision of Hon'ble Supreme Court in Sushil Kumar v. Rakesh Kumar, reported in (2003) 8 SCC at Page 673 at spl. Pg.: 676, wherein at paragraphs 61, 64, 65 and 63, it is observed and held as under:
``A person is not expected to take false grounds regarding his age or to make a statement that he had been reading in a school. No presumption in this behalf can be raised as such allegations would be subject to judicial scrutiny.
(Para 61) Even otherwise making a false statement before the court whether on affidavit or not is not to be treated lightly. The court acts on the basis of the statement made by a party to the lis. Whether such defence has been accepted or not is not of much importance but whether a false statement to the knowledge of the party has been made or not is. In any view of the matter, the court must draw an adverse inference in this behalf against the respondent.
(Para 64) Furthermore, a person should not be permitted to take advantage of his own wrong. He should either stand by his statement made before a court of law or should explain the same sufficiently. In absence of any satisfactory explanation, the court will presume that the statement before a court is correct and binding on the party on whose behalf the same has been made.
(Para 65) As the law stated in Thiru John case ``a party's admission as defined in Sections 17 to 20, fulfilling the requirements of Section 21 of the Evidence Act , is substantive evidence proprio vigore. An I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 65 of 88 admission, if clearly and unequivocally made, is the best evidence against the party making it and though not conclusive, shifts the onus on to the maker.'' (Para 63)
83. The Learned Counsel for the 3rd Respondent cites the decision of the Hon'ble High Court of Bombay (Aurangabad Bench) in Datta and Ors. V. State of Maharashtra and Ors., reported in Manu/MH/3146/2019, wherein in at paragraphs 34, 36 and 37, it is observed as under:
34. ``In view of law laid down in the case of Vedica Procon Private Ltd. (Supra) and above referred principles and safeguards emerged from various judgments, we have no hesitation to hold that if all the said principles and safeguards are satisfied and if there is nothing to suggest any collusion of fraud, the auction proceeding may not be there is nothing to suggest any collusion or fraud, the auction proceeding may not be reopened only on the ground that subsequent to the finalization of the auction slightly higher offer is received, than the auctioned price to the sale of the property in liquidation. Thus, in view of the fact that except allegation of fraud and collusion, no evidence in that regard brought on record by any of the Petitioners, we are of the considered view that this is not a fit case to reopen the auction proceeding only because slightly higher offer is made by one of the Petitioners than the auctioned price.
36. On modification of said contention of negotiation, the time period was extended upto 24.05.2019 from 17.5.2019. It is also clear from the facts that the Petitioners in Writ Petition No. 7784/2019, submitted his offer on 24.05.2019. Thus on the date of the submission of offer, the Petitioner was aware of modified condition and inspite of the same he did not raise any demure to modified condition and participated in auction.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 66 of 88
37. It is now well settled law that the conditions of tenders cannot be challenged once participated. In the cases of Montecarlo Ltd., M/s. Michigan Rubber Ltd., D.G. Road Safety Pvt. Ltd. and Saj Enterprises (supra) the Hon'ble Supreme Court has held that the tender conditions cannot be allowed to challenge once participated. In the given facts and circumstances of present case the said well recognized principle is suarely applicable to the present case. Thus we hold that it is not open for the Petitioner in Writ Petition No. 7784/2019 to challenge the conditions of auction in question, particularly when he participated in auction process without any demur.'' Fraud:
84. It is relevantly pointed out by this `Tribunal' that `Fraud' and `Collusion' vitiates the `solemn proceedings' in any `Civilised System of Jurisprudence'. `Fraud' emanates from a deception committed by the `disclosure of an incorrect facts knowingly and deliberately to invoke the exercise of power'. To put it pin-pointedly, it is an act of `Trickery' or `Deceit'.
85. The term `Fraud' involves (i) Deceit (ii) An injury to the individual `Deceived' (iii) An injury is like `deprivation of an `Movable' / `Immovable Property' or of `Money', and it will include whatever harm caused to any person in body, mind, reputation, etc.'.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 67 of 88 Meaning of Fraud:
86. Section 17 of the Indian Contract Act, 1872, defines `Fraud', meaning and including the suggestion as to a fact of that which is untrue, by one who does not believe it to be true and active concealment of a fact by one having knowledge or belief of fact.
Standard of Proof:
87. More importantly, in respect of an `allegation', `misrepresentation' or `Fraud' is made, the level of proof required is extremely high and placed on par with the `Criminal Trial'.
Negligence:
88. The word `Negligence' has manifestations Viz., a) `Active Negligence' and b) `Passive Negligence'. In case of `Negligence' per se, no further proof is required.
Evaluation:
89. The Appellant/Applicant in I.A. No. 74/2021 in CP/508/IB/2017, before the `Adjudicating Authority' (`National Company Law Tribunal') had prayed for a `Relief' in (i) Setting aside the declaration of the 3rd I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 68 of 88 Respondent as a `Successful Bidder (ii) To declare it (Applicant/Appellant) as the `Successful Bidder' in the `E-auction' dated 21.01.2021. Further, in the interim, had sought an `Order' in directing the 1st Respondent/Liquidator of Ennore Coke Limited not to issue `Letter of Intent' to the 3rd Respondent and not to accept the `Balance Consideration' from the 3rd Respondent. Also, a direction was sought for by the `Applicant/Appellant' (in the interim) in directing the 1st Respondent and / or the 2nd Respondent not to conclude the `Sale' by executing a Sale Certificate or Sale Deed to transfer the `Assets' forming part of the `Auction' dated 21.01.2021 to the 3rd Respondent.
90. The Appellant/Applicant in I.A. No. 74 of 2021 in CP/508/IB/2017 before the Adjudicating Authority in the alternative had prayed for an `Order' in directing the 1st Respondent/Liquidator to conduct another round of auction in terms of Clause 11 of Schedule - I of Regulation 33 of the Liquidation Regulations for the Assets of the Corporate Debtor, in a transparent, impartial and unbiased manner by appointing a Government approved E-Auction Service Provider in place of 2nd Respondent or such E-Auction Service Provider, as the Adjudicating Authority, may direct.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 69 of 88
91. The Appellant/Applicant in I.A. No. 74 of 2021 in CP/508/IB/2017 before the Adjudicating Authority had also prayed for a `Relief' appointing an Independent Forensic Expert, to conduct a Forensic Audit of the entire `Bidding Process' / `Portal' and other computer systems of the 2nd Respondent.
92. According to the Appellant / Applicant during the course of `Liquidation Proceedings' the 1st Respondent/Liquidator had issued an `Expression of Interest' and the `EOI', inviting `Investors' to acquire Assets of the Corporate Debtor had included the `Tender' document, terms and conditions (`Process Memorandum') for participating in the `E- auction Sale' for the Corporate Debtor, which were made available to the `Bidders' on 24.12.2020.
93. It is represented on behalf of the Appellant/Applicant that the 1st Respondent/Liquidator had issued the `Process Memorandum' for the purpose of `Auctioning of Leasehold Land', Building, Plant and Machinery, Furnitures and Fixtures and Vehicles at the Haldia of the Corporate Debtor as mentioned in Clause 7 of the `Process Memorandum'. In fact, the `Reserve Price' for the Assets, in terms of the Process Memorandum was Rs.16,20,00,000/-.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 70 of 88
94. It comes to be know that as per the terms of the Process Memorandum, The Appellant/Applicant had submitted its `Expression of Interest' by email dated 15.01.2021 along with `Requisite Bid Form' and `Earnest Money Deposit, etc., and it was approved for taking part in the `E-auction' which was informed by the 2nd Respondent through email dated 16.01.2021. E-Auction Bidder Tutorial Sheet was provided to the Appellant/Applicant and the Appellant/Applicant took part in the E- auction on 21.01.2021 and incrementally increased its `Bid' within every five minutes from the last `Bid' placed by the another `Bidder'.
95. The Appellant/Applicant placed its 9th Bid of Rs.17,80,00,000/- at 17:37:33 hours on 21.01.2021. It is the version of the Appellant/Applicant that after it placed its 9th Bid at 17:37:33, the 3rd Respondent had not placed its `Bid' within five minutes of 17:37:33 hours. As a matter of fact, `E-auction' ended on 21.01.2021 at 17:42:32 hours with the Appellant/Applicant as the `Successful Bidder'. The first screenshot of the `E-Auction Portal' taken at 17:43:17 hours showed that the `Auction' was `Closed'. The screenshot contained the last bid of the Applicant as Rs.17,80,00,000/-. The second screenshot of the `E-auction Portal' taken at 17:43:39 hours clearly shown that the `Auction' end date and the time was mentioned in the said screenshot from the platform as `Auction End I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 71 of 88 Date & Times - 21/01/2021 17:42:32' and further that the Appellant/Applicant emerged as the `Highest Successful Bidder' in the `E-Auction', as per electronic records.
96. According to the Appellant/Applicant it attached the same screenshots of the `E Portal' of the 2nd Respondent as `proof' of its bid of Rs.17.80 Crores was the highest bid at 17:42:32 hours on 21.01.2021, etc. The Learned Counsel for the Appellant/Applicant that on 21.01.2021 at 7:27 P.M., the 1st Respondent/Liquidator informed the Appellant/Applicant that as per the `Auction Login Report', `Bids History Report' and `Itemwise Breakup Report', shared by the 2nd Respondent, the `Successful Bidder' for the `E-auction' conducted was `Mahalaxmi Wellman Fuel LLP/3rd Respondent.
97. The Learned Counsel for the Appellant / Applicant takes a stand that the 2nd Respondent's Report was not genuine and that the actions of the 1st Respondent/Liquidator were not transparent and an arbitrary one. In this connection, the Learned Counsel for the Appellant/Applicant submits that the `Auctions' have to maximize the value by a transparent manner and in the instant case, the Electronic Records were manipulated to prop up the 3rd Respondent, as the `Highest Bidder' while none of the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 72 of 88 same was visible in the `E-Auction Portal' because the `Portal' showed that the `E-Auction Process' was closed at 17:42:32 hours.
98. The Learned Counsel for the Appellant/Applicant comes out with a plea that the actions of the 1st and 2nd Respondents altering the `Digital E- Auction Result' are in violation of the `Information Technology Act, 2000' and is an `offence', committed as per Section 464 of the Indian Penal Code. Furthermore, the 1st Respondent/Liquidator action by inserting the entry of the 3rd Respondent much after the `Bidding' was closed, is a manipulation of Electronic Records made by the Respondents No. 1 and 2 and they have committed fraud and the selection of the 3rd Respondent was a malafide one.
99. The 1st Respondent/Liquidator in his `Reply' to IA/74/2021 in CP/508/IB/2017 had inter alia averred that as per `Report' of the 2nd Respondent received by the `Liquidator', the `Bidding Process' which commenced at 3.00 P.M. on 21.01.2021 went beyond 5.00 P.M. etc., in fact, the `Bidding Process' was completed at 17:46:00 hours, the last bid was submitted by the 3rd Respondent i.e., Mahalaxmi Wellman Fuel LLP at 17:41:01 hours at Rs.17,90,00,000/-. In fact, the last `Bid' submitted by the Appellant/Applicant was at 17:37:33 hours, amounting to I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 73 of 88 Rs.17,80,00,000/- and within four minutes thereof, the 3rd Respondent submitted a `Higher Bid' at 17:41:01 hours. In the instant case, according to the 1st Respondent/Liquidator, the 3rd Respondent who submitted the last highest `Bid' was considered as the `H1 Bidder' (highest bid).
100. The Learned Counsel for the 1st Respondent/Liquidator points out that between 17:41:01 to 17:46:00 hours, there was no activity recorded in the System / Portal by the `E-auction Service Provider'. As per the records of the 2nd Respondent/Auction Agency and in fact, the `E-auction' was automatically closed and no further `Bids' could be made.
101. According to the 1st Respondent/Liquidator, there was no fraud, on his part, in conducting the `Auction' as per the `Process Memorandum' in a fair and transparent manner and in fact, he had perused the `Log Report' and other details furnished by the 2nd Respondent and only then proceeded to affirm that the 3rd Respondent was the highest `Bidder'. Moreover, within the extended `Liquidation Period', as directed by the `Adjudicating Authority' (`Tribunal'), on or before 30.08.2021, the Liquidation of the Corporate Debtor was to be completed and hence the 1st Respondent/Liquidator had proceeded with the process and completed I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 74 of 88 the Liquidation on or before the time period specified by the `Adjudicating Authority'.
102. The 2nd Respondent in his `Reply' to IA/74/2021 in CP/508/IB/2017 had stated that the `Appellant/Applicant' had come before the `Adjudicating Authority' with unclean hands and the transcript of the translated telephonic conversation (in English) that took place between the Applicant/Appellant and the 2nd Respondent is mentioned as under:
``Translated version of the transcript (in English) :
Applicant : Why am I getting log out frequently?
lip1 : Is it getting log out frequently?
Applicant : Yes, I am getting log out frequently.
lip1 : So do one thing, try to change your system.
Applicant : I have attached Internet from wifi to wire.
lip1 : even after changing (internet) you are still facing the same issue?
Applicant : Yes.
lip 1: Are you still logged out after changing?
Applicant : Yes it is happening right now.''
103. It is projected on the side of the 2nd Respondent that the `Appellant/Applicant' has chosen not to refresh the System / Screen I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 75 of 88 during the active `Auction' (goes to the Server back and forth) and the translated version of the transcript (in English) is as follows:
``Translated version of the transcript (in English) :
APPLICANT : I DID NOT REFRESH AGAIN AND AGAIN THIS TIME. THE AUCTION GET EXPIRED BEFORE I COULD START.
I am the highest bidder.
LIP1: From your log in credentials, you did not get logged out thereafter.
Applicant : May be It has happened from my system, now when will I receive the E-mail for E-auction sir?
104. The Learned Counsel for the 2nd Respondent brings it to the notice of this `Tribunal' that the Appellant/Applicant had simultaneously logged in from multiple browser as admitted by it and the translated version of the transcript (in English), runs as under:
``Translated version of the transcript (in English) :
APPLICANT : I AM SIMULTANEOUSLY LOGGED IN FROM TWO (2) BROWSERS.
LIP1 : DON'T OPEN TWO BROWSERS SIMULTANEOUSLY.''
105. The Learned Counsel for the 2nd Respondent adverts to the fact that in terms of the automatically system generated Log Report, the `Appellant/Applicant' had not undertaken any `activity' at 17:37:33 hours and the translated version of the transcript (in English), is as under:
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 76 of 88 ``Translated version of the transcript (in English) :
Applicant : When did the auction end?
lip1 : Auction has ended at 46 pm on 5.46 pm. Applicant : How auction has ended on 46?
lip1 : one bid had come at 41 that has taken up it to 46.
Applicant : Our bid was on 43, it displayed in our computer, and the same was generated at 43 in your system and at 17 min, it shows that it is closed.''
106. The Learned Counsel for the 2nd Respondent points out that the Appellant / Applicant had not only violated the confidentiality by sharing the screen and recording the active bid session by way of Third Party Application, `ZOOM'; rather (as it appears) and further the Appellant went to the extent of logging in plurality browsers during the course of active session (admitted by the Appellant/Applicant, during the telephonic conversation dated 21.01.2021.
107. The Learned Counsel for the 2nd Respondent submits that the 3rd Respondent had placed the final bid of the `Auction', during the subsistence of the five minutes extended period of Auction at 17:41:01 hours for Rs.17,90,00,000/- and hence the 3rd Respondent was declared as the `Successful Bidder'. Incidentally, the Appellant/Applicant had placed I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 77 of 88 its `last Bid' at 17:37:33 hours for Rs.17,80,00,000/- and later only the 3rd Respondent had placed the final `Bid' of the `Auction', as mentioned Supra.
108. The 3rd Respondent in its `Reply' in IA/74/2021 in CP/508/IB/2017 before the `Adjudicating Authority' had denied that there were any dishonest manipulation and alteration of `E-auction' Results by Respondents No. 1 and 2, declaring the 3rd Respondent as the `Successful Bidder'. Further, the `Appellant/Applicant' submitted its `Bid' at 17:37:33 hours at it logged out of the System for more than twenty minutes and it is not possible for them to know that the 3rd Respondent had put in a higher `Bid' and was successful in the `E-auction Process'.
109. According to the 3rd Respondent, it is a matter of record that after the `E-auction' was closed, the `Successful Bidder' shall get a system generated confirmation mail declaring him as the highest `Bidder', and in fact, the 3rd Respondent was intimated by such System Generated Email at about 18.30 hours dated 21.01.2021.
110. It is projected on the side of the 3rd Respondent that the Appellant/Applicant was reluctant to increase its `Bid' after submitting I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 78 of 88 the `Bid' for Rs.17,80,00,000/- at 17:37:34 hours and further that the `Appellant' had not adhered to the instructions of the 2nd Respondent for such `E-auction Process' and therefore, it was not aware of the highest `Bid' submitted by the 3rd Respondent, after the Applicant had logged out from the System, while `Bidding Process' was continuing.
111. The Learned Counsel for the 3rd Respondent submits that the 3rd Respondent had denied the allegation of the `Appellant/ Applicant' that Respondents No. 1 and 2 are committed fraud or manipulated the `E-Auction Results' for choosing the 3rd Respondent. Furthermore, the `Appellant/Applicant' last touch of the `E-auction Process', after logging out of the System at 17:37:00 hours and thereafter re-logged at 17:57:59 hours i.e., after 20 minutes of the logging out.
112. In the instant case, the `Appellant' has come out with a plea that the Respondents No. 1 and 2 have joined together in declaring the 3rd Respondent as the `Successful Highest Bidder'. The `Appellant' before the `Adjudicating Authority' had relied upon the `screenshots', which were System generated to fall back upon its contention that the auction was closed at 05:43:17 hours (Indian Standard Time) which was not I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 79 of 88 accompanied by a Certificate as per the ingredients of Section 65B (4) of the Indian Evidence Act, 1872.
113. As a matter of fact, it is evident from the `Bid History', that the `Bids Sum' was made known as Rs.17,80,00,000/-. On 21.01.2021, the `snapshots' of the screen were taken at 05:43:17 hours (Indian Standard Time), which is not backed up by a furnishing of Certificate, as per Section 65B (4) of the Indian Evidence Act. In reality, the onus is upon the `Appellant/Applicant' to ascertain the Equipment / System through which the `snap shots' were generated and a Certificate ought to have been filed by the Appellant / Applicant in terms of Section 65B of the Indian Evidence Act, 1872, coupled with the Information Technology Act, 2000. Unfortunately, the `Appellant' had not produced the Certificate in question, as per the requirement of aforesaid Acts before the `Adjudicating Authority'.
114. Sections 65A and 65B of the Indian Evidence Act, 1872 are brought in, under Schedule II to the Information Technology Act, 2000. Section 5 of the Indian Evidence Act, 1872, provides that an `evidence' can be given regarding only facts that are at issue or of relevance. Section 136 of the Indian Evidence Act, 1872, empowers a `Judge' to determine I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 80 of 88 on `admissibility of evidence', in a given case. The contents of `Electronic Record' may be proved as per Section 65B of the Indian Evidence Act, 1872.
115. It is to be remembered that for accepting the `screenshots', the submission / production of Certificate, as per Section 65B (4) of the Indian Evidence Act, 1872 is a pre-requisite condition to take into account the `Electronic Record' as an evidence. Till date, the `Appellant' had not produced the said `Certificate' for inexplicable reasons. To put it succinctly, in the absence of Certificate evidence / material and oral version / evidence is unworthy of acceptance by this `Tribunal'.
116. In the present case, it is brought to the fore from the System generated `Log Report' that the `Appellant' had logged in at 17:37:20 hours. It placed its `Bid' at 17:37:34 hours. The `Appellant' logged in at 17:57:59 and for nearly 20 minutes and 25 seconds, had logged out for a considerable time (there being no `activity' on its part), of course in breach of the `E-auction' terms and conditions.
117. One cannot ignore the important fact that as per the `E-auction' conditions, the `Auction' screen ought not be `shared with any Third I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 81 of 88 Party' and in fact, the Third Party Application `ZOOM' was `active' / `operated' at the time of `Auction Process' and also that various other `Applications' were running at the same time during `active' Auction. During the period of inactivity for about 20 minutes, the 3rd Respondent had increased the `Bid' by Rs.10,00,000/- to Rs.17,90,00,000/-. The 3rd Respondent had placed its `Bid' at 17:41:01 hours. Indeed, the `Appellant's last `Bid' at 17:37:34 hours for Rs.17,80,00,000/-.
118. On behalf of the 2nd Respondent, it is pointed out that the `Appellant' was getting logged out more often and further the `Appellant' had admitted that it had logged in from two browsers simultaneously and for the aspect of sharing `E-Auction', negligence, omission to act or for faulty Internet connection, the opposite party could not be blamed or accused of.
119. It cannot be gainsaid that Schedule I Mode of Sale (under Regulation 33 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, Serial No. 10, it is mentioned as `If the Liquidator is of the opinion that an auction where bid amounts are not visible is likely to maximize realizations from the sale of assets and is in the best interests of the creditors, he may apply, in writing, to the I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 82 of 88 Adjudicating Authority for the permission to conduct an auction in such manner'. It is to be borne in mind that the `1st Respondent/`Liquidator' had not resorted to the recourse of preferring an `Application', based on the ground that the `Bid Sums' were not discernible, as per the stand taken on behalf of the `Appellant/Applicant'.
120. It is pertinently pointed out that if an `Act is committed by a person to Contract with an intention to deceive another person or to induce him to enter in to a Contract, certainly it will come within the ambit of the term `Fraud' in the considered opinion of this `Tribunal'. In order to constitute `Fraud', the person making the statement must be aware of its falsify, as per decision Bappu Rawther v. State of Kerala, reported in AIR 1964 Ker 109.
121. A charge of `Fraud' must be substantially proved as laid and when one kind of `Fraud' is charged, another kind of `Fraud' cannot be substituted, as per decision Narayanan Chettiar v. Official Assignee AIR 1941 PC 93.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 83 of 88
122. A party guilty of fraud can insist of his rights under the `Contract', when the Party defrauded insists on the `Performance of Contract', as per decision Official Receiver v. Jugal Kishore, AIR 1963 ALL 459.
123. In regard to the plea of `Fraud' / `An Irregularity', that had taken place in a particular matter, it is for the `Applicant' / `Appellant' to prove not only the `Irregularity', but also `Fraud'. Besides this, it must establish that it had suffered a `substantial injury', as a result of such a material `Irregularity' / `Fraud'.
124. If a person offers a price after the completion of `Auction' over and above the `Auction Price', one cannot by any stretch of imagination come to a conclusion that any `Fraud' had taken place in the `E-auction Sale'. A conclusion of a `Sale in Auction', as per Clause 13 Schedule I of Regulation 33 of the Liquidation Regulations unequivocally points out that on payment of the full sum, the sale shall stand completed, the Liquidator shall execute the `Sale Certificate' or `Sale Deed' to transfer such `Assets' and the `Assets' shall be delivered to him in the manner specified in the terms of `Sale'.
I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 84 of 88
125. As a matter of fact, the term `Material' means `Real' and not merely `Formal' and `Academic', as opined by this `Tribunal'. An `Irregularity' which may be termed as `Material', ought to be such as it affects the ultimate decision of the given `Proceedings' or `Case'.
126. As far as the present case is concerned, the `Appellant/Applicant' had admitted that `Yes, I am getting logged out frequently' (vide Vol. II Page 237 - translated version of the Transcript from Hindi in Preliminary Reply Affidavit of R2 / Linkstar Infosys Private Limited to I.A. No. 74/2021 in CP/508/IB/2017), which is certainly an unfavorable circumstance against it. `Admissions' are admissible even though they are self harming. `Admission' is substantive evidence `Pro Prie Vigore'.
127. In fact, the `Appellant/Applicant' had tacitly admitted that `I AM SIMULTANEOUSLY LOGGED IN FROM TWO (2) BROWSERS.
Further the `Appellant/Applicant' chose to simultaneously shared the `Auction' screen during the `Auction' session by using the `Third Party Application - ZOOM'. An `Admission' by a `Party' is the best piece of evidence which can be pressed into service against him. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 85 of 88
128. As per the terms and conditions of the `Auction', the Appellant/Applicant is to follow the rules of the game scrupulously, when the Appellant / Applicant is guilty of `inaction' and `latches on its part' and remained `inactive' for more than 20 minutes from 17:37:34 hours till 17:57:59 hours, then, it is not open to it to assail the `conduct of auction' in and by which, the 3rd Respondent was declared to be the `Successful Highest Bidder' and later, the `concluded sale', which cannot be set aside because of the fact that the `Appellant/Applicant' is endeavoring to increase the `Bid'.
129. At the risk of repetition, this `Tribunal' that after getting `Sale Certificate' from the 1st Respondent/Liquidator, the 3rd Respondent had changed its position to its detriment, by spending substantial amounts and took steps in reviving the `Plant'.
130. In law, it is impermissible for an `Unsuccessful Bidder' in `Auction' (after taking part in the `Auction') to question the `validity' and `legality' of whole `Auction Process', especially after the completion of the `Auction Sale'. Under the pretext of maximisation of value from the `Sale of Assets', the Appellant/Applicant is not to be permitted to question the `Auction Sale', when the 3rd Respondent had made `payment of full I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 86 of 88 balance sum', in the teeth of `Process Memorandum' on 15.02.2021 and 16.02.2021, respectively and that the 1st Respondent/Liquidator was to act as per Clause 13 Schedule I of Regulation 33 of Liquidation Regulations. In the instant case, after the conclusion of `Auction Sale', the same was acted upon and the fact of the matter is, the amount received was disbursed, in terms of the `Waterfall Mechanism', as per Section 53 of the I & B Code, 2016.
131. Be that as it may, in the light of detailed `upshot', foregoing reasons, this `Tribunal' on the basis of surrounding facts and circumstances of the case, keeping in mind of the prime fact that if a validly conducted `E-Auction Process' in a fair and transparent manner is to be set at naught by this `Appellate Tribunal', then there will be no sanctity to the `Sale' that was concluded to and in favour of the 3rd Respondent (ofcourse in accordance with Law), who had admittedly paid the sale consideration and applied for `Renewal of Licenses' before the concerned Authorities and the whole process of `E-auction' cannot be revisited, comes to a consequent conclusion that the `impugned order' dated 18.03.2021, passed by the `Adjudicating Authority' in dismissing the IA No.74 of 2021 in CP/508/IB/2017 is free from legal infirmities. Resultantly, the instant `Company Appeal' fails. I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 87 of 88 Disposition:
In fine, Comp. App (AT) (CH) (INS) No. 49 of 2021 is dismissed for the reasons ascribed by this `Tribunal' in this `Appeal'. No costs.
The connected pending I.A. Nos. 107 to 110 of 2021 are `Closed'.
[Justice M. Venugopal] Member Judicial [Kanthi Narahari] Member Technical 17/08/2022 SR/TM I.A. No. 121 of 2021 in Comp. App (AT) (CH) (INS) No. 49 of 2021 & Comp. App (AT) (CH) (INS) No. 49 of 2021 Page 88 of 88