In its order dated February 17, 2022 ("Order") in the case of Anand Kariwala v. Partha Pratim Ghosh and Others [I.A. (IB) No. 20/KB/2021 in CP (IB) No. 533/KB/2018], the National Company Law Tribunal, Kolkata ("NCLT") held that a resolution plan cannot be rejected on the basis of a perceived grievance by a member of the suspended board who had not taken any proactive steps to participate in the meetings of the Committee of Creditors (“CoC”).
In the instant case titled Visisth Services Limited v. Mr. S. V. Ramani and Others the issue raised for clarification before the NCLAT was:
Whether liabilities are included in the sale of the corporate debtor as a "Going Concern" during the liquidation process?
With regard to this issue, The NCLAT noted that it was clear from paragraphs 3.2.1, 3.2.2, and 4.2.1 of the IBBI Discussion Paper on Corporate Liquidation Process ("Discussion Paper"), as well as from the Draft Regulations dated April 27, 2019, and Regulation 32-A of the LPR 2016, that a sale as a "Going Concern" entailed the sale of both the company's assets and liabilities and not just its assets. The NCLAT noted that the discussion paper's paragraphs 3.2.1 and 4.2.1 sufficiently defined that all assets and liabilities that are essential to the Corporate Debtor's business would be transferred together and that the consideration must be for the Corporate Debtor's business.
According to the NCLAT, the Liquidator would operate the Corporate Debtor's business in order to carry out its beneficial liquidation in accordance with Section 35 of the IBC. The contract's terms are final and cannot be changed or revised by the liquidator. Only in conformity with the law would the liquidator attempt to sell the corporate debtor as a "Going Concern." The Appellant unconditionally promised to comply with the requirements of the "E-Auction process" and the Bid Document in the signed declaration, including the forfeiture of the EMD in the event that the Appellant did not fulfil their commitment once the bid was accepted in their favour. On September 25, 2019, the appellant received notice of the acceptance. The Appellant cannot now claim that their offer was conditional because it was made clear in the terms and circumstances that the Corporate Debtor was being sold as a "going concern" on an "as is, where is" basis.
According to the NCLAT, selling a business as a "going concern" entails selling both its assets and liabilities if it is done on a "as is, where is" basis. The NCLAT was of the opinion that the Appellant cannot be entitled to the EMD amount and the amount paid toward the Bid Document if he does not comply with the terms of the contract on the grounds that the offer made was a "conditional offer" because he is the "Successful Bidder," and this is in light of Regulation 32-A of the LPR 2016 and the scope and objective of the IBC. Consequently, the NCLAT did not discover any illegality or flaw in the decision of the NCLT and hence the case was accordingly dismissed.
The NCLAT categorically stated that,
"A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, and the person by whom the tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor-made to suit the convenience of any particular person with a view to eliminating all others from participating in the bidding process."