Case Title: Ayan Mallick v. Pratime Bayal
The NCLAT held that a joint auction is permissible under the provisions of IBC, 2016, and SARFAESI, 2002, in order to maximize the value of the assets of the corporate debtor, and thereby upheld the decision of the NCLT.
In this case, the corporate debtor filed an appeal before the NCLAT against the order of the NCLT Kolkata dated February 1, 2022, wherein it was decided that the joint auction sale of the assets of the corporate debtor under the IBC and the guarantor under the SARFAESI Act be conducted.
The counsel asserts on behalf of the corporate debtor that the joint e-auction notice is illegal in nature as it does not fall under the subject of any insolvency proceedings. Furthermore, it was contended that the liquidator does not have permission to publish a joint e-auction notice wherein the banks have already taken possession of the land under the SARFAESI Act.
Lastly, it was contended that there has been no due diligence done in differentiating the assets of the corporate debtor and the director, and a consolidated reserve price has been quoted without separating their respective assets.
The counsel on behalf of the respondent contended that both the liquidator and two banks had moved forward with the sale of the guarantor's land under the IBC, 2016, and SARFAESI Act, 2002, and had estimated the reserve price at 12.50 crores and 3.65 crores, respectively, and that thereafter, a joint auction was created using these two reserve prices.
Furthermore, it was contended that a joint auction of two assets would net a greater price than proceeding under one of the statutes. The liquidator also argued that no legal provisions are being broken, a joint auction of these two assets would net a greater price, and the plant and land must be sold together otherwise no one will buy them.
The NCLT observed that selling these assets simultaneously has the potential to increase the value of the corporate debtor's assets, despite some procedural irregularities in the e-auction. The NCLT further observed that the guarantor would also benefit from a higher value at the combined auction and that the suspended director of the corporate debtor should not suffer any sort of discrimination.
The NCLAT further concluded that a combined sale would maximize the assets of the corporate debtor and guarantor, thereby confirming the NCLT's decision and stating that the suspended director cannot be adversely affected in any way.