The bench asked the administrator and Supreme Infrastructure India to file their responses and listed the matter for further hearing on December 22.A Nagpur-based company, which emerged as the highest bidder for a property in Mumbai in an auction conducted by Srei Infrastructure Finance ahead of insolvency proceedings against it, on Monday sought “appropriate orders” from the Kolkata bench of the National Company Law Tribunal (NCLT) to direct the Reserve Bank of India-appointed administrator to complete formalities to transfer the title of the property in its favour.
Zqube Infracon was declared the highest bidder for the commercial property in Powai, Mumbai — which had been mortgaged to Srei Infrastructure Finance (SIFL) — after an e-auction on August 11. SIFL had engaged iQuippo as the auctioneer to sell the property, whose owner is Supreme Infrastructure India.
The RBI superseded the boards of SIFL and its wholly-owned subsidiary Srei Equipment Finance and appointed Rajneesh Sharma as administrator of the companies on October 4, citing governance concerns and defaults by the two NBFCs. The Kolkata bench of the NCLT on October 8 gave its approval to start insolvency proceedings against the two Srei group companies after the central bank filed insolvency applications.
In his submission before the bench of Justices Rajasekhar VK and Balraj Joshi of the NCLT on Monday, Zqube Infracon’s counsel Jishnu Chowdhury said the company had made an earnest money deposit of Rs 1.5 crore in favour of SIFL on August 10 as a requirement to participate in the e-auction. The company was declared the highest bidder at Rs 15 crore.
The reserve price for the property was fixed at Rs 15 crore. There were only two bidders, but the other bidder backed out, according to Zqube Infracon’s application before the bench. However, the LOA was not issued within the mentioned time frame. Following that, the company approached Supreme Infrastructure India, requesting issuance of an LOA. On September 14, Supreme Infrastructure informed the company that “since the response was low, Srei Infrastructure Finance does not want to go ahead with sale and has cancelled the applicant’s bid”.
Zqube, in its application, said SIFL and Supreme Infrastructure had failed to provide any substantial justification for cancellation of the bid. It also alleged that the earnest money deposit was not refunded.
Chowdhury submitted before the bench that being the highest bidder, Zqube Infracon was entitled to transfer of the property so that the amount gained from the e-auction could come into the common pool of the financial service providers. “The e-auction, which was conducted prior to the commencement of the insolvency proceedings of the Srei companies, must necessarily be concluded,” he said.
Advocate Jishnu Saha, representing administrator Rajneesh Sharma, submitted that as the moratorium under provisions of the Insolvency and Bankruptcy Code (IBC) for Srei Infrastructure Finance has started, these provisions will apply now.
The bench asked the administrator and Supreme Infrastructure India to file their responses and listed the matter for further hearing on December 22.
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