IN THE NATIONAL COMPANY LAW TRIBUNAL,

MUMBAI BENCH-I

IA No. 1772/MB/C-I/2022
And
IA No. 167/MB/C-I/2022
And
IA No. 2164/MB/C-I/2021
In
C.P (IB) No. 292/MB/C-I/2017

An application under Section 60(5) of the Insolvency and

Bankruptcy Code, 2016
Filed by

Mr. Vijaykumar V. Iyer

…Applicant
Versus
Chowgule SBD Private Limited and Ors.
…Respondent
In the matter of

Edelweiss Asset Rescontruction Company

…Financial Creditor
Versus
Bharati Defence and Infrastructure Limited.
… Corporate Debtor
Order Pronounced on: 24.01.2023
Coram:

Hon’ble Member (Judicial) : Justice P. N. Deshmukh (Retd.)

Hon’ble Member (Technical) : Mr. Shyam Babu Gautam

 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017

Appearances:
For the Liquidator : Ld. Sr. Counsel Mr. Pradeep Sancheti
For the Mangalore Port Trust : PCA Ayush J Rajani a/w. Khushboo
Shah and Mitali Bhat
For the Successful Bidder : Ld. Sr. Counsel Mr. Mustafa Doctor
ORDER
Per Coram:

1. This Court convened through video conferencing.

Backdrop of facts

2. The Corporate Debtor was Liquidated vide Order dated 14.01.2019,

pursuant to which the Mr. Vijaykumar Iyer was appointed as the

Liquidator. The aforesaid Order was assailed before the Hon’ble

NCLAT wherein it was directed that the Liquidator must ensure that the

Corporate Debtor remains a going concern and conclude the process

under Section 230 of the Companies Act. Since, no compliant scheme

was received by the Liquidator, the Liquidator issued a public

announcement for submission of Expression of Interest issued in 6

newspapers.

3. Accordingly, the Liquidator filed IA No. 3702 of 2019 for Liquidation of

the Corporate Debtor by sale of assets, collectively as a yard, in parcel of

assets, or each asset on standalone basis. This Tribunal passed an Order

Page 2 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
dated 18.12.2020 directing the Liquidator to take appropriate steps for

liquidation of the Corporate debtor, including sale of assets collectively

or in parcels or individually.

4. It is submitted that in view of the Order dated 18.12.2020, the Liquidator

undertook all the measures to sell the Corporate Debtor as a going

concern basis, however, despite several rounds of e-auctions conducted

from time to time, the assets stored at the Leased Premises are yet to be

sold.

5. The Order dated 18.12.2020 was challenged before the Hon’ble NCLAT

in three appeals being Company Appeal (AT)(Ins) 140 of 2021,

Company Appeal (AT)(Ins) 165 of 2021, Company Appeal (AT)(Ins)

243 of 2021 by various aggrieved parties. The said appeals were

dismissed by the common Order dated 08.12.2021 with directions to the

Liquidator to try and Liquidate the Corporate Debtor within 6 weeks

from date of the Judgment.

IA 1772 of 2022

Submissions made by the Applicant

6. The reliefs sought by the Applicant are as follows:

i. Direction to the secured creditors to provide to the Bidder,

upon issuance of Sale Certificate by the

Liquidator/Applicant, all the necessary documents for

Page 3 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
release of charges including duly executed charge release

forms and to handover the originals of all title documents/

deeds that were deposited with them by the Corporate

Debtor or its shareholders in connection with the

Mangalore Shipyard Assets deleting all

encumbrances/charges mentioned in the assets secured to

them.

ii. Direction that, from the date of the Sale Certificate, all

encumbrances, attachments, liens, charges, security

interests, liabilities, claims and obligations in relation to the

Mangalore Shipyard Assets shall stand released irrevocably,

without any obligation on the Bidder and from the date of

Sale Certificate, the Mangalore Shipyard Assets shall vest

with the Bidder free from any security interest,

encumbrance, lien, attachment, claim, counter claim, or

charge whatsoever.

iii. Direction that, from the date of the sale certificate, any and

all the legal proceedings (including any show cause, notice,

adjudication proceedings, assessment proceedings,

regulatory orders etc.), arbitration or other legal, judicial,

regulatory or administrative proceedings, in relation to the

Page 4 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Mangalore Shipyard Assets, initiated before any court,

tribunal or authority by or on behalf of any creditor or

governmental authorities, to enforce any rights or claims

against the company shall be withdrawn, abated, settled

and/ or extinguished with effect from the date of the Sale

Certificate and the Bidder shall no longer be required to

make any payments in relation to such

litigations/proceedings. Further direction to all the

stakeholders of the company (including creditors and

governmental authorities), for not pursuing such

litigations/ proceedings after the issuance of Sale Certificate

and withdrawing all existing litigations/proceedings,

wherever pending.

iv. Direction that, from the date of the sale certificate, all claims

by any government authority or department (including but

not limited to the customs department, Department of Ports

and Inland Water Transport, Government of Karnataka)

pertaining to Mangalore Shipyard assets or any liabilities or

obligations owed or payable by the Company to any

government authority or department (including but not

limited to taxes, liabilities, interest, penalties, duties, etc.),

Page 5 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
whether direct or indirect, whether admitted or not, due or

contingent, asserted or un-asserted, crystallized or un-

crystallized, known or unknown, secured or unsecured,

disputed or undisputed, in relation to any period prior to the

date of Sale Certificate, shall stand permanently

extinguished and no such claim, liability etc. shall be

recoverable in any form or manner whatsoever from the

Bidder and the payment of Sale consideration by the Bidder

into the liquidation account is a full and final settlement by

the bidder towards such claims, liabilities etc.

v. Direction that, from the date of the sale certificate, all the

governmental and regulatory departments providing

essential services to the Mangalore Shipyard Assets, such as

electricity, water, port authorities, etc. and all the critical

suppliers and vendors shall continue to give full support to

the Bidder without arm twisting the Bidder for any liabilities

of the Company Pertaining to the period prior to the date of

the sale certificate.

vi. Direction to the relevant governmental and regulatory

departments that the environmental clearances and the

electricity connection/permissions obtained for the

Page 6 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Mangalore shipyard assets shall be transferred in the name

of the bidder without any demand for the liabilities of the

Company pertaining to the period prior to the date of the

sale certificate.

vii. Direction that, from the date of the Sale Certificate, the

Bidder shall be entitled to the benefit of Section 32A of the

Code and all the actions taken against the Mangalore

Shipyard Assets for an offence committed prior to the

commencement of its corporate insolvency resolution

process of the Company, shall cease and the Bidder shall

not be prosecuted for such an offence. Further, no action

shall be taken or continued against the Mangalore Shipyard

Assets in relation to any offence committed prior to the

commencement of the corporate insolvency resolution

process of the Company.

viii. Direction to the Karnataka Maritime Board / Department

of Ports and Inland Water Transport, Government of

Karnataka, (i) that with effect from the Transfer Date, the

lease deed(s) for the Mangalore shipyard Land shall not be

terminated or cancelled on account of any non-compliance

or breach of the terms of the lease deed by the Company,

Page 7 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
pertaining to the period prior to the Transfer Date, and (ii)

that the leasehold rights in the Mangalore Shipyard land

shall be transferred to the Bidder with the lease rentals in

accordance with the Guidelines / Notifications framed by

the Government of Karnataka.

ix. Direction to the Customs Department, Mangalore that the

Mangalore Shipyard be de-bonded and custody /

attachment of the Confiscated Assets on account of

liabilities of Company pertaining to the period prior to the

Transfer Date, be released and the Bidder be allowed

peaceful possession of the Confiscated Assets.

7. The Applicant submits he conduced multiple rounds of e auction

pertaining to sale of the Corporate Debtor as a going concern basis and

set of assets of the Corporate Debtor. The details of sale of parcel of assets

of the Corporate Debtor are as follows:

Date of Public Date of e-auction Description of Parcel

announcement Sold

10.08.2021 06.09.2021 Kolkata Shipyard

21.09.2021 26.10.2021 Assets located at

Bhandarli and

Page 8 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Ghodbunder yard

01.11.2021 24.11.2021 Assets located in Goa

8. The Applicant submits that the Order dated 18.12.2020 passed by this

Tribunal in IA No. 3702 of 2019 was challenged before the Hon’ble

NCLAT in Company Appeal (AT)(Ins) No. 140 of 2021, Company

Appeal (AT)(Ins) No. 165 of 2021, Company Appeal (AT)(Ins) No. 243

of 2021. The said Appeals were disposed off by the Appellate Tribunal

vide its Judgement dated 08.12.2021 while granting a total of 6 weeks to

the Applicant for sale of the Corporate Debtor as a going concern.

9. The Applicant submits that no proposal was received for the acquisition

of the Corporate Debtor after expiration of 6 weeks. Hence, the

Applicant proceeded to conduct the liquidation process by way of private

sale of assets of the Corporate Debtor.

10. Pursuant thereto, the Applicant proceeded with issuance of a public

announcement for conduct of private sale process on 09.02.2022.

However, on account of failure of the said round of private sale process,

the Applicant issued public announcement on 21.03.2022 for inviting

bids for the Corporate Debtor as a whole on going concern basis

(excluding parcels of assets of already sold) and for remaining shipyards

individually, including all the Corporate Debtor’s assets, rights and

Page 9 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
privileges and duties etc. associated with such shipyard in parcels i.e., the

Parcel 2 (Dabhol yard), Parcel 3 (Ratnagiri Yard) and Parcel 4

(Mangalore Yard).

11. As per the EOI the interested bidders were required to submit the EOI

on or before 08.04.2022 and submit a binding and unconditional EMD

on or before 20.05.2022. The sale was to be governed in term of the

process document dated 21.03.2022.

12. The Respondent No.1 herein submitted its EOI on 04.04.2022 along

with necessary documents as stipulated in the process document. The

Respondent No.1 was granted access to virtual data room.

13. The Respondent submitted its bid on 20.05.2022 for the Parcel 4 assets

of the Corporate Debtor i.e. Mangalore Shipyard including leasehold

interest pertaining to leasehold land, sheds, warehouse and hull shops,

plant and machinery, inventory and other movable items on an ‘as is

where is basis’ (“Mangalore Shipyard Assets”). The said bid was

accompanied by the EMD by way of Bank Guarantee.

14. The Applicant and the Private Sale Committee invited the Respondent

to present the details of its proposal before it on 23.05.2022, pursuant to

said presentation made before the private sale committee several rounds

of negotiations were undertaken with the Respondent whereby the

Respondent offered to submit its revised bid. It is noted that final bid was

Page 10 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
submitted by the Respondent on 08.06.2022

15. The Liquidator, in consultation with and after seeking inputs from the

stakeholders, considered the bid dated 20.05.2022 and subsequently

amended and submitted on 08.06.2022, for an amount of

Rs.75,00,06,000/- (Rupees Seventy Five Crore and Six Thousand Only)

towards purchase of Parcel 4 (the “Final Bid”).

16. The Respondent was declared as the successful bidder as per the process

documents for Parcel 4 i.e. Mangalore Shipyard. Subsequently, the

Letter of Intent (“LOI”) was issued to the Respondent on 11.06.2022 for

successful acceptance of the bid for Parcel 4 of the assets of the Corporate

Debtor. The said LOI was accepted and counter signed by the

Respondent.

17. In terms of the proposed payment schedule, the Respondent is now

required to infuse partial sale consideration of Rs.7,50,00,000/- (Rupees

Seven Crore Fifty Lakh Only) within a period of 30 days from the date

of issuance of LOI, into the escrow account. After, the Respondent has

taken all the necessary steps outlined in the Final Bid, the said sum of

Rs.7,50,00,000/- shall be transferred into the Liquidation Account and

the balance consideration of Rs.67,50,06,000/- into the Liquidation

Account.

18. The Applicant submits that the Respondent has deposited Rs.

Page 11 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
7,50,00,000/- out of the total sale consideration into the escrow account

as proposed in the Final Bid.

Submissions made by the Respondent No.1:

19. At the outset, it is submitted that the Respondent supports the present

Application. The Respondent further submits that all the

reliefs/concessions/waivers sought in the Application are necessary for

effective sale and transfer of Mangalore Shipyard.

20. The reliefs are sought by the Respondent for acquisition of the Parcel 4

of the Corporate Debtor on a clean slate basis.

Submissions made by the Respondent No.2:

21. It is submitted that Parcel 4 was sold to the Respondent No.1 on

04.04.2022 which is 15 months after the Order Terminating the lease was

issued by the Respondent No.3. The said Termination Order was

communicated on 15.01.2021.

22. Further, it is contended that the present sale of Parcel 4 is a lot wise sale

and not sale as a going concern or business of the Corporate debtor being

sold as going concern. Hence, the Applicant’s averment of clean slate

basis is misplaced as the sale is on “as is where is basis”.

23. Moreover, it is submitted that reliefs sought are merely to evade the

contractual liabilities, liabilities towards payment of insolvency

resolution costs and liquidation process costs and obligations towards

Page 12 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Respondent No.2 and 4.

24. Regulation 32 and Regulation 33 read with Schedule I (Mode of Sale),

clause 12 of Insolvency and Bankruptcy Board of India (Liquidation

Process) Regulations, 2016 lays down that a successful bidder to pay the

sale consideration within 90 days from being declared as the highest

bidder while any payment made after 30 days from such declaration up

to the period of 90 days shall attract 12% interest.

25. We have considered the para-wise reply of Respondent No.2 to the reliefs

sought by the Respondent No.1 qua the sale of Parcel 4 i.e. Mangalore

Shipyard.

IA 167 of 2022

26. The Government of Karnataka vide Order No. PWD 16 PSP 2008, dated

10 May 2010 has sanctioned 20.94 acres of Port land for 30 years for the

construction of ship building yard at Mangalore Port Limits as per Sl.

No.7 of schedule F" at INR 15/- per 10 square meters per month, as per

the Rules ("Land B") (Land A and Land B are collectively referred to as

"Leased Premises"). While allotment of Land B was done, no lease deed

was entered into for Land B. It is pertinent to note that while the lease

agreement was not executed for Land B, the lease rent was paid for both

the land parcels A and B upto 2013 and for part of the CIRP period.

27. After commencement of Liquidation, the Liquidator had issued public

Page 13 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
announcement on 19.01.2019 inviting creditors to file their claim within

30 days from liquidation commencement date.

28. Accordingly, the Respondent No.2 herein filed its claim form dated

04.02.2019 with the Liquidator on 05.02.2019 to an extent of

Rs.21,03,55,543/- (Rupees Twenty-One Crore Three Lakh Fifty Five

Lakh and Five Hundred and Forty Three Only) towards lease rentals

under License No. 166 and 167. The Applicant vide its email dated

09.03.2019 had communicated to the Respondent No.2 inadequacies in

claim form and the proofs submitted.

29. The Respondent has not provided the necessary proof to substantiate its

claim and hence the Liquidator is unable to verify the claim in full.

30. The Liquidator vide email dated 26.03.2019 addressed to the Respondent

No.2 stated that since the documents were not sufficient, claim to the

extent of Rs.11,05,95,499/- is admitted and the balance amount of

Rs.9,97,60,044/- has not been verified as the working calculation of rent

and penalty for both license number 166 and 167 was not provided to the

Liquidator with necessary documents.

31. Further, the Respondent No.2 vide notice dated 14.10.2020 requested

the Applicant to admit the additional claim of Rs.9,97,60,044/-. The

Applicant on 13.01.2021 inter alia apprised the Respondent No.2 that

dues admitted prior to the Liquidation commencement date will be

Page 14 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
addressed in terms of Section 53 of the Code and the amount that become

due during the Liquidation period will be treated as CIRP costs and paid

in priority.

32. The Respondent No.2 vide its letter dated 20.01.2021 (hereinafter

referred to as Impugned Notice) along with the Order passed by

Government of Karnataka cancelled the lease sanctioned with respect to

leased Premises, to the extent of 49.31acres with immediate effect for

non-payment of lease rent and the leased premises for not being utilized.

33. Moreover, the Applicant also explained the provisions of Section 33(5)

of the Code stating that the section bars any suit or legal proceeding to

be instituted by or against the Corporate Debtor on account of

commencement of liquidation process.

34. It is submitted that the institution of proceedings against the Corporate

Debtor by the Respondent No.1 during the pendency of Liquidation

period itself is not permissible as per Section 33(5) of the Code given the

moratorium.

35. Accordingly, the present Application is filed by the Liquidator seeking

the following reliefs:

i. Set aside the Impugned Order dated i.e. order of Government of

Karnataka dated 14.12.2020.

ii. Set aside the impugned notice dated 20.01.2021 issued by the

Page 15 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Respondent No.2 i.e. the Port Officer Mangalore Port.

36. The Respondent No.2 submits that out of the entire claim of

Rs.18,88,22,584/- pertains to the CIRP and Liquidation period. The

Applicant has only released an amount of Rs.51,34,122/-. The

Respondent No.2 states that these due are outstanding since 01.05.2013.

37. The Applicant has erred in rejecting the partial claim to the extent of

Rs.9,97,60,044/- on the ground of “without adequate details as

prescribed under the Liquidation Regulations”. The Respondent vide

emails dated 14.10.2020 and 01.06.2021 has provided the working

calculation of rent and penalty for both license numbers 166 and 167.

38. The Respondent submits that it is well within its powers to terminate the

lease and evict the Applicant on clear failure to pay the dues in terms of

Section 53 of the Code

IA. No. 2164 of 2021

39. This Application filed by the Port Authority, Mangalore as a counter to

IA No. 167 of 2022 seeking directions against Liquidator and admission

of claim filed by the Port Authorities in its entirety and vacation of port

land in view of the Order dated 14.12.2020. In alternative, if the

occupation of port land is permitted then the Liquidator ought to release

the CIRP Costs and Liquidation Costs in terms of Section 53 of Code.

Page 16 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Findings and Directions:

40. We have perused records and heard the submissions made by the parties.

41. Considering the facts and submissions made in IA No. 1772 of 2022, IA

No. 167 of 2022 and IA No. 2164 of 2021, we note that land on which

Mangalore Shipyard is built was leased premises and owing to non -

payment of lease rentals vide Order dated 14.12.2020 the said lease was

terminated.

42. The Successful Bidder i.e. Chowgule SBD Private Limited submits that

the reliefs enumerated in clauses viii and ix in paragraph 6 hereinabove,

are central for the purpose of reviving and restarting its operations for

shipbuilding work of the Port. Further, it is submitted that the

implementation of the bid is conditional upon the grant of above stated

reliefs under clause viii and ix.

43. The Relief sought at clause viii pertains to transfer leasehold rights of the

Corporate Debtor to the Successful Bidder in Mangalore Shipyard Land.

The Liquidator has filed an Application bearing IA No. 167 of 2022

wherein he has challenged the Termination Order of Government of

Karnataka dated 14.12.2020 and Notice dated 20.01.2021. As a counter

to the aforesaid Application, the Port Officer, Mangalore Port has filed

an Application bearing IA. No. 2164 of 2022.

44. The relief at clause ix relates to release of assets of the Corporate Debtor

Page 17 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
in the custody/attachment of the customs department, Mangalore by

way of confiscation.

45. Considering the inter related facts and circumstances and in the interest

of maximization of the value of the stakeholders of the Corporate

Debtor, this bench vide Order 14.11.2022 had directed the Successful

Bidder and Ld. Counsel appearing for the Mangalore Port Trust to try

and arrive at an amicable solution.

46. In view of the aforesaid direction, the Successful Bidder i.e. Chowgule

SBD Private Limited vide affidavit dated 28.11.2022 submits that it is

ready and willing to enter into a fresh lease deed with the Government

of Karnataka as per applicable rates under the “The Karnataka

Ports(Landing and Shipping Fees)(Amendment) Rules, 2022” and the

Mangalore Port Trust has vide affidavit dated 28.11.2022 stated that it

would extend necessary support and the fresh lease shall be in terms of

Karnataka Minor Port Land Allotment Guidelines-2020 and The

Karnataka Ports(Landing and Shipping Fees)(Amendment) Rules, 2022.

47. The above stated affidavits are taken on record and the parties have

amongst themselves carved out a solution with respect to the aforesaid

issue of transfer of lease in favour of the Successful Bidder. Accordingly,

the relief claimed in Clause (viii) in paragraph 6 hereinabove is rendered

infructuous.

Page 18 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
48. As far as reliefs enumerated in clause (ix) is concerned the Hon’ble

Supreme Court in the matter of Sundaresh Bhatt, Liquidator of ABG

Shipyard vs Central Board of Indirect taxes and Customs has held as under:

“45. From the above discussion, we hold that the respondent could

only initiate assessment or re-assessment of the duties and other levies.

They cannot transgress such boundary and proceed to initiate

recovery in violation of Sections 14 or 33(5) of the IBC. The interim

resolution professional, resolution professional or the liquidator, as

the case may be, has an obligation to ensure that assessment is legal

and he has been provided with sufficient power to question any

assessment, if he finds the same to be excessive.

54. On the basis of the above discussions, following are our

conclusions:

i. Once moratorium is imposed in terms of Sections 14 or 33(5) of the

IBC as the case may be, the respondent authority only has a limited

jurisdiction to assess/determine the quantum of customs duty and

other levies. The respondent authority does not have the power to

initiate recovery of dues by means of sale/confiscation, as provided

under the Customs Act.

ii. After such assessment, the respondent authority has to submit its

claims (concerning customs dues/operational debt) in terms of the

Page 19 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
procedure laid down, in strict compliance of the time periods

prescribed under the IBC, before the adjudicating authority.

iii. In any case, the IRP/RP/liquidator can immediately secure goods

from the respondent authority to be dealt with appropriately, in terms

of the IBC.”

49. In view of the law laid down in the aforesaid Judgement we hereby direct

the customs department to release the confiscated assets of the Corporate

Debtor at Mangalore Shipyard.

50. The LOI dated 11.06.2022 was issued to the Successful Bidder i.e.

Chowgule SBD Private Limited for “Category B-Parcel 4: Set of assets

pertaining to Mangalore Shipyard on ‘as is where is basis’, ‘as is what is’, ‘as is

how is’ and ‘without any recourse basis’, with financial proposal submitted for

INR 75,00,06,000/-.” It is evident that the said sale was in terms of

Regulation 32(d) of the Insolvency and Bankruptcy Board of India

(Liquidation Process) Regulations, 2016 which deals with sale of assets

in parcels.

51. We note that the Successful Bidder i.e. Chowgule SBD Private Limited

has deposited an amount of Rs.7,50,00,000/- out of the total bid amount

of Rs. 75,00,06,000/- (Rupees Seventy-Five Crore and Six Thousand

Only). The LOI was issued by the Liquidator on 11.06.2022. In terms of

Schedule 1 Clause 12 of the Liquidation Regulations, the highest bidder

Page 20 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
shall be invited to provide balance sale consideration within 90 days from

such demand and payments made after 30 days shall attract interest at

the rate of 12%.

52. We direct the Successful Bidder to deposit the balance sale consideration

within 30 (Thirty) days from date of this order. Failure, if any on part of

the Successful Bidder to deposit the balance sale consideration within 30

days shall result in forfeiture of the EMD and cancellation of sale of the

Corporate Debtor. Further, the Successful Bidder shall be liable to

deposit the balance sale consideration along with 12% p.a. interest

onwards 11.07.2022 (after 30 days of date of issuance of demand letter

dated 11.06.2022) in accordance with Schedule 1 Regulation 12 of the

Liquidation Regulations.

53. The said sale consideration shall be distributed by the Liquidator in terms

of Section 53 of the Code. Further, as on the date of approval by the

Adjudicating Authority, all such claims which are not a part of statement

of claims, shall stand extinguished and no person will be entitled to

initiate or continue any proceedings in respect to a claim which is not a

part of the statement of claims.

54. For the sake of convenience, the reliefs sought are tabulated hereinbelow:

Page 21 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Sr. Particulars of the reliefs and Remarks

No. concessions

i. Direction to the secured creditors Granted. The dues of

to provide to the Bidder, upon the creditors shall be

issuance of Sale Certificate by the distributed in terms of

Liquidator/Applicant, all the Section 53 of the Code

necessary documents for release of and hence the

charges including duly executed liabilities shall stand

charge release forms and to extinguished qua the

handover the originals of all title Mangalore Shipyard.

documents/ deeds that were Consequently, upon

deposited with them by the issuance of Sale

Corporate Debtor or its Certificate the

shareholders in connection with documents/deeds

the Mangalore Shipyard Assets shall be provided to the

deleting all encumbrances/charges bidder.

mentioned in the assets secured to

them.

ii. Direction that, from the date of the Granted. Since the

Sale Certificate, all encumbrances, applicant should not

Page 22 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
attachments, liens, charges, be saddled with the

security interests, liabilities, claims liability prior to the

and obligations in relation to the issue of sale certificate.

Mangalore Shipyard Assets shall

stand released irrevocably, without

any obligation on the Bidder and

from the date of Sale Certificate,

the Mangalore Shipyard Assets

shall vest with the Bidder free from

any security interest,

encumbrance, lien, attachment,

claim, counter claim, or charge

whatsoever.

iii. Direction that, from the date of the Granted. Since the

sale certificate, any and all the applicant should not

legal proceedings (including any be saddled with the

show cause, notice, adjudication liabilities prior to the

proceedings, assessment issue of sale certificate.

proceedings, regulatory orders

etc.), arbitration or other legal,

Page 23 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
judicial, regulatory or

administrative proceedings, in

relation to the Mangalore

Shipyard Assets, initiated before

any court, tribunal or authority by

or on behalf of any creditor or

governmental authorities, to

enforce any rights or claims against

the company shall be withdrawn,

abated, settled and/ or

extinguished with effect from the

date of the Sale Certificate and the

Bidder shall no longer be required

to make any payments in relation

to such litigations/proceedings.

Further direction to all the

stakeholders of the company

(including creditors and

governmental authorities), for not

pursuing such litigations/

Page 24 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
proceedings after the issuance of

Sale Certificate and withdrawing

all existing

litigations/proceedings, wherever

pending.

iv. Direction that, from the date of the Granted. The claims of

sale certificate, all claims by any the creditors shall be

government authority or distributed in terms of

department (including but not Section 53 of the Code.

limited to the customs department,

Department of Ports and Inland

Water Transport, Government of

Karnataka pertaining to

Mangalore Shipyard assets or any

liabilities or obligations owed or

payable by the Company to any

government authority or

department (including but not

limited to taxes, liabilities, interest,

penalties, duties, etc.), whether

Page 25 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
direct or indirect, whether

admitted or not, due or contigent,

asserted or un-asserted,

crystallized or un-crystallized,

known or unknown, secured or

unsecured, disputed or

undisputed, in relation to any

period prior to the date of Sale

Certificate, shall stand

permanently extinguished and no

such claim, liability etc. shall be

recoverable in any form or manner

whatsoever from the Bidder and

the payment of Sale consideration

by the Bidder into the liquidation

account is a full and final

settlement by the bidder towards

such claims, liabilities etc.

v. Direction that, from the date of the The Successful Bidder

sale certificate, all the can apply for grant of

Page 26 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
governmental and regulatory essentials services to

departments providing essential the relevant regulatory

services to the Mangalore authorities. The

Shipyard Assets, such as regulatory authorities

electricity, water, port authorities, may consider the

etc. and all the critical suppliers same.

and vendors shall continue to give

full support to the Bidder without

arm twisting the Bidder for any

liabilities of the Company

Pertaining to the period prior to

the date of the sale certificate

vi. Direction to the relevant The Successful Bidder

governmental and regulatory can apply for grant of

departments that the essentials services to

environmental clearances and the the relevant regulatory

electricity connection/permissions authorities. The

obtained for the Mangalore regulatory authorities

shipyard assets shall be transferred may consider the

in the name of the bidder without same.

Page 27 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
any demand for the liabilities of

the Company pertaining to the

period prior to the date of the sale

certificate

vii. Direction that, from the date of the Section 32(1)A

Sale Certificate, the Bidder shall be pertains to waivers

entitled to the benefit of Section under Resolution Plan

32A of the Code and all the actions and not Sale of Assets

taken against the Mangalore under Liquidation

Shipyard Assets for an offence Proceedings. The

committed prior to the present Application is

commencement of its corporate for sale of assets in

insolvency resolution process of parcels.

the Company, shall cease and the

Bidder shall not be prosecuted for

such an offence. Further, no action

shall be taken or continued against

the Mangalore Shipyard Assets in

relation to any offence committed

prior to the commencement of the

Page 28 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
corporate insolvency resolution

process of the Company.

viii. Direction to the Karnataka Rendered Infructuous

Maritime Board / Department of in view of settlement

Ports and Inland Water Transport, arrived at by the

Government of Karnataka (i) that Successful Bidder and

with effect from the Transfer Date, Mangalore Port.

the lease deed(s) for the Mangalore

shipyard Land shall not be

terminated or cancelled on account

of any non-compliance or breach

of the terms of the lease deed by the

Company, pertaining to the period

prior to the Transfer Date, and (ii)

that the leasehold rights in the

Mangalore Shipyard land shall be

transferred to the Bidder with the

lease rentals in accordance with the

Guidelines / Notifications framed

by the Government of Karnataka /

ix. Direction to the Customs Granted in view of law

Page 29 of 30
 IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH-I
IA NO. 1772/MB/C-I/2022, IA No. 167/MB/C-I/2022
And IA No. 2164/MB/C-I/2021
In
C.P. (IB) No. 292/MB/C-I/2017
Department, Mangalore that the laid down by the
Mangalore Shipyard be de-bonded Hon’ble Apex Court in
and custody / attachment of the Sundaresh Bhatt,
Confiscated Assets on account of Liquidator of ABG
liabilities of Company pertaining Shipyard vs Central
to the period prior to the Transfer Board of Indirect taxes
Date, be released and the Bidder be and Customs.
allowed peaceful possession of the
Confiscated Assets.

55. With the aforesaid observation present IA No. 1772 of 2022 In C.P (IB)

No. 292/MB/C-I/2017 stands disposed of as allowed in above terms.

56. In view of the understanding arrived at between the Successful Bidder

and the Mangalore Port Trust vide affidavits dated 28.11.2022 IA No.

167 of 2022 and IA No. 2164 of 2021 stands disposed of.

Sd/- Sd/-

SHYAM BABU GAUTAM JUSTICE P. N. DESHMUKH

MEMBER (TECHNICAL) MEMBER (JUDICIAL)

24.01.2023

Priyal

Page 30 of 30