# In the matter of Manthan Broadband Services Private Limited

> NCLT judgment dated 2024-01-12. Citation: TCN-2024-NCLT-03153. The case involves a dispute over the sale of shares of Alliance Broadband Services Private…

- **Court:** NCLT
- **Order date:** 12 Jan 2024
- **Citation:** TCN-2024-NCLT-03153
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/manthan-broadband-services-private-limited-047b2121

## Summary

### Background

The case involves a dispute over the sale of shares of Alliance Broadband Services Private Limited, held by Manthan Broadband Services Private Limited, which is undergoing liquidation. The Liquidator sought to sell these shares through an e-auction. The suspended board of Manthan challenged the auction, claiming the shares were pledged to Alliance, the sale was undervalued, and the auction violated liquidation regulations. Several IAs were filed, including one by Kalyankari Texfab Private Limited, the highest bidder in the e-auction, seeking to intervene. The core issue revolves around whether the Liquidator can proceed with the sale of the shares, considering the claims of pledge, valuation, and compliance with liquidation regulations.

## Facts

Manthan Broadband Services Private Limited was admitted into insolvency on 2019-09-18 and subsequently ordered into liquidation on 2022-04-06. Alliance Broadband Services Private Limited had extended a loan of Rs. 10.20 crores to Manthan, against which Manthan pledged 77,500 shares of Alliance. The Liquidator of Manthan initiated an e-auction to sell these shares. The suspended board of Manthan challenged the auction, arguing that the shares were pledged, the sale was undervalued, and the auction violated liquidation regulations. They claimed Alliance had not relinquished its security interest and the sale price was significantly below market value. The Liquidator contended that the pledge was no longer valid, Alliance had not complied with Regulation 21A of the

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## Issues and analysis

### Issue 1: Whether the e-auction of shares of Alliance Broadband Services Private Limited held by Manthan …

**Ratio:** The court relied on the principle that the liquidation process should be completed

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**Reasoning:** The court reasoned that the suspended board's concerns were not sustainable and that the

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**Interpretation:** The court interpreted Regulation 21A to mean that if a secured creditor fails

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**Application:** The court applied this interpretation to the facts, noting that Alliance had

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## Parties

- **Judges:** BIDISHA BA…; D. Ar…
- **Appellants:** Alliance Broadband…
- **Respondents:** Manthan Broadband…; Kuldeep…
- **Advocates:** Ratnanko B…; Swapna Ch…; +10 more

## Timeline

- **2019-09-18 — Admission to I…**: Manthan Broadband Services Private Limited was admitted to insolvency in CP (IB)…
- **2022-04-06 — Liquidation…**: Order of liquidation was passed in respect of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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