Clause 12 of Part-1 of Schedule-I of IBBI (Liquidation Process) Regulations, 2016 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator – V.S. Palanivel Vs. P. Sriram, CS, Liquidator, etc. – Supreme Court
Hon’ble Supreme Court held that:
(i) The Auction Purchaser would be entitled to the benefit of the order dated 23rd March, 2020 read with Regulation 47A of the IBBI Regulations, 2016.
(ii) In view of the analysis undertaken above, Rule 12 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator.
(iii) The Rule 11 of the NCLT Rules is not to be read in isolation but in conjunction with Section 35 of the IBC
(iv) Clause 12 of the Schedule-I of the Liquidation Process Regulations is not interlinked with Clause 13. Both the Rules cover different situations.
(v) Clause 12 to be mandatory in character because non-payment within the timeline has consequences attached to it. However, in contrast thereto, there are no adverse consequences spelt out in Clause 13 for it to be treated as mandatory.
