Extension of Time in payment of Auction Sale by Auction Purchaser/Buyer/Bidder

The pendency of litigations initiated by any person or stakeholder is not a justifiable ground for non-implementation of Resolution Plan unless stayed by a Court/ Tribunal – Darwin Platform Infrastructure Ltd. Vs. Union Bank of India and Ors. – NCLT Mumbai Bench

In this judgment, Hon’ble NCLT Mumbai Bench clarifies the following issues:

A. Can status of the Corporate Debtor reflected as “active, non-compliant” in the records of MCA be a reason of non-implementation of Resolution Plan?
B. Is Pendency of litigations initiated by any person or stakeholder a justifiable ground for non-implementation unless the implementation is stayed by a court/tribunal?
C. Whether invocation and encashment of PBG furnished for Resolution Plan as per Regulation 36B of CIRP Regulations, is legal and proper?
D. Whether an extension of timelines for implementation of approved Resolution Plan should be granted?
E. In the event of non-extension of time for implementation of the Resolution Plan, can CIRP be restored?

The pendency of litigations initiated by any person or stakeholder is not a justifiable ground for non-implementation of Resolution Plan unless stayed by a Court/ Tribunal – Darwin Platform Infrastructure Ltd. Vs. Union Bank of India and Ors. – NCLT Mumbai Bench Read Post »

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.

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 Read Post »

Square Four Housing & Infrastructure Development Pvt. Ltd. (Auction Purchaser) Vs. Vijay Kumar Iyer, Liquidator of Bharati Defence and Infrastructure Ltd. & Ors. – NCLAT New Delhi

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Square Four Housing & Infrastructure Development Pvt. Ltd. (Auction Purchaser) Vs. Vijay Kumar Iyer, Liquidator of Bharati Defence and Infrastructure Ltd. & Ors. – NCLAT New Delhi Read Post »

Period of 90 days to make balance payment is mandatory and not left to the discretion of liquidator while laying down terms and conditions of auction notice and IBBI circular dated 26.08.2019 as non-est in law – Sneha Techno Equipments Pvt. Ltd. Vs. Vinod Kumar Kothari, Liquidator – NCLT Kolkata Bench

NCLT held that there is no doubt period of 90 days to make balance payment is mandatory and not left to the discretion of liquidator while laying down terms and conditions of auction notice. In the present case, EOI was issued by the liquidator on 08.07.2020, i.e. after the date of amendment of period for payment of balance sale consideration to 90 days. In the EOI issued on 08.07.2020, the period was mentioned to be 15 days by the liquidator, whereas applicant sought extension up to 90 days from the date of demand in terms of the amendment dated 25.07.2019. Therefore, we are of the considered view that the liquidator was required to issue EOI in terms of the amendment that was in place on the date of issuance of EOI, thereby providing 90 days for payment of balance sale consideration from the date of demand. Further, it is held that there is no power to issue such circular under Section 196 of IBC 2016. We hold that the circular dated 26.08.2019 as non-est in law.

Period of 90 days to make balance payment is mandatory and not left to the discretion of liquidator while laying down terms and conditions of auction notice and IBBI circular dated 26.08.2019 as non-est in law – Sneha Techno Equipments Pvt. Ltd. Vs. Vinod Kumar Kothari, Liquidator – NCLT Kolkata Bench Read Post »

Regulation’s outer-limit for going concern sale and liquidation prescribes a period of 90 days from the date of receipt of Letter of Intent for the payment of sale consideration, if any sale has to be consummated as a Going Concern – VDB Projects Pvt. Ltd. Vs. Anil Mehta, Liquidator of Pratibha Industries Ltd. – NCLT Mumbai Bench

The Adjudicating Authority held that IBC, 2016 has been introduced to ensure the resolution of companies facing financial distress (known as Corporate Debtors) and in the failure of the same, the process of liquidation to be done in a time bound manner. Therefore, the present application which is filed seeking extension of time to deposit the unpaid consideration. For the similar issue, the Bench had directed the applicant to deposit the consideration vide order dated 03.06.2022 and the same was breached by the Applicant who is now praying for extension.

Regulation’s outer-limit for going concern sale and liquidation prescribes a period of 90 days from the date of receipt of Letter of Intent for the payment of sale consideration, if any sale has to be consummated as a Going Concern – VDB Projects Pvt. Ltd. Vs. Anil Mehta, Liquidator of Pratibha Industries Ltd. – NCLT Mumbai Bench Read Post »

NCLT cancelled sale of Pratibha Industries Limited on a going concern & directed Liquidator to get assets valued again and issue fresh e-Auction sale notice – VDB Projects Pvt. Ltd. Vs. Anil Mehta, Liquidator of Pratibha Industries Ltd. – NCLT Mumbai Bench

The Adjudicating Authority held that it not inclined to give benefit of provision of 90 days to pay balance sale consideration as per amended clause 12 of Schedule I of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Relying on Circular issued by the IBBI, we hold that benefit cannot be granted as the liquidation order in the proceeding was passed before the amendment dated 25.07.2019 benefit under amended clause 12, could not be granted. Therefore, EAuction dated 15.02.2022 is null and void as bad in law.

NCLT cancelled sale of Pratibha Industries Limited on a going concern & directed Liquidator to get assets valued again and issue fresh e-Auction sale notice – VDB Projects Pvt. Ltd. Vs. Anil Mehta, Liquidator of Pratibha Industries Ltd. – NCLT Mumbai Bench Read Post »

A Successful Bidder gets 30 Days time without interest. The payment of Loan sum, by the Successful Bidder / Bidder ought to be made, within 90 days with interest and 30 days without interest – MCM Pacific PTE Ltd. Vs. Mr. Pankaj Dhanuka Liquidator of Lanco Kondapalli Power Ltd. – NCLAT Chennai

NCLAT held that no wonder, the Code, 2016 stipulates the time limit that the period, in which the entire CIRP is to be completed, with a view to ensure maximisation of value of Assets of the Corporate Debtor and to avoid depreciation value, of the property concerned. More importantly, a Successful Bidder gets 30 Days time without interest. The payment of Loan sum, by the Successful Bidder / Bidder ought to be made, within 90 days with interest and 30 days without interest. The only benefit that the Successful Bidder derives is that no interest for 30 Days from the date of Letter of Intent. The balance full sale consideration (money consideration) is to be paid within 90 days, of course, with interest, on some pretext or the other.

A Successful Bidder gets 30 Days time without interest. The payment of Loan sum, by the Successful Bidder / Bidder ought to be made, within 90 days with interest and 30 days without interest – MCM Pacific PTE Ltd. Vs. Mr. Pankaj Dhanuka Liquidator of Lanco Kondapalli Power Ltd. – NCLAT Chennai Read Post »

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