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2023 (5) TMI 44 - AT - Insolvency and BankruptcyForfeiture of the EMD and part consideration - Jurisdiction/power of Liquidator to forfeit the EMD - case of appellant is that the forfeiture of the amount under the terms and conditions of Tender Document is in nature of penalty hence can be recovered only in accordance with Section 74 of Indian Contract Act by bringing action by the Liquidator - Defect in title of the Corporate Debtor or not - Suppression by Liquidator, crucial information from the Appellant and other bidders. Jurisdiction/power of Liquidator to forfeit the EMD - compensation for breach of contract - HELD THAT:- For purpose of this case, law as laid down in Paragraph 43.7 is relevant where Hon’ble Supreme Court in KAILASH NATH ASSOCIATES VERSUS DELHI DEVELOPMENT AUTHORITY [2015 (1) TMI 1377 - SUPREME COURT] has clearly held that when forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application. The statement of law in paragraph 43.7 is fully applicable in the case of the present case. The present is a case where Appellant participated in the e- Auction conducted by the Liquidator under the Liquidation Process Regulations, 2016. Section 74 of the Indian Contract Act has no application in the case of Auction conducted by the Liquidator under the Liquidation Process Regulations, 2016. The terms and conditions of the sale as finalized by the Liquidator under which the e-Auction was held is binding on all including the bidders. Bidders give an unqualified undertaking for participation in the e-Auction after knowing fully well of clauses of the e-Auction Process Document and undertook to abide by the clauses. The submission of the Appellant can not be accepted that Appellant’s EMD can not be forfeited even though he has committed default in making the payment of balance amount and the Liquidator should file a suit for forfeiting amount deposited by the Appellant. Such preposterous argument can not be accepted in view of the fact that Liquidation Process is conducted under the statutory Liquidation Process Regulations, 2016. The terms and conditions of the Process Document has been framed as per statutory empowerment given to the Liquidator by Schedule I of the Liquidation Process Regulations, 2016 - When the clauses of the Process Document, clearly empowers the Liquidator to forfeit the EMD and any payment made in event default is committed by the Highest Bidder, no exception can be taken to the action of the Liquidator in cancelling the sale and forfeiting the amount deposited by the Appellant - there are no substance in the submission of Learned Counsel for the Appellant that Liquidator was not empowered to forfeit the EMD. Defect in title of the Corporate Debtor or not - Suppression by Liquidator, crucial information from the Appellant and other bidders - HELD THAT:- The process document under which e-Auction has been held and the e-Auction Notice has described the price of the land which was sought to be auctioned - the issue raised by the email dated 17th June, 2022 by the Appellant that name of the land is not in the name of the corporate debtor is only a ruse not to make payment within time allowed by law. Admittedly, the land was in the name of Anil Products Limited which was the earlier name of the Corporate Debtor changed in to Anil Limited. The title of the land shall be of the corporate debtor Anil Limited by change of the name the title to the land will continue with the corporate debtor and the earlier name of the corporate debtor in the revenue record has no bearing in the title. Thus, there was neither defect in the title nor the fact that process of change of the name in the revenue record was underway was any reason for Appellant not to make the payment of balance consideration within time. Property tax dues in respect of land was outstanding - HELD THAT:- Liquidator has submitted that all dues were paid and No Dues Certificate was issued. Liquidator further submitted that in any view of the matter, these issues were required to be done by the Liquidator before transferring the property in question in favour of the Appellant but that itself could not have been any ground available to the Appellant to refuse to deposit the balance consideration within time allowed by the law. Similarly, the argument that properties were attached towards nonpayment of property tax dues also can not raise any fetter in the title, right of the corporate debtor and further when No Dues Certificate were obtained by the Liquidator subsequently it can not be said that title of the corporate debtor was defective due to above reason - There was no title defect in the Corporate Debtor. Permission of the Deputy Collector for sale - Intimidation regarding entry in the revenue record - HELD THAT:- It is satisfying that issues regarding entry in the revenue record, permission of the Deputy Collector for sale were issues which had no effect on the title of the corporate debtor and the issues were raised by the Appellant to avoid payment of balance amount and to buy time in which Appellant failed. There are no substance in the submissions that there was defect in title. Appeal dismissed.
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