TMI Blog2022 (2) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... plete the auction proceedings. However, before the expiry of the 90 days timeline, the appellant/applicant filed the said Application on the ground of Regulation 47 A of Liquidation Process Regulation, 2016. 25. Regulation 47 A was brought by the amendment in liquidation process regulation by Government Notification dated 20 April 2020 with retrospective effect from 17 April 2020. This Regulation provided that the period of Lockdown imposed by the central government in the wake of the Covid 19 outbreak shall not be counted for computation of the timeline for any task that could not be completed due to such Lockdown in relation to any liquidation process - It is pertinent to mention that the Government of India vide notification dated 20 April 2020 brought similar notification 40 C, as a special provision relating to the timeline under the Insolvency Resolution Process Regulation 2016. Accordingly, this Regulation was effective with effect from 29 March 2020. In the instant case, the applicant had sought an extension of 3 months on the ground of the 2nd wave of the Covid 19 outbreak. The applicant stated that Lockdown had been imposed in Tamil Nadu since 10 May 2021 because of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple attempts to auction the property of the corporate debtor. The present Appellant and Appeal are concerned with the auction sale of only the 'Pondicherry unit' of the corporate debtor in an E-Auction. After the announcement in February 2021, E-Auction was conducted in March 2021. 3. The Appellant emerged as the successful bidder in the auction proceeding for the 'Pondicherry unit with a bid of ₹ 3.3 crores; the Liquidator had issued a letter of intent dated 5 March 2021 stipulating and 90 days timeline for making the full payment to complete the auction proceeding. 4. The said 90 days was to expire on 3 June 2021. The Appellant had preferred IA number 3377 of 2021 dated 25 May 2021 before the Adjudicating Authority/NCLT, seeking time extension in complying with auction proceedings' completion, under Rule 11 of the NCLT Rules, 2016. 5. The prayer in the said IA number 3377 of 2021 is given as under; Allow the present application by granting extension of time of three (3) months from the date of present application; or in the alternative, grant extension of one (1) months from lifting of complete lockdown in the state of Tamil Nadu, to enable th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bankers to evaluate the Appellant's loan proposal. 14. The Appellant was in any event entitled to complete exclusion of the period from May 2021 on account of Lockdown under Regulation 47 A of the IBBI (Liquidation Process) Regulations, 2016. 15. By Regulation 47, A of the IBBI (Liquidation Process) Regulations, 2016, the period after the imposition of Lockdown must be wholly excluded from the calculation of the 90 days. Accordingly, if the Liquidator had acted as per law, there might have been no occasion for the Appellant to seek an extension of time. 16. Following points arise for the decision of this Appeal. a) Is the NCLT and Liquidator justified refusing to grant an extension to the Appellant without considering Regulation 47 A of the Liquidation Process Regulation 2016? b) Whether the Appellant is entitled to the exclusion/extension of time for the period of Lockdown due to Covid 19 as stipulated under Regulation 47 A of the IBBI (Liquidation Process) Regulation, 2016? 17. Appellants Submissions 17.1 The Counsel for the Appellant submitted that during the pendency of this Appeal, within a few days of the issuing of notice in this Appeal, the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Table presents a model timeline of the liquidation process of a Corporate Debtor from the liquidation commencement date, assuming that the process does not include compromise or arrangement under Section 230 of the Companies Act, 2013 (18 of 2013) or sale under Regulation 32-A: Model Timeline for Liquidation Process Sl. No. Section/ Regulation Description of Task Norm Latest Timeline (Days) (1) (2) (3) (4) (5) 1 Section 33 and 34 Commencement of liquidation and appointment of Liquidator LCD 0 = T 2 Section 33(1) ( b ) ( ii )/Reg. 12 (1, 2, 3) Public announcement in Form B Within 5 days of appointment of liquidator. T + 5 3 Reg. 35 (2) Appointment of registered valuers Within 7 days of LCD T + 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s receipt payments for the financial year 15 April 14 Proviso to Reg. 15 (1) Progress report in case of cessation of Liquidator Within 15 days of cessation as Liquidator Date of cessation + 15 15 Reg. 37 (2, 3) Information to secured creditors Within 21 days of receipt of intimation from secured creditor Date of intimation + 21 16 Reg. 42 (2) Distribution of the proceeds to the stakeholders Within 3 months from the receipt of amount Date of Realisation+ 90 17 Reg.10 (1) Application to AA for Disclaimer of onerous property Within 6 months from the LCD T + 6 months 18 Reg.10 (3) Notice to persons interested in the onerous property or contract At least 7 days before making an application to AA for [disclaimer]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete auction proceedings. 21. Undisputedly the Appellant had emerged as the successful bidder in the auction proceedings for the Pondicherry unit with a bid of ₹ 3.3 crores. The Liquidator had issued a letter of intent on 5 March 2021, stipulating 90 days timeline for making the full payment to complete the auction proceedings. The said 90 days was to expire on 3 June 2021. However, the Appellant had preferred IA 3377 of 2021 on 25 May 2021, i.e. before the expiry of the timeline provided for depositing the bid amount. 22. The IA 3377 of 2021 was filed under Rule 11 of NCLT Rules with a specific prayer for an extension of three months from the date of filing the Application or in the alternative for extension of one month from the date of the lifting of complete Lockdown in the state of Tamil Nadu, to enable the Appellant to complete auction proceedings. However, the learned Adjudicating Authority disposed of the Application by a one-line order given as under; IA-3377/2021-this application has become infructuous and hence dismissed. 23. In the instant case, the Adjudicating Authority disposed of the Appellant's Application IA-3377/2021 by one-line or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord reasons. 26. Our procedural law and the established practice, in fact, imposes unqualified obligation upon the courts to record reasons. There is hardly any statutory provision under the Income Tax Act or under the Constitution itself requiring recording of reasons in the judgments but it is no more res integra and stands unequivocally settled by different judgments of this Court holding that the courts and tribunals are required to pass reasoned judgments/orders. In fact, Order 14 Rule 2 read with Order 20 Rule 1 of the Code of Civil Procedure requires that, the court should record findings on each issue and such findings which obviously should be reasoned would form part of the judgment, which in turn would be the basis for writing a decree of the court. 27. By practice adopted in all courts and by virtue of judge-made law, the concept of reasoned judgment has become an indispensable part of basic rule of law and, in fact, is a mandatory requirement of the procedural law. Clarity of thoughts leads to clarity of vision and proper reasoning is the foundation of a just and fair decision. In Alexander Machinery (Dudley) Ltd. [1974 ICR 120 (NIRC)] there are apt obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubtful about the relevance of Regulation 47 A in the instant case because Lockdown was declared by Tamil Nadu State and not the Central Government. 28. It is pertinent to mention that Liquidation Process Regulation 47 deals with the Model Timeline for Liquidation Process. Model Timeline is only a directory in nature. It cannot be considered a deadline. It is provided under Regulation as a guiding factor to complete the liquidation process in a time-bound manner. In exceptional circumstances, such a time limit can be extended. 29. Hon'ble Supreme Court, while dealing with the timeline provided under Section 7 of the Insolvency and Bankruptcy Code 2016, has held that the timeline provided under Section 7 of the Code is a directory in nature and in special exceptional circumstances, it can be extended. 30. Hon'ble Supreme Court's observation in paragraph 58 in the case of Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416 is very much relevant in this regard. In this case, Hon'ble Supreme Court has held that; 58. This Court, while dealing with timelines provided qua operational creditors, in Surendra Trading Co. [Surendra Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le consideration may be extended by the sole discretion of Liquidator, to the extent permissible under the applicable laws and regulations. However, in case final sale consideration is not paid within stipulated timeline, the Liquidator shall forfeit earnest money. 33. The Adjudication Authority did not consider that satisfaction of creditor claims while ensuring asset maximisation is the underlying principle of the IBC, which cannot be overridden on account of meagre delays induced by a force majeure event. 34. It is further necessary to point out that the respondent liquidator has in its reply affidavit admitted that it has received two remittances of ₹ 3,39,02,732 on 8 September 2021 and 9 September 2021 respectively towards the bid consideration along with up-to-date interest at the rate of 12% till the payment was received in respect of any auction held on 2 March 2021 for Pondicherry unit of the corporate debtor. The same has been accepted by respondent without prejudice and would proceed further in the matter in accordance with the order/directions passed by this Appellate Tribunal in the present Appeal. 35. Based on the above discussion, we have conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
