Covid-19 lockdown valid reason to extend time for auction purchaser to deposit balance consideration

V.S. Palanivel Vs P. Sriram (Supreme Court of India)

Supreme Court held that Covid-19 lockdown was a valid reason for extension of time to deposit the balance sale consideration to auction purchaser under Insolvency and Bankruptcy Code.

Facts- The appellant – V.S. Palanivel (shareholder/former Managing Director of M/s Sri Lakshmi Hotel Private Limited) has filed the present appeals against the judgment and order dated 16t^h September, 2022, passed by the National Company Law Appellate Tribunal.

Notably, National Company Law Tribunal rejected an application moved by the appellant praying inter alia that directions be issued to the Liquidator, Sri Lakshmi Hotel Private Limited to stall all proceedings in respect of the e-auction conducted by him on 23^rd December, 2019, to work on an alternative manner of dividing the property put to auction and sell only a part of the land and for grant of sufficient time to make payment to the financial creditor.

Conclusion- In the larger contextual background of the Covid-19 breakout, a liberal interpretation would have to be adopted and the Auction Purchaser would be entitled to the benefit of the order dated 23^rd March, 2020 read with Regulation 47A of the IBBI Regulations, 2016. The appellant cannot be heard to state that when the entire country was engulfed by the Covid-19 pandemic and a countrywide lockdown was imposed on 25t^h March, 2020 that was extended from time to time, the Auction Purchaser ought to have deposited the balance sale consideration within the stipulated 90 days. In such a situation, a lenient view would have to be taken by the Court.