Sushil Jejani S/o Atmaram Jejani Vs Pasad Dharap (NCLAT Delhi)
Conclusion: Since there were compelling circumstances which constrained the Liquidator from securing the sale consideration of the auction land within 90 days such as special circumstances arising out of the conversion imbroglio, restraint orders of the Hon’ble Bombay High Court and IAs pending before the Adjudicating Authority, therefore, there was no infirmity in the order of the Adjudicating Authority in allowing further time to the SAP to make balance payment in view of what it described as “external circumstances”.
Held: The Corporate Debtor- Jejani Pulp & Paper Mills Pvt Ltd. was admitted into the rigours of CIRP. Liquidation proceedings of the Corporate Debtor was initiated by the Adjudicating Authority. An online auction was conducted with a revised reserve price of Rs 9,30,00,000, in which three bidders submitted applications. Pursuant to the auction, a Letter of Intent (“LoI” ) was issued by the Liquidator in favour of SAP stipulating that balance consideration be paid within 90 days. Appellant contended that as the SAP did not submit the balance sale consideration within a period of 90 days in terms of the auction document, it was contended that the Liquidator should have cancelled the auction. Appellant had further contended that Adjudicating Authority by permitting 30 days further time-period for the deposit of balance sale consideration at this belated stage did not act in accordance with the statutory provisions of IBC and hence the impugned order was liable to be set aside. It was contended that giving such relief by the Adjudicating Authority to the SAP had no statutory foundation and was contrary to the tenets of IBC. Moreover, Adjudicating Authority by allowing the SAP to have the subject land on the bid price of 2020 at a time when there had been a steep value escalation, injustice had been caused to the creditors and other stakeholders of the Corporate Debtor. It was held that ordinarily the time-line of 90 days specified in Regulation 33 of Liquidation Process Regulations needsdto be adhered to for making payment by the successful bidder. However, it was well settled law that if it come to the notice of the Adjudicating Authority that extraordinary circumstances had arisen which had impeded the conduct of auction process, it could allow further time to the successful bidder as a special measure in exercise of its inherent powers. Further since the Palanivel judgment did not define in specific terms as to the circumstances in which the time extension could be allowed, there was no prohibition on the exercise of this power as long as the Adjudicating Authority was satisfied that there are extraordinary and extenuating circumstances to do so. In the present case, the Adjudicating Authority had clearly expressed its satisfaction of the external circumstances which afflicted the conduct of auction and led to the non-payment of balance consideration by the SAP inspite of his willingness to pay. Therefore, there was no infirmity in the order of the Adjudicating Authority in allowing further time to the SAP to make balance payment in view of what it described as “external circumstances”. The balance of convenience was clearly in favour of the Liquidator. There was no substance to show that any deliberate irregularity or gross illegality was committed by the Liquidator in the conduct of the auction process. In all fairness, the findings of the Adjudicating Authority could not be allowed on the conduct of the Liquidator to subsist as it would cause unnecessary prejudice to the interests of the Liquidator.
