Tribunal reinstates bid affected by Covid lockdown, emphasizes flexibility in timelines under IBC

The Tribunal allowed the appeal, setting aside the order dismissing the extension application and the termination of the Appellant's bid. The Tribunal recognized the impact of the Covid-19 lockdown on the Appellant's ability to complete the auction process and emphasized the need for flexibility in timelines under the IBC in exceptional circumstances. The decision highlighted the importance of reasoned judgments and acknowledged the genuine difficulties faced by the Appellant due to the pandemic, ultimately reinstating the validity of the bid.

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Issues Involved:
1. Justification of NCLT and Liquidator in refusing extension without considering Regulation 47 A of the Liquidation Process Regulation 2016.
2. Entitlement of the Appellant to exclusion/extension of time for the period of Lockdown due to Covid-19 under Regulation 47 A of the IBBI (Liquidation Process) Regulation, 2016.

Issue-wise Detailed Analysis:

1. Justification of NCLT and Liquidator in refusing extension without considering Regulation 47 A of the Liquidation Process Regulation 2016:

The Appellant, a successful auction purchaser of the Pondicherry unit of the Corporate Debtor, filed IA 3377 of 2021 seeking an extension of three months from the date of the application or one month from the lifting of the complete lockdown in Tamil Nadu. The Adjudicating Authority dismissed the application as infructuous without providing detailed reasons. The Tribunal emphasized the importance of reasoned judgments, referencing the Supreme Court's observations in the case of CCT v. Shukla & Bros., which highlighted that "reasons are the real live links to the administration of justice." The Tribunal criticized the NCLT's one-line order, indicating that it failed to consider the genuine difficulties faced by the Appellant due to the Covid-19 lockdown and other uncontrollable factors.

2. Entitlement of the Appellant to exclusion/extension of time for the period of Lockdown due to Covid-19 under Regulation 47 A of the IBBI (Liquidation Process) Regulation, 2016:

The Appellant argued that Regulation 47 A, introduced by an amendment effective from 17 April 2020, mandates that the period of lockdown imposed by the Central Government should not be counted in the timeline for any liquidation process task. Although the lockdown in Tamil Nadu was state-imposed, the Tribunal acknowledged the severe impact of the second wave of Covid-19 and the lockdown's effect on the Appellant's ability to secure a loan and complete the auction process. The Tribunal noted that the Liquidator had the discretion to extend timelines under the E-Auction Process Document and should have sought permission from the Adjudicating Authority for such an extension. The Tribunal also referenced the Supreme Court's stance in Pioneer Urban Land and Infrastructure Ltd. v. Union of India, which held that timelines under the IBC are directory and can be extended in exceptional circumstances.

Conclusion:

The Tribunal concluded that the appeal deserved to be allowed, setting aside the impugned order and the consequential letter from the Liquidator terminating the Appellant's bid and forfeiting the earnest money deposit. The Tribunal declared the bid still valid, recognizing the Appellant's compliance with the payment requirements despite the delays caused by the Covid-19 lockdown. The decision underscores the need for flexibility and reasoned decision-making in the face of extraordinary circumstances like the pandemic.

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