Appeals allowed, e-Auction sale confirmed with 90-day payment window under IBBI Regulations

The Appeals were allowed, setting aside the Adjudicating Authority's order and confirming the e-Auction Sale of Lot No. 1 and Lot No. 2 held on 26th February 2021. The Liquidator was directed to proceed with all necessary actions. The Tribunal emphasized the applicability of the amended Schedule I, Clause 12 of the IBBI (Liquidation Process) Regulations, 2016, allowing 90 days for depositing the balance sale consideration, and clarified that statutory amendments take precedence over Circulars.

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Issues Involved:
1. Confirmation of the Auction Sale of Lot No. 1 and Lot No. 2.
2. Applicability of the amended Schedule I, Clause 12 of the IBBI (Liquidation Process) Regulations, 2016.
3. Validity and impact of the Circular dated 26th August 2019 issued by the Insolvency and Bankruptcy Board of India (IBBI).

Detailed Analysis:

1. Confirmation of the Auction Sale of Lot No. 1 and Lot No. 2:
- The Appeals were filed against the Order dated 29.10.2021 by the National Company Law Tribunal (NCLT), Mumbai Bench, which directed the Liquidator to issue a fresh e-Auction Sale Notice instead of confirming the Auction Sale of Lot No. 1 and Lot No. 2.
- The Appellants were the 'Successful Auction Purchasers' in the e-Auction held on 26th February 2021. They had deposited the entire sale consideration within the stipulated period of 90 days as per the Letter of Intent (LoI) and the statutory regulations.
- The Liquidator had sought confirmation of the sale conducted under the e-Auction dated 26th February 2021. However, the Adjudicating Authority did not approve the e-Auction, leading to the Appeals.

2. Applicability of the amended Schedule I, Clause 12 of the IBBI (Liquidation Process) Regulations, 2016:
- Schedule I, Clause 12 was amended on 25th July 2019, extending the period for the highest bidder to deposit the balance sale consideration from 15 days to 90 days.
- The Adjudicating Authority held that the amended regulation was not applicable as the liquidation process had commenced before the amendment date (30th July 2018).
- The Appellants argued that since the e-Auction Notice was issued on 23rd January 2021, the amended regulations were applicable, allowing them 90 days to deposit the balance sale consideration.
- The Tribunal clarified that the amended regulation applies to auctions conducted after the amendment date, irrespective of when the liquidation order was passed. The statutory requirement under Clause 12, Schedule I, is triggered 'on the close of the auction'.

3. Validity and impact of the Circular dated 26th August 2019 issued by the Insolvency and Bankruptcy Board of India (IBBI):
- The Circular stated that the amended regulations were not applicable to liquidation processes that commenced before 25th July 2019.
- The Appellants contended that the Circular could not override the statutory provisions amended by the Notification dated 25th July 2019.
- The Tribunal noted that the Circular did not reference Schedule I, Clause 12, and was subsequently withdrawn by another Circular dated 6th May 2022.
- The Tribunal emphasized that Circulars and guidelines cannot override statutory provisions. The amended regulation in Schedule I, Clause 12, which allows 90 days for depositing the balance sale consideration, is applicable to auctions conducted after the amendment date.

Conclusion:
- The Tribunal concluded that the Adjudicating Authority's order rejecting the Liquidator's application for confirmation of the e-Auction Sale was erroneous and unsustainable.
- The Appeals were allowed, and the order dated 29th October 2021 was set aside. The e-Auction Sale held on 26th February 2021 was confirmed, and the Liquidator was directed to take all consequential actions accordingly.
- The Tribunal reiterated that statutory amendments have precedence over Circulars, and the amended Schedule I, Clause 12, was applicable to the auction in question.

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