Tribunal upholds decision on EMD forfeiture, directs refund with interest. Liquidator's non-compliance noted. Jurisdiction confirmed.

The appeal was dismissed by the Tribunal, upholding the Adjudicating Authority's decision that declared the forfeiture of Earnest Money Deposit (EMD) illegal. The Appellant, as the Liquidator, was directed to refund the forfeited EMD amount with interest. The Tribunal found that the Liquidator failed to comply with the amended Clause 12 of Schedule 1 of the IBBI (Liquidation Process) Regulations, 2016, regarding the sale of assets. Additionally, the Tribunal held that the Adjudicating Authority had jurisdiction to declare the board's circular as non-est, emphasizing the need to adhere to the regulatory framework in ongoing liquidation processes.

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Issues Involved:
1. Legality of the forfeiture of Earnest Money Deposit (EMD).
2. Applicability of amended Clause 12 of Schedule 1 of the IBBI (Liquidation Process) Regulations, 2016.
3. Jurisdiction of the Adjudicating Authority to declare the circular of the board as non-est.

Summary:

1. Legality of the forfeiture of Earnest Money Deposit (EMD):
The Appellant, as the Liquidator of the Corporate Debtor, was aggrieved by the order of the Adjudicating Authority (NCLT, Kolkata Bench-1) which declared the forfeiture of EMD deposited by the Respondent as illegal. The Adjudicating Authority directed the Appellant to refund the forfeited EMD amount with interest at 4% from the date of forfeiture, failing which an interest of 7% would be applicable until actual payment is made.

2. Applicability of amended Clause 12 of Schedule 1 of the IBBI (Liquidation Process) Regulations, 2016:
The Liquidator initiated liquidation proceedings and floated an Expression of Interest (EOI) for the sale of assets. The E-auction held on 30.07.2020 declared the Respondent as the highest bidder (H1), who deposited 25% of the sale consideration but failed to pay the remaining 75% within the stipulated time. The Appellant forfeited the EMD and the 25% sale consideration due to non-payment. The Respondent filed an application for an extension of the timeline and a refund of the forfeited amount. The Adjudicating Authority held that the Appellant should have followed the amended Clause 12 of Schedule 1 of the Regulations, which provides 90 days for payment of the balance sale consideration from the date of demand.

3. Jurisdiction of the Adjudicating Authority to declare the circular of the board as non-est:
The Appellant argued that the Adjudicating Authority lacked jurisdiction to declare the board's circular as non-est. However, the circular dated 26.08.2019, which interpreted the amended Clause 12 of Schedule 1 to apply prospectively, was withdrawn. The Tribunal observed that the amended Regulation does not specify prospective application and should apply to ongoing liquidation processes irrespective of their initiation date. The Tribunal held that the Appellant's failure to follow the amended Regulation rendered its actions unsustainable.

Conclusion:
The Tribunal dismissed the appeal, upholding the Adjudicating Authority's order, and found no merit in the Appellant's arguments. The Appellant's request to reconsider the interest component was also dismissed, noting that the EMD amount was accruing interest in the bank. The appeal was dismissed with no costs.

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