Sale Certificate Canceled: Tribunal Confirms Forfeiture of Deposit Over Payment Delay, Upholds Liquidator's Actions.

The Appellate Tribunal upheld the Adjudicating Authority's decision to cancel the sale certificate and forfeit the Earnest Money Deposit (EMD) due to the Appellant's failure to make the required payment within the specified timeline. The Tribunal found that the Liquidator's actions were consistent with the bid document terms and statutory requirements under the Liquidation Regulations. Consequently, the appeal was dismissed, and the Impugned Order was affirmed.

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Issues:
Challenge to the order cancelling sale certificate, appointment of local commissioner, stay on auction, refund of EMD amount.

Analysis:
The Appellate Tribunal heard an appeal challenging the order of the Adjudicating Authority dated 11.12.2023 in IA 626/2022. The appeal sought to set aside the cancellation of the sale certificate, appointment of a local commissioner to verify machinery, grant a stay on the auction, and direct the Liquidator to refund the EMD amount of Rs.58.10 Lacs with interest. The Liquidation Proceedings against the Corporate Debtor began on 16.09.2020 and 06.11.2020. The Appellant participated in an e-Auction, submitted a bid, and was declared the successful bidder. However, the Appellant failed to make the required payment within the stipulated time, leading to the cancellation of the sale certificate by the Liquidator. The Appellant challenged this cancellation, arguing that certain conditions, such as the issuance of a Letter of Intent (LoI), were not fulfilled.

The Appellant's counsel contended that the LoI, a requirement in the bid documents, was never issued, and therefore, the Liquidator could not cancel the sale certificate or forfeit the EMD. On the other hand, the Liquidator's counsel argued that the Appellant had multiple opportunities to make the payment but failed to do so. The bid document specified the payment terms, including consequences for default by the successful bidder. The Liquidator had issued a communication confirming the Appellant as the successful bidder and requesting compliance with the bid document terms.

The Sale Certificate issued to the Successful Bidder did not mention the requirement of an LoI, as per Clause 9 of the bid document. The Liquidation Regulations mandated payment within 90 days, and the Appellant's claim of not being informed about the payment timeline was not accepted. The Liquidator acted within their rights to cancel the sale certificate and forfeit the EMD due to the Appellant's failure to make the payment. The Appellant's deposited amount was already refunded. The Tribunal found no grounds to interfere with the Impugned Order and dismissed the appeal.

In conclusion, the Appellate Tribunal upheld the decision of the Adjudicating Authority to cancel the sale certificate and forfeit the EMD due to the Appellant's failure to make the required payment within the specified timeline. The Tribunal found that the Liquidator's actions were in accordance with the bid document terms and the statutory requirements under the Liquidation Regulations. The appeal was dismissed, and the Impugned Order was upheld.

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