Liquidation sale payment deadline is mandatory, but Adjudicating Authority may extend time and sustain the sale on full payment.

The liquidation regulations require the successful auction purchaser to pay the balance sale consideration within the prescribed period, and default ordinarily renders the sale liable to cancellation. However, where the Adjudicating Authority, rather than the liquidator, extends time in appropriate circumstances, the extension may be sustained under its statutory and inherent powers. Once the full consideration with interest is received, approval of the sale can follow as a consequential step. The operative principle is that the payment timeline is mandatory, but limited judicial extension may validate the transaction on the facts.

---

---

Issues: (i) whether the time prescribed for payment of the balance sale consideration by the successful auction purchaser under the liquidation regulations was mandatory and liable to result in cancellation on default; (ii) whether the Adjudicating Authority could extend the time for payment and thereafter approve the sale upon receipt of the balance consideration.

Issue (i): whether the time prescribed for payment of the balance sale consideration by the successful auction purchaser under the liquidation regulations was mandatory and liable to result in cancellation on default.

Analysis: The liquidation framework prescribed payment of the balance sale consideration within ninety days, with interest for delayed payment beyond thirty days and cancellation of the sale if payment was not received within the stipulated period. The provision was treated as mandatory. The decision relied on earlier authority holding that non-payment within the prescribed time ordinarily results in cancellation and that the liquidator is not empowered to extend the timeline under the liquidation regulations.

Conclusion: The stipulated payment period was mandatory and default would ordinarily justify cancellation of the sale.

Issue (ii): whether the Adjudicating Authority could extend the time for payment and thereafter approve the sale upon receipt of the balance consideration.

Analysis: The distinguishing feature was that the extension was granted by the Adjudicating Authority, not by the liquidator. The power of the liquidator under Section 35 of the Insolvency and Bankruptcy Code, 2016 is subject to the directions of the Adjudicating Authority, and the Adjudicating Authority may exercise inherent powers under Rule 11 of the National Company Law Tribunal Rules, 2016 in appropriate circumstances. The order extending time was therefore sustained, and once the full consideration with interest had been received, approval of the sale followed as a consequential step.

Conclusion: The Adjudicating Authority was competent to extend time in the facts of the case and to approve the sale after receipt of the entire consideration.

Final Conclusion: No ground was found to interfere with either impugned order, and the challenge to the extension of time and approval of sale failed.

Ratio Decidendi: Although the balance-sale-payment timeline in liquidation is mandatory, the Adjudicating Authority may, in appropriate circumstances and by exercising its statutory and inherent powers, extend time for payment and validate the sale once full consideration is received.

---