Liquidation auction timelines may be extended for exceptional circumstances when delay is not wilful and equities are balanced by interest.

Liquidation auction timelines are ordinarily binding, but the auction was not vitiated where the successful bidder showed readiness to pay and the delay was not wilful. The Adjudicating Authority could grant limited further time in extraordinary circumstances, including a conversion dispute, stay order, and pending proceedings, especially where interest was imposed to balance equities. No gross irregularity or illegality was established in the Liquidator's conduct, as the conversion process was linked to obtaining lawful transfer permissions and no fraud or collusion was shown. The auction sale was therefore allowed to stand.

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Issues: (i) Whether non-payment of the balance sale consideration within 90 days automatically vitiated the auction and required cancellation; (ii) Whether the Adjudicating Authority could extend time for payment beyond the 90-day period in the circumstances of the case; (iii) Whether the Liquidator's conduct in pursuing the conversion process amounted to gross irregularity or illegality in the auction process.

Issue (i): Whether non-payment of the balance sale consideration within 90 days automatically vitiated the auction and required cancellation.

Analysis: The governing liquidation framework required the highest bidder to pay the balance sale consideration within 90 days, and the auction documents and letter of intent reflected the same timeline. However, the record showed repeated correspondence from the successful bidder expressing readiness and willingness to pay, along with proof of funds, before expiry of the period. The non-payment was not found to be a wilful default in the facts of the case.

Conclusion: The auction did not stand vitiated merely because the balance consideration was not paid within 90 days.

Issue (ii): Whether the Adjudicating Authority could extend time for payment beyond the 90-day period in the circumstances of the case.

Analysis: Although the 90-day period under the liquidation regulations is ordinarily to be followed, the decision recognised that the Adjudicating Authority may exercise inherent powers to extend time where extraordinary circumstances impede completion of the sale. Here, the conversion dispute, stay order, continuing proceedings before the revenue authorities, and pending applications before the Adjudicating Authority were treated as external circumstances justifying limited relaxation, with interest imposed to balance equities.

Conclusion: The Adjudicating Authority was competent to grant further time, and the extension was upheld.

Issue (iii): Whether the Liquidator's conduct in pursuing the conversion process amounted to gross irregularity or illegality in the auction process.

Analysis: The auction itself was not shown to be tainted by fraud or collusion. The Liquidator's involvement in the conversion process was found to be linked to the successful bidder's request and to the need to obtain lawful permissions for transfer of the land. No deliberate irregularity, gross illegality, or subversion of the liquidation process was established.

Conclusion: No gross irregularity or illegality in the Liquidator's conduct was established.

Final Conclusion: The auction sale was allowed to stand, the challenge to the liquidation orders failed, and the connected proceedings arising from the same cause became infructuous after payment and issuance of the sale certificate.

Ratio Decidendi: While liquidation timelines are ordinarily mandatory, the Adjudicating Authority may, in exercise of inherent powers, grant limited extension of time for payment where extraordinary circumstances have impeded completion of a valid auction and equitable adjustment is secured by interest or similar conditions.

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