TaxTMI 
TaxTMI 
2022 (2) TMI 623
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....had made multiple attempts to auction the property of the corporate debtor. The present Appellant and Appeal are concerned with the auction sale of only the 'Pondicherry unit' of the corporate debtor in an E-Auction. After the announcement in February 2021, E-Auction was conducted in March 2021. 3. The Appellant emerged as the successful bidder in the auction proceeding for the 'Pondicherry unit with a bid of Rs. 3.3 crores; the Liquidator had issued a letter of intent dated 5 March 2021 stipulating and 90 days timeline for making the full payment to complete the auction proceeding. 4. The said 90 days was to expire on 3 June 2021. The Appellant had preferred IA number 3377 of 2021 dated 25 May 2021 before the Adjudicating Authority/NCLT, seeking time extension in complying with auction proceedings' completion, under Rule 11 of the NCLT Rules, 2016. 5. The prayer in the said IA number 3377 of 2021 is given as under; "Allow the present application by granting extension of time of three (3) months from the date of present application; or in the alternative, grant extension of one (1) months from lifting of complete lockdown in the state of Tamil Nadu....
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....chmark for the bankers to evaluate the Appellant's loan proposal. 14. The Appellant was in any event entitled to complete exclusion of the period from May 2021 on account of Lockdown under Regulation 47 A of the IBBI (Liquidation Process) Regulations, 2016. 15. By Regulation 47, A of the IBBI (Liquidation Process) Regulations, 2016, the period after the imposition of Lockdown must be wholly excluded from the calculation of the 90 days. Accordingly, if the Liquidator had acted as per law, there might have been no occasion for the Appellant to seek an extension of time. 16. Following points arise for the decision of this Appeal. a) Is the NCLT and Liquidator justified refusing to grant an extension to the Appellant without considering Regulation 47 A of the Liquidation Process Regulation 2016? b) Whether the Appellant is entitled to the exclusion/extension of time for the period of Lockdown due to Covid 19 as stipulated under Regulation 47 A of the IBBI (Liquidation Process) Regulation, 2016? 17. Appellants Submissions 17.1 The Counsel for the Appellant submitted that during the pendency of this Appeal, within a few days of the issuing of notice i....
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....ss.- The following Table presents a model timeline of the liquidation process of a Corporate Debtor from the liquidation commencement date, assuming that the process does not include compromise or arrangement under Section 230 of the Companies Act, 2013 (18 of 2013) or sale under Regulation 32-A: Model Timeline for Liquidation Process Sl. No. Section/ Regulation Description of Task Norm Latest Timeline (Days) (1) (2) (3) (4) (5) 1 Section 33 and 34 Commencement of liquidation and appointment of Liquidator LCD 0 = T 2 Section 33(1) (b) (ii)/Reg. 12 (1, 2, 3) Public announcement in Form B Within 5 days of appointment of liquidator. T + 5 3 Reg. 35 (2) Appointment of registered valuers Within 7 days of LCD T + 7 4 [Section 38 (1), Reg. 17, 18, 19, 20 and 21-A] Submission of claims; Intimation of the decision on relinquishment of security interest Within 30 days of LCD T + 30 5 Section 38(5) Withdrawa1/ modification of claim Within 14 days of submission of claim T + 44 6 Reg. 30 Verification of claims received under Regulation 12(2)(b) Within 30 d....
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....on to provide the balance amount. [AA: Adjudicating Authority, LCD: Liquidation Commencement Date, SCC: Stakeholders' Consultation Committee]] Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 Amendment DT. 20.4.2020 w.e.f.17.4.2020 vide Government Notification. [47-A. Exclusion of period of Lockdown.-Subject to the provisions of the Code, the period of Lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purposes of computation of the timeline for any task that could not be completed due to such Lockdown, in relation to any liquidation process.] Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Amendment DT. 20.4.2020 w.e.f.29.3.2020 vide Government Notification [40-C. Special provision relating to the timeline.-Notwithstanding the timelines contained in these regulations, but subject to the provisions in the Code, the period of Lockdown imposed by the Central Government in the wake of the Covid-19 outbreak shall not be counted for the timeline for any activ....
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.... rejection of his claim/prayer. It is then alone, that a party would be in a position to challenge the order on appropriate grounds. Besides, this would be for the benefit of the higher or the appellate court. As arguments bring things hidden and obscure to the light of reasons, reasoned judgment where the law and factual matrix of the case is discussed, provides lucidity and foundation for conclusions or exercise of judicial discretion by the courts. 24. Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases (Wharton's Law Lexicon). Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dissatisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. In our view, the court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e. at admission stage or after regular hearing, howsoev....
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....hereinabove." 24. In the instant case, the Appellant, i.e. successful auction purchaser by filing IA 3377 of 2021 dated 25 May 2021, sought an extension of 90 days for making the full payment to complete the auction proceedings. However, before the expiry of the 90 days timeline, the appellant/applicant filed the said Application on the ground of Regulation 47 A of Liquidation Process Regulation, 2016. 25. Regulation 47 A was brought by the amendment in liquidation process regulation by Government Notification dated 20 April 2020 with retrospective effect from 17 April 2020. This Regulation provided that the period of Lockdown imposed by the central government in the wake of the Covid 19 outbreak shall not be counted for computation of the timeline for any task that could not be completed due to such Lockdown in relation to any liquidation process. 26. It is pertinent to mention that the Government of India vide notification dated 20 April 2020 brought similar notification 40 C, as a special provision relating to the timeline under the Insolvency Resolution Process Regulation 2016. Accordingly, this Regulation was effective with effect from 29 March 2020. 27. In the instan....
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....on 7(4) would be directory. We are conscious of the fact that under Section 64(1) of the Code, NCLT President or the Chairperson of NCLAT may, after taking into account reasons by NCLT or NCLAT for exceeding the period mentioned by statute, extend the period of 14 days by a period not exceeding 10 days. We may note that even this provision is directory, in that no consequence is provided either if the period is not extended, or after the extension expires. This is also for the good reason that an Act of the court cannot harm the litigant before it. Unfortunately, both NCLT and NCLAT do not have sufficient members to deal with the flood of applications and appeals that is before them. The time taken in the queue by applicants who knock at their doors cannot, for no fault of theirs, be put against them." 31. Further, it is necessary to mention that E-Auction Process Information Document also provided discretion to the Liquidator to extend the timeline. The impact of the 2nd wave of Covid 19 was everywhere in India, of which judicial notice can be taken. In the special circumstances, the Liquidator ought to have sought permission of the Adjudicating Authority to extend the timel....