TaxTMI 
TaxTMI 
2022 (5) TMI 1256
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1. These two Appeals have been filed against the same Impugned Order dated 29.10.2021 passed by National Company Law Tribunal, Mumbai Bench, Court -II (Adjudicating Authority) in I.A. No. 1012/2021 in CP No. 1042(IB)/MB/C-II/2017. By which Order, I.A. No. 1012/2021 filed by the Liquidator for confirmation of the Auction Sale of Lot No. 1 and Lot No. 2 has been disposed of directing the Liquidator to issue fresh e-Auction Sale Notice. 2. The Appellants in both the Appeals are the 'Successful Auction Purchasers' of e-Auction Sale held on 26th February, 2021, wherein the Appellant-'Jain International Trade Organisation' submitted its bid for Lot No. 2 whereas the Appellants-'Hitesh Vasantlal Bhanushali and Ors.' submitted its bid for Lot No. 1. 3. Brief facts of the case and the sequence of the events need to be noted for deciding these Appeals. By an Order dated 30th July, 2018, National Company Law Tribunal, Mumbai Bench allowed an Application filed under Section 33 of the Code and passed an Order directing for liquidation of the Corporate Debtor-'M/s. P&S Jewellery Limited'. The Liquidator-Respondent No. 1 issued e-Auction Sale Notice for e-Auction to be held on 05th Decem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tification dated 25th July, 2019 by which it was provided that the highest bidder shall be invited to deposit balance sale consideration within 90 days of the date of such demand whereas prior to 25th July, 2019, Schedule I, Clause 12 provided that Bidder shall be invited to deposit the balance sale consideration within 15 days. The Adjudicating Authority noticed the amendments in the Liquidation Regulations by Notification dated 25th July, 2019 as well as the Circular dated 26th August, 2019 issued by the Board. The Adjudicating Authority took the view that in view of the Circular dated 26th August, 2019, the amended Liquidation Regulations, Schedule I, Clause 12 as amended by Notification dated 25th July, 2019 was not complied with regard to e-Auction held on 26th February, 2021 and the Adjudicating Authority held that amendment notification dated 25th July, 2019 shall be applicable to the Liquidation Process which occur after the said date and in the present case, Liquidation was passed on 30th July, 2018, un-amended Liquidation Regulation, Schedule I, Clause 12 shall apply and the Auction Purchasers could not have been given 90 days time to deposit balance sale consideration he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jeet Sinha, Advocate appearing for Interveners, shareholder and suspended director of the Corporate Debtor submits that Circular issued by the Board i.e. 26th August, 2019 was fully applicable in the present case since the Liquidation Process was initiated on 30th July, 2018 i.e. much before 25th July, 2019 by which notification Schedule I, Clause 12 got amended, the amended regulation dated 25th July, 2019 is not applicable. Appellants being only the Bidder, no right accrued in their favour by the payments with regard to the assets of the Corporate Debtor. It is submitted that the Circular dated 26th August, 2019 has been issued by the Board in exercise of the power under Section 196 of the Insolvency and Bankruptcy Code, 2016. Mr. Abhijeet Sinha further submits that the Circular dated 26th August, 2019 has been withdrawn by subsequent Circular dated 06th May, 2022 to clarify the provisions of Regulations 2A, 21A, 31A and 44 as inserted by Amendment dated 25th July, 2019. 10. We have considered the submissions of Learned Counsel for the Parties and perused the record. 11. In the present case, the Order for Liquidation was passed by the Adjudicating Authority on 30th July, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egulation 33 of the IBBI (Liquidation Process) Regulations, 2016. Regulation 33 is as follows: "33. Mode of sale. (1) The liquidator shall ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I. (2) The liquidator may sell the assets of the corporate debtor by means of private sale in the manner specified in Schedule I when- (a) the asset is perishable; (b) the asset is likely to deteriorate in value significantly if not sold immediately; (c) the asset is sold at a price higher than the reserve price of a failed auction; or (d) the prior permission of the Adjudicating Authority has been obtained for such sale: Provided that the liquidator shall not sell the assets, without prior permission of the Adjudicating Authority, by way of private sale to- (a) a related party of the corporate debtor; (b) his related party; or (c) any professional appointed by him. (3) The liquidator shall not proceed with the sale of an asset if he has reason to believe that there is any collusion between the buyers, or the corporate debtor's related parties and buyer....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... come to the Circular dated 26th August, 2019 which is relied by Respondents. Circular dated 26th August, 2019 is as follows: "Insolvency and Bankruptcy Board of India 7th Floor, Mayur Bhawan, Connaught Place, New Delhi-110001 CIRCULAR No. IBBI/LIQ/024/2019 26th August, 2019 To All Registered Insolvency Professionals All Recognised Insolvency Professional Entities All Registered Insolvency Professional Agencies (By mail to registered email addresses and on website of the IBBI) Dear Madam / Sir, Sub: Applicability of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 notified on 25th July, 2019. The Insolvency and Bankruptcy Board of India notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 (Amendment Regulations) on 25th July, 2019. They came into force on the date of their publication in the Official Gazette, that is, on 25th July, 2019. 2. The stakeholders have expressed a difficulty in applying the Amendment Regulations to a liquidation process, which commenced before 25th July, 2019....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Board has notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2022 to clarify that provisions of regulations 2A, 21A, 31A and 44 as amended / inserted by the Amendment Regulations 2019 apply only to the liquidation processes commencing on or after 25th July, 2019. 3. In view of above, the Circular dated 26th August 2019 is withdrawn with immediate effect. 4. This circular is issued in exercise of the powers under section 196 of the Insolvency and Bankruptcy Code, 2016. Yours faithfully, Sd/- (Rajesh Tiwari) General Manager Tel: 011-2346 2864 Email: [email protected]" 19. The Circular dated 06th May, 2022 refers to Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019. It is clear that by the said Amendment Regulation, explanations have been added in Regulations 2A, 21A, 31A and 44 by the Amendment Regulation, 2022 neither there is any explanation nor there is any indication with regard to Schedule I, Clause 12. Schedule I, Clause 12 was on a different subject with regard to which neither there is any indication in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....19 i.e. the date on which the amendment regulations was published in the Gazette. There is no doubt that Amendment Regulation dated 25th July, 2019 amending Schedule I, Clause 12 is only prospective and shall not have effect on Auctions which were held prior to the amendment. The Circular dated 26th August, 2019 issued by the Board had neither any indication nor it can be said to have no any application with regard to the amendments brought into the Schedule I, Clause 12 by Notification dated 25th July, 2019, hence the time period of 90 days which was introduced in the Amendment dated 25th July, 2019 can be availed by the Auction Purchasers which Auction took place subsequent to the amendment dated 25th July, 2019. 20. There is one more reason due to which the Circular dated 26th August, 2019 can be held not to affect the statutory amendments brought into Schedule I, Clause 12 by Notification dated 25th July, 2019. The Circular was issued by the board in exercise of its power of issuing guidelines under Section 196(p) whereas the Amendment Regulation dated 25th July, 2019 were issued in exercise of power of the Board to make a Regulations which have statutory force. It is well s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....brought up by stakeholders relating to liquidation process under IBC. Reference was made to judgments where direction was given with regard to time during which process should be completed. Para 3.2 of the Discussion Paper referred to Regulation 32 and the option to explore sale of Corporate Debtor as a going concern along with the other available sale options and the need to provide complete framework to enable the Liquidator to exercise the option. The Discussion Paper tries to balance need to be within timeframe for maximisation of the value and the need to have sufficient time for steps to be taken. In such backdrop, Para 5.2.2 (referred supra) was included in the Discussion Paper with regard to difficulties found by Liquidators when time is of mere 15 days. 13. Perusing the Liquidation Regulations and Clause 12 of Schedule I as was subsequently introduced on 25.07.2019, the substituted Regulation which has been brought by way of amendment does not show that the Regulation is to be applied only prospectively. It is open ended provision relating to procedural law which in no way states that it will not apply to pending liquidation processes on the date of substitution. ....