TaxTMI 
TaxTMI 
2025 (12) TMI 884
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....2023 in CP(IB)66 of 2017. The Adjudicating Authority by the impugned order allowed IA/364(AHM) 2023 filed by Respondent No.1 - the Successful Auction Purchaser ("SAP"). Aggrieved by part of the order by which the Adjudicating Authority has exonerated the SAP from paying interest charged on balance consideration, this Appeal has been filed. 2. The Appellant in the Appeal has prayed for following reliefs: "(A) This Hon'ble Tribunal may be pleased to quash and set aside the impugned judgment and order dated 21.06.2024 as passed by the Hon'ble Adjudicating Authority in I.A. 364 of 2023 in CP (IB) No. 66 of 2017 to the extent of waiver of interest granted to the Respondent on the delayed payment of balance Sale Consideration; (B). Pending hearing and final disposal of the present Appeal, this Hon'ble Tribunal may be pleased to direct the Respondent to deposit the interest @ 12% per annum on balance sale consideration to the tune of Rs. 46.81 Crores; (C). Pass any or such further orders in favour of the Appellant as this Hon'ble Appellate Tribunal may deem fit and proper in the facts and circumstances of the case." 3. Brief facts of the ca....
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....me. With respect to prayer (b), the Adjudicating Authority observed that at this stage it is not deciding the issue of waiver of interest. (vii) On 21.06.2024, IA filed by the Liquidator for removal of the attachment was allowed and on the same date, the impugned order was passed in IA/364(AHM)2023. The operative portion of the impugned order is as follows: "22. In view of the above, we pass the following order: ORDER i) Application is partly allowed. ii) Applicant is exonerated from paying interest charged on balance consideration by respondent. Respondent not to charge interest on balance consideration at this stage. (iii) No extension of time is granted. iv) Prayer for removal of encroachment and other issues are rejected." 4. The present Appeal is filed by the Liquidator challenging the impugned order dated 21.06.2024. Initially this Tribunal vide its order dated 06.02.2025 rejected IA No.8709 of 2024 filed by the Appellant praying for condonation of 115 days delay in refiling the Appeal. The Appellant filed Civil Appeal No.5106 of 2025 in the Hon'ble Supreme Court, challenging the order of this Tribunal dated 06.02.20....
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....mitted that in the above case, the Hon'ble Supreme Court has held that attachment by Income Tax Department of the assets, could not be a ground for not making the payment of sale consideration within the time allowed. It is submitted that the Hon'ble Supreme Court has ultimately directed the payment with interest, which judgment covers the issues. It is submitted that SAP was obliged to make payment of balance consideration along with interest and interest having not been paid, the Adjudicating Authority has erroneously exonerated Respondent No.1 from making the payment of interest. 7. Shri Arun Kathpalia, learned Senior Counsel appearing for Respondent No.1 refuting the submissions of the Appellant submits that the attachment by the State Tax Department being continued, Respondent No.1 within 90 days period wrote a letter on 19.03.2023 asking the Liquidator whether Liquidator would be in a position to convey the ownership of the land in event the entire amount is paid. The Liquidator on 20.03.2023 replied that he would not be in a position to convey ownership of the said land until attachment by State Tax Department is lifted. Thus, Respondent No.1 was always ready and willing ....
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.... submissions of the parties, it is relevant to notice certain clauses of Tender Document dated 03.12.2022, which is Annexure 'E' to the Appeal. Under the heading 'disclaimer' in Clauses 3, 10 and 12, following has been mentioned: "3. It is to be noted that no information being provided in this "Tender Document' claims to be comprehensive, independent due diligence of the intended user of this document or the bidder is highly recommended." 10. The Land of the Company are proposed to be sold on "As is where is basis", "As is what is basis", "Whatever there is basis" and "No recourse" basis and the proposed sale of land of the Company does not entail transfer of any other title, except the title which the Company had on its land as on date of transfer. The Liquidator does not take or assume any responsibility for any shortfall or defect or shortcoming in the land of the Company. 12. This Tender Document is neither an agreement nor an offer by the Liquidator to the Prospective Bidders or any other person. The objective of this Tender Document is to provide interested parties with information that may be useful to them in making their bids. It may be noted....
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....3, Schedule I of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016." 12. Further, under Clause 4.3, Bidders were requested to inspect the land, including the area of the land. Clauses (b), (d) and (e) of 4.3 are as follows: "4.3(b) Bidders are advised/ cautioned to verify with the sub- registrar's office as well as obtain and analyze the revenue records with respect to the Land and to satisfy themselves regarding the existence, title, nature, description, condition, existing encumbrances, liens, charges, statutory dues, etc. over the Land before submitting their bids. (d) Bidders are bound by the principle of caveat emptor (buyer beware). (e) Bidders are requested to submit their bids only after conducting their own independent due diligence exercise with respect to the title to the Land. 13. Under Clause 4.10, sub-clause (b), bidders were required to pay balance sale price within 30 days of issue of Sale confirmation Advice. However, they can pay the amount within the extended period of 90 days from the date of issue of Sale of Confirmation Advice along with interest of 12% p.a. after 30 days. Clause 4.10 (b) ....
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....yment of Rs. 255 or on or before 29th March. 2023. would you be able to convey the property to us simultaneously. We await for your response. Thanking You Yours Sincerely For Adani Infrastructure and Developers Private Limited Vishal Shah Authorised Signatory" 16. The Liquidator on 20.03.2023 replied the letter and clearly stated that transfer process is an independent process and shall not in any way affect the payment schedule as prescribed under Clause 4.10 of the Tender Document. It is useful to extract reply dated 20.03.2023, which is as follows: "Dated 20.03.2023 To, Shri Vishal Shah, Adani Infrastructure and Developers Private Limited 10th floor, Shikhar, Near Adani House, Mithakhali six roads, Ahmedabad 380009 Dear Sir, Subject: Reply to your letter dated 19.03.2023 with respect to Sale of land of Anil Limited ("property") located at Bapunagar, Ahmedabad. With reference to the above subject, the undersigned is astound that at this stage of sale process your good office has raised this query with regards to transfer of property and payment terms. Kindly note that al....
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.... Thanking you, Yours faithfully, For Anil Limited (In Liquidation) Sd/- CA Ramchandra Dallaram Choudhary Liquidator IP Reg. No: IBBI/IPA-001/IP-P00157/2017-18/10326 AFA valid till date: 15.11.2023" 17. The above letter clearly communicated Respondent No.1 that payment time lines as per Clause 4.10 of the Tender Document has to be adhered to and the Liquidator has already taken steps for removal of attachment, which application is to be listed on 28.03.2023. 18. IA/364(AHM)2023 was filed by Respondent No.1, in which following prayers were made: "(a) This Hon'ble Tribunal may be pleased to direct the Respondent to extend the time-limit for making payment of the balance consideration amount of Rs. 255,00,00,000/- (Rupees Two Hundred and Fifty Five Crores Only) by a further period of 3 months from 29.3.2022 or till such time as the issues raised by the Applicant in its letter dated 13.3.2023 relating to the said land are not finally resolved, whichever is later; (b) This Hon'ble Tribunal may be pleased to direct the Respondent to waive the 12% Interest in respect of the balance payment of Rs. 305,00,00,00....
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....erest @ 12% on the balance sale consideration, which was not paid within 30 days from the receipt of Sale Confirmation Advice and whether the order of Adjudicating Authority exonerating Respondent No.1 from interest charge is sustainable. 22. The statutory provisions of Schedule-I Clause 12 and 13, which are relevant are as follows: (12) On the close of the auction, the highest bidder shall be invited to provide balance sale consideration within ninety days or such period as mentioned in the auction notice under clause 3, of the date of such demand: Provided that payments made after thirty days shall attract interest at the rate of twelve per cent.: Provided further that the sale shall be cancelled if the payment is not received within the period provided under this clause. (13) On payment of the full amount, the sale shall stand completed, the liquidator shall execute certificate of sale or sale deed to transfer such assets and the assets shall be delivered to him in the manner specified in the terms of sale." 23. The statutory provision required payment of entire sale consideration in maximum 90 days, but payment beyond 30 days has to be ....
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....sions of this Tribunal and the Hon'ble Supreme Court that the time line provided in Schedule-I of Regulation is mandatory. The Hon'ble Supreme Court in V.S. Palanivel (supra) in paragraph 68 has clearly held that Rule 12 of Schedule-I has to be treated as mandatory. Paragraph 68 of the judgment of the Hon'ble Supreme Court is as follows: "68. In view of the analysis undertaken above, Rule 12 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator. To that extent, there is substance in the submission made on behalf of the appellant that since the second proviso under Rule 12 contemplates a consequence of cancellation of the auction on non-payment of the balance sale consideration within 90 days, the Liquidator was not empowered to extend the timeline." 25. There can be no dispute that provision of Schedule-I Rule 12 is mandatory as noted above. Ninety days' maximum period for payment of sale consideration with 12% interest on payment made after 30 day....
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.... said application was allowed by the adjudicating authority on 5-5-2020 [KMC Speciality Hospital (I) Ltd. v. Sri Lakshmi Hotels Ltd. (Liquidator), 2020 SCC OnLine NCLT 7278] and time was granted to the auction-purchaser to pay the balance sale consideration on the Central Government/State Government lifting the lockdown. 72. The aforesaid order dated 5-5-2020 [KMC Speciality Hospital (I) Ltd. v. Sri Lakshmi Hotels Ltd. (Liquidator), 2020 SCC OnLine NCLT 7278], was passed by the adjudicating authority in exercise of its inherent powers under Rule 11 of the 2016 NCLT Rules which states as follows: "11. Inherent powers.-Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal." 73. The aforesaid Rule is not to be read in isolation but in conjunction with Section 35 IBC that deals with the powers and duties of the Liquidator and states that the Liquidator shall have the powers and duties specified in clauses (a) to (o) of sub-section (1) including the power to sell an immovable/movable proper....
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....y of 30 days. Further, the amount of Rs. 50 crores was paid on 13.03.2023, i.e. within a period of 90 days as provided in Schedule-I Rule 12. As per Schedule-I Rule 12, after 30 days from 29.12.2022 SAP was liable to pay 12% interest. The application IA/364(AHM)2023, which was filed by the SAP praying for extension of time and exoneration of interest, came to be considered and order was passed on 15.06.2023 as noted above. Time extension, which was allowed by the Adjudicating Authority, thus, commenced only on 15.06.2023. The SAP, thus, was clearly liable to pay balance sale consideration @ 12% interest as per Schedule-I Rule 12. We, thus, hold that SAP was clearly liable to pay interest @ 12% on the balance consideration after expiry of 30 days from 29.12.2022. 28. Shri Arun Kathpalia, learned Senior Counsel appearing for the Respondent relying on Section 51 of the Indian Contract Act, 1872 submits that in the absence of reciprocal promises being fulfilled by a promisee, the promisor is not bound to perform his obligation. It is submitted that when the Liquidator was not competent to transfer the assets in favour of SAP, the Liquidator cannot ask the Appellant to fulfill the pr....
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....The present is not a case for any breach of contract entered between the parties, rather is a case of sale of liquidation estate under the statutory provisions of Liquidation Process Regulations, 2016. The above judgment, thus, does not come to any aid of the Respondent in the present case. Similarly, the judgment of Hon'ble Supreme Court in Sikkim Subba Associates (supra), which arose out of award given by District Judge Gangtok, where the State has filed an application under Section 30 of the Arbitration Act, 1940, which judgment has no application in the facts of the present case. The judgment of the Delhi High Court in I.C.M. Airport Technics (supra) was also a case, which arose out of the Arbitration Act, 1940 and has no applicability in the facts of the present case. We, thus, are of the view that the above submission advanced by learned Counsel for the Respondent relying on Indian Contract Act, 1872, does not help the Respondent in the facts of the present case. 31. The next question, which needs consideration is as to whether during the period of order dated 15.06.2023, extending the time for payment of sale consideration was in operation, whether the SAP was liable to p....
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.... In the light of the notice for sale and the replies furnished to the auction-purchaser well before the bidding process had commenced, we are of the considered view that it was for the auction-purchaser as an intending bidder to have conducted a due diligence at its own end, gather all the relevant information pertaining to the subject property which included the status of the property and the liabilities attached to it, weigh all the pros and cons and only thereafter participate in the auction process. After having participated in the e-auction with its eyes wide open, the auction-purchaser cannot be heard to state that payment of the balance sale consideration was linked with the lifting of the attachment order passed by the Income Tax Department when it knew all along that the auction was being conducted on an "as-is- where-is", "as-is-what-is" and "whatever-there-is" basis." 33. The Hon'ble Supreme Court has further held that Rule 12 is not interlinked with Rule 13. In paragraphs 82, 83 and 84, the Hon'ble Supreme Court held following: "82. The contention of the learned counsel for the auction- purchaser is that Rule 13, Schedule I to the 2016 IBBI Regulations must ....