TaxTMI 
TaxTMI 
2025 (3) TMI 1574
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....e Liquidation process. 2. On appointment, Liquidator issued public announcement of the Liquidation process, constituted Stakeholders Consultation Committee (SCC), prepared the Asset Memorandum and after getting approval in SCC, decided to sell the Corporate Debtor as a going concern through e-auction in the manner provided in Schedule I of the said regulations. 3. The Liquidator issued the first e-auction sale notice on 31.05.2023. Subsequently, he issued 3 more such notices on 23.07.2023, 09.09.2023 and 27.10.2023, which failed to attract any bid. In the 5th e-auction, which was published on 11.12.2023 and held on 11.01.2024, the Appellant participated and was declared as to be the Successful Bidder having bid a sum of Rs. 43,74,00,000/-, for purchase of the Corporate Debtor as a going concern. 4. Consequent to the Appellant being determined as to be a Successful Bidder, the Respondent / Liquidator filed IA (IBC) / 415 (CHE) / 2024, before the Ld. Adjudicating Authority, seeking inter alia, confirmation of the sale of Corporate Debtor as a going concern and declaration of the Successful Bidder, as the purchaser of Corporate Debtor along with immunity as prescribed under S....
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.... directed to be paid under the terms of the bidding document. The Appellant admittedly had defaulted in remittance of the amount, in compliance of the Order dated 27.09.2024 and requested the Liquidator vide his letter dated 26.12.2024 to grant time upto 31.01.2025 to make the balance payment as he was in the process of raising the required funds from Kotak Mahindra Bank. Further, he filed an Application before the Ld. being IA (IBC) / 2488 (CHE) / 2025, praying for extension of 30 days for payment of the balance 75% of the sale consideration to the tune of Rs. 32,80,50,000/-. 7. In the Application thus preferred, the Appellant sought for the following reliefs: "The Applicant humbly prays that this Hon'ble Tribunal grant an extension of 30 days for the payment of the Balance consideration of Rs. 32,80,50,000/- (Thirty-Two Crores, Eighty Lakhs, Fifty Thousand) to the Respondent as per the order dated 27th September 2024 passed in IA(IBC)/415(CHE)/2024 and pass such order or orders as it may deem fit and thus render justice." 8. During the pendency of this Application, the Respondent sent an e-mail dated in his mail dated 01.01.2025 to the Appellant stating that the am....
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....invoked the Forfeiture Clause of the e-auction bidding document, described in Clause 9 and Clause 11 of the said document which was published by the Respondent on 11.12.2023. 12. The aforesaid Clauses are extracted hereunder: "9. FORFEITURE OF EARNEST MONEY: The Earnest Money, paid by bank transfer / DD will be forfeited, upon the occurrence of any of the following events: • If any of the conditions under this E-Auction Process Document are breached by the Qualified Bidder or in case the Qualified Bidder is found to have made any misrepresentation; or • If the Qualified Bidder or any person acting jointly or in concert with such Qualified Bidder is found to be ineligible to submit a bid under Section 29A of the IBC (as amended from time to time) or is found to have made a false or misleading declaration no eligibility under Section 29A of the IBC (as amended from time to time); or • If the Successful Bidder does not accept the Letter of Intent issued by the Liquidator within the period and in the manner specified; or • If the Successful Bidder fails to pay the balance sale consideration (plus any applicable ta....
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....e Liquidator failed to consider while dealing with his request for extension of payment period of balance sale consideration by another 30 days beyond the prescribed 90 days. Clause 31A (1) (h) reads as under: "(h) extension of payment of balance sale consideration as provided in clause (12) of Para 1 of Schedule I, beyond ninety days, to be disclosed in the auction notice." 16. Sub-Clause (h) as extracted above has been interpreted by the Ld. Counsel for the Appellant that, as if, it has permitted extension of time for payment of balance sale consideration beyond the specified period of 90 days. The said interpretation is a misnomer for the reason being that, if Clause 31A (1) (h) is read in its entirety, it is clear that it has only provided for that the said time period can be extended beyond 90 days and it has to be clearly mentioned in the Auction Notice and that it is not to be applied for the purposes of extension of time for payment of balance sale consideration in an Auction which has already been concluded. What has been mandated by the aforesaid amendment is, that the said extension of period for payment of balance sale consideration beyond 90 days has to ....
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....e notification, in the Gazette, that is, w.e.f. 12.02.2024 and in that eventuality, this notification will not be governing the instant Auction proceeding, which has already been initiated on 11.12.2023 and concluded too on 11.01.2024, i.e. much prior to the publication of the Notification of the said amendment. 21. The learned counsel for the Appellant had made reference to a Press release, which he calls as a Memorandum, which has been issued on 13.02.2024, to support his case, for extension of the period for the payment of the amount. He has particularly referred to Clause 2(1) of the said document which really cannot be read beyond the actual amendment as made in the subordinate legislation, since being exclusively a set of executive instructions. Clause 2(l) is extracted hereunder: "2(1). The liquidator may extend the payment period of balance sale consideration beyond ninety days, after consultation with the SCC." 22. In fact, this Clause, if it is read together with the notification of amendment Rules issued on 12.02.2024, it can be seen that it is nothing but a reiteration of the amended Regulations, which have been inserted by way of a notification of 12.02.....
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....cument inviting bids was made on 11.12.2023, and it would be exclusively governing the terms and conditions of the Bidding process, to be resorted to for sale of the Corporate Debtor which was to be resorted to for the purposes of the Corporate Debtor under Liquidation i.e. M/s. Ganga Foundations Private Limited. 26. Another question, which emerged for consideration during the course of argument, and which is the subject matter of consideration in the accompanying Company Appeal (AT) (CH) (INS) No. 168 / 2025 is with regards to the implications of the forfeiture clause, due to non-payment of the balance sale consideration within the stipulated time period as per the Bidding document. 27. The bidding document as published by the Respondent on 11.12.2023, provides for Forfeiture of the amount already paid in Clause 9 of said document, which has to be read with Clause 11. 28. The Forfeiture Clause as given therein, specifically provide that in an event of failure of the Successful Bidder to deposit the balance sale consideration before the expiry of the period of payment of the same, will lead to forfeiture of the Earnest Money Deposit amount. 29. Subsequently, another que....
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.... and determined by the learned Adjudicating Authority vide its Order dated 27.09.2024. 34. The settled principle of law is, that once the rules of the game have already been brought into a public domain and a person voluntarily participates in the process as contemplated under the rules of the game, which has been published, he cannot, on a later date, upon being determined unsuccessful or upon arising of any dispute regarding the terms and conditions of the said document, he cannot take a somersault or a stand converse to the terms and conditions of the bidding document contending thereof, that these Clauses are arbitrary. 35. This is not a percept available under law, because, once a person who intends to the reap the fruits of participation in the Auction process is also equally bound to the liabilities which will be flowing from the documents based on which he has participated in the bidding process. 36. Owing to the fact that it is not in controversy that the last date thus fixed for deposit of the balance sale consideration was 27.12.2024 and that the Appellant was not able to deposit the amount as settled, after he being determined as to be a Successful Bidder, the ....