2022 (11) TMI 1281 - AT - Insolvency and Bankruptcy

Seeking extension of time before the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Court No.II) for 90 days time, with a Bonafide request, to extend the time, to pay the balance purchase consideration, to complete the sale by exhausting all avenues, including approaching the Bank for Funding - HELD THAT - It is an evident from the terms of Paragraph 3.2 of the Updated Process Document dated 08.04.2022, that, if there is failure to the Bid, within the time of the Letter of Intent, further consequences will flow for the Default. It is relevantly pointed out, that if a condition is to be followed by the Bidders and that when a confirmation of the Bid had taken place, then, at a later point of time, it is not open to the concerned Bidder to resile from the same and it cannot be brushed aside that the Bid is valid for a particular certain period. The Appellant / Applicant either as a matter of routine or as a matter of right, cannot lay a claim to seek for an extension of time. In this connection, this Tribunal points out that I B Code, 2016 is an inbuilt and self-contained code. Speed is the Essence / Gist of the Code. Moreover, the Provisions of I B Code, 2016 are summary in nature, and they are not adversarial in character. Also, that the Appellant / Applicant is bound, as per the relevant clause of the Letter of Intent concerning the Bid. No wonder, the I B Code, 2016 stipulates the time limit that the period, in which the entire CIRP process is to be completed, with a view to ensure maximisation of value of Assets of the Corporate Debtor and to avoid depreciation value, of the property concerned. This Tribunal keeping in mind that the Appellant had defaulted in fulfilling the tenor and spirit of Letter of Intent for the second time, and also, the observations, made by the Members of the Stakeholders Consultation Committee, in their 14th Meeting held on 21.09.2022 and on a cumulative consideration of the facts and circumstances of the present Case, in a Holistic Manner, the plea of the Appellant, in seeking an extension of time, in application towards the payment of balance purchase consideration, the said request cannot be acceded to by this Appellate Tribunal, to secure the ends of justice. On going through the contents of the impugned order comes to an inevitable and unescapable conclusion that the impugned order of dismissing the application is free from any Legal Flaws - application dismissed.

Summary

Issues Involved:
1. Request for extension of time to make balance payment by the successful bidder.
2. Compliance with the terms of the Bid Process Document and Letter of Intent.
3. Consideration of unforeseen circumstances affecting the bidder's ability to pay.
4. Adherence to the timelines stipulated under the Insolvency & Bankruptcy Code, 2016.

Detailed Analysis of the Judgment:

1. Request for Extension of Time to Make Balance Payment by the Successful Bidder:
The appellant, as the successful bidder, requested an extension of time to make the balance payment due to unforeseen circumstances, including the backing out of international investors and the sharp depreciation of Myanmar currency. The appellant had already paid Rs. 14,94,23,947 but was unable to disburse the remaining purchase consideration within the stipulated time. The Stakeholders' Consultation Committee (SCC) had rejected this request, and the appellant was not present at the relevant meeting despite being informed via email and telephone.

2. Compliance with the Terms of the Bid Process Document and Letter of Intent:
The Bid Process Document and the Letter of Intent (LoI) explicitly stated that the payment of the sale consideration by the successful bidder should be made within 90 days with interest or 30 days without interest. The appellant's plea for an extension was not countenanced due to the clear terms of the Bid Process Document, which did not allow for further extensions beyond the stipulated timelines. The appellant had defaulted in fulfilling the terms of the LoI for the second time, leading to the forfeiture of the amount paid and the cancellation of the LoI.

3. Consideration of Unforeseen Circumstances Affecting the Bidder's Ability to Pay:
The appellant cited unforeseen circumstances, such as the backing out of international investors and the depreciation of Myanmar currency, as reasons for the inability to make the balance payment. Despite these claims, the economic hardship in performance of a contract does not render it impossible to perform. The parties to the contract cannot escape their obligations due to changes in the economic scenario. The Liquidator had issued multiple communications to the appellant, urging the payment, but the appellant failed to comply.

4. Adherence to the Timelines Stipulated Under the Insolvency & Bankruptcy Code, 2016:
The Insolvency & Bankruptcy Code, 2016 emphasizes the importance of adhering to strict timelines to ensure the maximization of the value of assets and to avoid depreciation. The appellant's request for an extension of time was not in line with the essence of the Code, which aims for speedy resolution. The Tribunal highlighted that the Code is an inbuilt and self-contained code where speed is the essence. The appellant's failure to adhere to the timelines undermined the objective of the Code.

Conclusion:
The Tribunal, after considering the facts and circumstances of the case, upheld the decision of the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Court No.II) to dismiss the appellant's request for an extension of time. The Tribunal found no legal flaws in the impugned order dated 12.10.2022 and concluded that the appellant's plea could not be acceded to. Consequently, the appeal was dismissed, and all connected interlocutory applications were closed.