2025 (3) TMI 581 - AT - IBC

Prayer for grant of stay of operation of the impugned order - condonation of delay in submitting the scheme under Section 230 of the Companies Act 2013 mandated under Regulation 2B of IBBI ( Liquidation process) Regulations 2016 - prayer for condonation of delay of 224 days in re-filing the instant appeal - Challenge to Auction notice - HELD THAT - Owing to the specific stand taken by the Respondent that there was no procedural flaw coupled with the fact that the question of considering the so-called proposal under Section 230 of the Companies Act 2013 since having been filed belatedly could not have created at all any obstacle as such for the Respondent from discharging his statutory function of the completion of the liquidation process particularly when the Stakeholders Committee in the SCC meeting has categorically rejected the said scheme. Owing to the fact that the valuation was already done by the Respondent in terms of the provisions of the code and the regulations since there was no procedural flaw established by the Appellant to have chanced in conducting the auction till the stage it was finalized by the issuance of the sale certificate on 17.07.2023 and since apparently and admittedly too the proposal of the scheme under Section 230 of the Companies Act 2013 was preferred by the Appellant at a much belated stage there was no error on part of the liquidator to proceed further to finalize the liquidation process by auctioning the property which had now attained finality after the distribution. Conclusion - i) The finality of auction proceedings once completed and a sale certificate issued cannot be revisited based on belated procedural challenges. ii) The fact remains the valuation was done by this Respondent in terms of provisions of the Code and the Regulations. Appeal dismissed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

1. Whether the auction notice dated 20.05.2023 and the consequent proceedings/sale should be declared null and void.

2. Whether the delay in submitting the scheme under Section 230 of the Companies Act, 2013, should be condoned, allowing the appellant to provide a scheme of compromise.

3. Whether the appeal against the impugned order dated 11.03.2024 should be entertained despite the delay in refiling the appeal.

4. Whether the auction proceedings complied with the relevant regulations under the Insolvency and Bankruptcy Code and the Liquidation Regulations.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of the Auction Notice and Consequent Proceedings

- Relevant Legal Framework and Precedents: The appellant challenged the auction notice under Section 60(5) of the Insolvency & Bankruptcy Code, read with Regulation 2B of the IBBI (Liquidation) Regulations, 2016.

- Court's Interpretation and Reasoning: The Tribunal noted that the auction had been completed, and a sale certificate was issued on 17.07.2023. The auction purchaser had acquired a material right, and the proceedings had been finalized, leaving no room to declare the auction void.

- Key Evidence and Findings: The respondent confirmed the auction completion and distribution of proceeds, supported by a progress report.

- Application of Law to Facts: The Tribunal found that the appellant's challenge was delayed and that the auction had already been finalized, making it inappropriate to revisit the proceedings.

- Treatment of Competing Arguments: The appellant argued procedural flaws, but the Tribunal emphasized the finality of the auction and the issuance of the sale certificate.

- Conclusions: The Tribunal concluded that the auction proceedings could not be reopened or declared void.

2. Condonation of Delay in Submitting Scheme under Section 230

- Relevant Legal Framework and Precedents: The appellant sought condonation of delay under Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016.

- Court's Interpretation and Reasoning: The Tribunal highlighted the appellant's lack of diligence and the belated filing of the scheme, which could not obstruct the liquidation process.

- Key Evidence and Findings: The Stakeholders Committee had rejected the appellant's scheme, and the auction had proceeded to completion.

- Application of Law to Facts: The Tribunal found no procedural error in the auction process, and the appellant's late submission of the scheme did not warrant condonation.

- Treatment of Competing Arguments: The appellant's arguments regarding procedural flaws were countered by the respondent's detailed process compliance.

- Conclusions: The Tribunal declined to condone the delay, affirming the auction's finality.

3. Delay in Refiling the Appeal

- Relevant Legal Framework and Precedents: The appellant sought condonation of a 224-day delay in refiling the appeal.

- Court's Interpretation and Reasoning: The Tribunal found the appellant's reasons for delay, such as health issues and other litigations, unsubstantiated and insufficient.

- Key Evidence and Findings: No documentary evidence supported the appellant's claims of ill-health or litigation burdens.

- Application of Law to Facts: The Tribunal acknowledged the appeal's procedural aspect but emphasized the appellant's lack of diligence.

- Treatment of Competing Arguments: The Tribunal permitted the appeal's consideration on merit, despite the procedural lapse.

- Conclusions: The delay was condoned in the interest of justice, but the appeal lacked merit.

4. Compliance with Liquidation Regulations

- Relevant Legal Framework and Precedents: The appellant alleged non-compliance with Regulation 31A(2) of the Liquidation Regulations.

- Court's Interpretation and Reasoning: The Tribunal reviewed the respondent's compliance with the auction process and found no procedural flaws.

- Key Evidence and Findings: The respondent's detailed process compliance was outlined in a tabular chart, addressing the appellant's observations.

- Application of Law to Facts: The Tribunal found that the auction process adhered to the regulations, and the appellant's claims were unsupported.

- Treatment of Competing Arguments: The respondent's compliance with the regulations was substantiated, countering the appellant's allegations.

- Conclusions: The Tribunal concluded that the auction process was conducted in compliance with the relevant regulations.

SIGNIFICANT HOLDINGS

- Core Principles Established: The finality of auction proceedings, once completed and a sale certificate issued, cannot be revisited based on belated procedural challenges.

- Final Determinations on Each Issue: The Tribunal dismissed the appeal, affirming the auction's validity and the liquidation process's compliance with the regulations.

- Verbatim Quotes: "The fact remains the valuation was done by this Respondent in terms of provisions of the Code and the Regulations." The Tribunal emphasized the procedural compliance and finality of the auction process.