2021 (5) TMI 784 - Tri - Insolvency and Bankruptcy

Liability of Purchaser of corporate debtor under liquidation under auction - Certain demand raised by the liquidator - Levy of interest on the balance sale consideration paid for sale of assets of Corporate Debtor as a going concern - seeking exemption and waiver off of interest being charged on the Applicant - applicability of TDS being charged on the Applicant - seeking Liquidator to handover peaceful possession to the Applicant of the Corporate Debtor's factory, building and machinery - HELD THAT - After going through all the facts and documents as produced by the Applicant/Auction Purchaser is of the view that, it is matter of record that the Applicant has made made the entire payment towards the sale consideration of ₹ 18,72,00,000/- and it is only after the entire payment being made by the Applicant that the Liquidator has issued the sale certificate - Hence, now post the execution of the Sale Certificate, the demand raised by the Liquidator to the Applicant for the Interest as well as TDS is not maintainable. The Liquidator is at liberty to file for refund with the Income Tax department for the refund of TDS, if any, applicable to this case. The Liquidator is also directed to hand over the possession of the Corporate Debtors assets as per Schedule I of the Sale Certificate to the Applicant. Application disposed off.

Summary

Issues:
1. Application under Section 60(1) read with Rule 11 of the Insolvency and Bankruptcy Code, 2016 seeking directions.
2. Relief sought regarding interest, TDS, and possession of assets.
3. Dispute over possession and additional charges post-sale.
4. Interpretation of sale certificate terms and obligations.
5. Legality of demand for interest and TDS post-sale completion.

Analysis:
1. The application was filed seeking directions under the Insolvency and Bankruptcy Code, 2016. The Applicant requested relief from paying interest on the balance sale consideration, exemption from interest and TDS, peaceful possession of assets, and any other necessary orders.
2. The Applicant participated in an e-auction for the Corporate Debtor's assets and eventually acquired them. The Applicant claimed to have paid the entire bid amount in multiple tranches, including TDS. However, the Liquidator failed to hand over possession and later demanded additional payments.
3. The Applicant argued that the sale certificate clearly stated full payment and possession transfer obligations on the Liquidator without any further demands. The Liquidator's post-sale demands for interest and TDS were contested as unjustified and against the regulations.
4. The Tribunal analyzed the sale certificate terms and found that the Applicant had fulfilled payment obligations, as acknowledged in the certificate. The Tribunal held that the Liquidator's demands for interest and TDS post-sale were not valid, directing the Liquidator to refund any excess amounts and hand over possession as per the sale certificate.
5. The judgment concluded by disposing of the application, instructing the Liquidator to comply with the terms of the sale certificate and refund any unjustly demanded amounts, emphasizing that the possession transfer should proceed as per the certificate's schedule.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive overview of the legal proceedings and the Tribunal's decision.