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TMI Blog2021 (9) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to difficulties found by Liquidators when time is of mere 15 days. Power of Board under Section 196(1) (p) or (t) to issue guidelines cannot be expanded to interpreting provisions made. That is job of Courts to interpret and apply law. Reading the Regulation as amended we find it must be held to be applicable to liquidation process which are pending, and the provision can be applied considering stage of the process, irrespective of the date whether the liquidation process started before 25.07.2019 or on or after 25.07.2019 when Clause 12 Schedule I of the Regulations was substituted. This is not to say that sales already cancelled before 25.07.2019 for default of payment under earlier existing clause 12 can be reopened. Liquidators can rely on the amendment at the time of issue of Auction Notice being issued, irrespective of date of liquidation order of Adjudicating Authority. The Circular dated 26.08.2019, we hold is not legally enforceable to interpret applicability. Such Circular cannot be in the nature of substituting existing Regulation in the name of guidelines. The order passed by the Adjudicating Authority is modified and it is held that the Appellant- Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introducing 90 days as a period to make the payment of balance consideration. As such, the Appellant moved Application before the Adjudicating Authority as IBBI had issued a Circular clarifying that the benefit of the amendment could only be taken in the matters in which the liquidation process commenced on or after 25.07.2019. 3. It would be appropriate to reproduce relevant provisions for reference to the context. Schedule I of Liquidation Regulations deals with Mode of sale under Regulation 33. Regulation 33 reads as follows:- 33. Mode of sale. (1) The liquidator shall ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I. (2) The liquidator may sell the assets of the corporate debtor by means of private sale in the manner specified in Schedule I when- (a) the asset is perishable; (b) the asset is likely to deteriorate in value significantly if not sold immediately; (c) the asset is sold at a price higher than the reserve price of a failed auction; or (d) the prior permission of the Adjudicating Authority has been obtained for such sale: Provided that the liquidator shall not sell the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow the Liquidator to permit the highest bidder of an auction to provide balance sale consideration within 90 days from the date of such demand in accordance with the specific terms of Clause 12 of Schedule-I of the Liquidation Regulation as amended on 25 July 2019; Alternatively, To declare that time limit of 90 days may be permitted in accordance with Clause 12 of Schedule-I of the Liquidation Regulation as amended on 25 July 2019. iii. Consider and allow the present IA in terms of Section 60(5) read with Regulation 33(2)(b) and Clause 12 of Schedule-I of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. iv. To permit the Liquidator to sell the assets of the Corporate Debtor by way of private sale in terms of Regulation 33(2)(d) Of the Liquidation Regulations in case e-auction fails; v. And for such other/ further order(s) and/or direction(s) as the facts and circumstances of the case may warrant. 5. The Adjudicating Authority considered the legal position of the Clauses 12 and 13 of Schedule I of the Regulations which relates to Mode of Sale and considering IBBI s Circular dated 26.08.2019 observed that as the liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the relief sought still the Liquidator is before us. We would have not gone into the appeal further but it appears to us that the issue is material and before we take a decision we should have assistance of an Amicus Curiae with regard to the manner in which the IBBI has issued Circular with regard to whether the amendment in the Regulations is prospective or retrospective. It is necessary that there should be no confusion. As such we request Advocate Mr. Sumant Batra to be Amicus Curiae in the present appeal for the issue involved. The Appellant to supply copy of the appeal and its Annexures to Advocate Mr. Sumant Batra. List the Appeal For Admission Hearing on 25th June, 2021. 7. The above order of ours gives bird s eye view of the issue. The Circular of IBBI referred is not of 20.08.2019 but of 26.08.2019 which error is reflected in our order dated 14.06.2021, due to the typing error in impugned order at Para 4. By our order we appointed Advocate Mr. Sumant Batra as an Amicus Curiae and the Learned Amicus Curiae has painstakingly brought on record before us material with regard to the issue. The Learned Amicus Curiae submitted that the provisions in Clause 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor by exploring the route of compromise or arrangement under Section 230 of the Companies Act, 2013. According to the Learned Amicus Curiae, there were implementation gaps and feedback received from the stakeholders, including on the inadequacy of timeline of 15 days was considered by the IBBI and the concerned amendment in Regulation was brought in. Reference has been made to other amendments also which were made when Gazette dated 25.07.2019 was published. Then there is Circular dated 26.08.2019 which may in the present matter be referred as impugned Circular. Copy of the impugned Circular has been filed by the Learned Amicus Curiae (Diary No. 28303 at Page 155) which reads as follows:- Insolvency and Bankruptcy Board of India 7th Floor, Mayur Bhawan, Connaught Place, New Delhi-110001 CIRCULAR No. IBBI/LIQ/024/2019 26th August, 2019 To All Registered Insolvency Professionals All Recognised Insolvency Professional Entities All Registered Insolvency Professional Agencies (By mail to registered email addresses and on website of the IBBI) Dear Madam / Sir, Sub: Applicability of the Insolvency and Bankruptcy Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons framed under Section 196 read with Section 240 and 241 of the IBC. It is argued that whether an amendment applies prospectively or retrospectively is for the Courts to interpret and a Circular issued by IBBI cannot take away benefit granted by the amendment. The Learned Amicus Curiae submitted that the amendment being procedural will apply retrospectively which would be more in time with intent and aims and objects of the IBC and the reason for which the amendment was made. By making the amendment prospective by issuing a Circular the very purpose of the amendment would get defeated. By issuing such Circular a separate class of proceedings are being created. If the Circular is acted upon, there would be one class of liquidation proceedings which would be governed under the old provisions giving benefit only of 15 days for balance consideration and another class of liquidation proceeding would be those in which the liquidation process was commenced on or after 25.07.2019 giving 90 days time. This would be discriminatory according to the Learned Amicus Curiae. 11. Learned Counsel for the Appellant has also argued that the Circular could not be enforced to the disadvantage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or after 25.07.2019 when Clause 12 Schedule I of the Regulations was substituted. This is not to say that sales already cancelled before 25.07.2019 for default of payment under earlier existing clause 12 can be reopened. Liquidators can rely on the amendment at the time of issue of Auction Notice being issued, irrespective of date of liquidation order of Adjudicating Authority. The Circular dated 26.08.2019, we hold is not legally enforceable to interpret applicability. Such Circular cannot be in the nature of substituting existing Regulation in the name of guidelines. The guidelines which are inconsistent with the subordinate legislation would not be enforceable. If provision is clear, external aid, that too inconsistent, cannot be applied. The provision has to be enforced by Tribunal as it is. 14. The Adjudicating Authority in the impugned order had partly allowed the Application permitting prayer (iv) i.e. to sell by Private Sale. 15. For the reasons mentioned above, we modify the order passed by the Adjudicating Authority and hold that the Appellant- Liquidator would be at liberty to apply and enforce amended Clause 12 of Schedule I of the Liquidation Regulations to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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