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TMI Blog2022 (5) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 25th July, 2019. In the Schedule I, Clause 12, there is no indication that period of 15 days or 90 days which is provided by un-amended and amended regulation has any nexus with the date of the Order of the Liquidation Regulation 33 under which this Schedule is framed deals with Mode of Sale . The Mode of Sale as provided in Regulation 33 triggers in after several steps taken by the Liquidator after the Order of the Liquidation is passed. The Circular dated 06th May, 2022 refers to Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019. It is clear that by the said Amendment Regulation, explanations have been added in Regulations 2A, 21A, 31A and 44 by the Amendment Regulation, 2022 neither there is any explanation nor there is any indication with regard to Schedule I, Clause 12. Schedule I, Clause 12 was on a different subject with regard to which neither there is any indication in the Circular dated 26th August, 2019 nor there is any explanation in the Circular dated 06th May, 2022. There is no reference to Schedule I in the IBBI (Liquidation Process) (Amendment) Regulations, 2022 dated 28th April, 2022 also - There is no doubt that Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed an Application filed under Section 33 of the Code and passed an Order directing for liquidation of the Corporate Debtor- M/s. P S Jewellery Limited . The Liquidator-Respondent No. 1 issued e-Auction Sale Notice for e-Auction to be held on 05th December, 2019, 21st January, 2020 and 11th January, 2020 respectively for sale of the assets of the Corporate Debtor which included the reserve price for Lot No. 2 Asset at Rs. 50.69 Crore and Rs. 41.25 Crore for Lot No. 1. All the above three auctions failed. On 23rd January, 2021, Liquidator issued another e-Auction Sale Notice by further reducing the reserve price for Lot No. 2 Asset to 36.25 Crore and Rs. 3.10 Crore for Lot No. 1. Date of submitting EMD (Earnest Money Deposit) was extended till 23rd January, 2021. e-Auction was to be held on 26th February, 2021, Appellant- Jain International Trade Organisation gave bid of Rs. 41.25 Crore which was declared to be Successful Bidder for Lot No. 2. The Appellant- Mr. Hitesh Vasantlal Bhanushali and Ors. gave bid of Rs. 3.10 Crore for Lot No. 1. Both the Appellant had paid the EMD Amount and deposited the entire sale consideration with interest of twelve per cent (12%) per annum fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said date and in the present case, Liquidation was passed on 30th July, 2018, un-amended Liquidation Regulation, Schedule I, Clause 12 shall apply and the Auction Purchasers could not have been given 90 days time to deposit balance sale consideration hence the e-Auction cannot be approved. By the Impugned Order, the Adjudicating Authority virtually rejected the I.A. No. 1012 of 2021 filed by the Liquidator for confirmation of the Auction and directed to issue fresh e-Auction Sale Notice. Aggrieved by the said Order, both the Appellants have come up in these Appeals. 6. We have heard Mr. Gopal Jain, Sr. Advocate with Mr. Gaurangi Patil, Advocate for the Appellants and Mr. Vasudev Ganesh Nayak Udupi, Liquidator has appeared in person. Mr. Abhijeet Sinha, Advocate with Mr. Girirajpati Kaushal and Ors. appeared for Intervener. 7. Learned Counsel for the Appellants challenging the Impugned Order contends that e-Auction Sale Notice under which payments were deposited in the e-Auction was issued on 23rd January, 2021 i.e. subsequent to the amendment of Schedule I, Clause 12 of the IBBI (Liquidation Process) Regulations, 2016 dated 25th July, 2019 hence the amended Regulations wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserted by Amendment dated 25th July, 2019. 10. We have considered the submissions of Learned Counsel for the Parties and perused the record. 11. In the present case, the Order for Liquidation was passed by the Adjudicating Authority on 30th July, 2018. e-Auction Notices were issued by Liquidator on 19th November, 2019, 11th December, 2019 and 21st December, 2020 i.e. subsequent to the amendment dated 25th July, 2019. The e-Auction in which the Appellants have been declared as Successful Bidders was issued on 23rd January, 2021 and e-Auction took place on 26th February, 2021 in which the Appellants were declared to be Successful Bidder for Lot No. 2 and Lot No. 1 respectively. After the e-Auction, Letter of Intent was issued by the Liquidator to both the Appellants. It is relevant to notice paragraph 3 of the Letter of Intent dated 3rd March, 2021. Paragraph 3 of the LoI is as follows: 3. Payment of Sale consideration 3.1. The Successful Bidder shall pay amount of Rs. 50,00,000/- (Rupees Fifty Lakhs only) being the difference of 10% of the Sale consideration and the EMD already deposited with the liquidator, on or before 11th March, 2021. The same to be deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. (3) The liquidator shall not proceed with the sale of an asset if he has reason to believe that there is any collusion between the buyers, or the corporate debtor s related parties and buyers, or the creditors and the buyer, and shall submit a report to the Adjudicating Authority in this regard, seeking appropriate orders against the colluding parties. 14. Schedule I, Clause 12 before 25th July, 2019 and after 25th July, 2019 is as follows: Particulars Liquidation Regulations as at 01.04.2018. (Applicable to the present Corporate Applicant). Before25th July, 2019 Liquidation Regulation as at 04.03.2021. (Presently in force). After 25 th July, 2019. Schedule I, Point 12 12. On the close of the auction, the highest bidder shall be invited to provide balance sale consideration within fifteen days of the date when he is invited to provide the balance sale consideration. On payment of the full amount, the sale shall stand completed, the liquidator shall execute certificate of sale or sale deed to transfer such assets and the assets shall be delivered to him in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions) on 25th July, 2019. They came into force on the date of their publication in the Official Gazette, that is, on 25th July, 2019. 2. The stakeholders have expressed a difficulty in applying the Amendment Regulations to a liquidation process, which commenced before 25th July, 2019. It is reiterated that the provisions of the Amendment Regulations are not applicable to the liquidation processes, which had commenced before coming into force of the said Amendment Regulations and that they are applicable only to liquidation processes, which commenced on or after 25th July, 2019. 3. This Circular is issued in exercise of the powers under section 196 of the Insolvency and Bankruptcy Code, 2016. Yours faithfully, Sd/- (I. Sreekara Rao) Chief General Manager Email: [email protected] (Emphasis Supplied) 18. The Circular provides that provisions of amended regulations are not applicable to the Liquidation Process, which had commenced before coming into force of the said amendment regulations and they are applicable only to liquidation process, which commenced on or after 25th July, 2019. By Amendment Regulations, 2019, amendments were made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 neither there is any explanation nor there is any indication with regard to Schedule I, Clause 12. Schedule I, Clause 12 was on a different subject with regard to which neither there is any indication in the Circular dated 26th August, 2019 nor there is any explanation in the Circular dated 06th May, 2022. There is no reference to Schedule I in the IBBI (Liquidation Process) (Amendment) Regulations, 2022 dated 28th April, 2022 also. When we look into the Circular dated 06th May, 2022 and IBBI (Liquidation Process) (Amendment) Regulations, 2022, it is clear that explanation has been added that in Regulations 2A, 21A, 31A and 44, the requirement of those regulations shall apply to the liquidation process commencing on or after the date of the commencement of the IBBI (Liquidation Process) (Amendment) Regulations, 2019. With regard to the amendments incorporated in Schedule I, Clause 12 of the Liquidation Regulations neither there is any explanation nor any clarification in Circular dated 06th May, 2022 as well as Amendment Regulations, 2022. From the above statutory schemes, it is clear that amendments made in Schedule I, Clause 12 were in no manner affected by Circular dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of issuing guidelines under Section 196(p) whereas the Amendment Regulation dated 25th July, 2019 were issued in exercise of power of the Board to make a Regulations which have statutory force. It is well settled that Circular and Guidelines can have no effect when the statutory provisions are clear. No circulars can be read in any manner overriding the statutory effect of a statutory provision. In this context, we refer to Judgment of the Hon ble Supreme Court of India in (2008) 14 SCC 336, M/s. Sandur Micro Circuits Ltd. Vs. Commissioner of Central Excise, Belgaum . In the above case also, the question arose as to whether the Circular issued by Custom Excise and Service Tax Appellate Tribunal will have precedence over the notification issued. In paragraph 6 of the Judgment, following has been laid down: 6. The issue relating to effectiveness of a circular contrary to a notification statutorily issued has been examined by this Court in several cases. A circular cannot take away the effect of notifications statutorily issued. In fact in certain cases it has been held that the circular cannot whittle down the exemption notification and restrict the scope of the exemption no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be applied only prospectively. It is open ended provision relating to procedural law which in no way states that it will not apply to pending liquidation processes on the date of substitution. In our view, the Circular dated 26.08.2019 could not interpret the Regulations in the manner it is done. 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 interpr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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