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TMI Blog2022 (9) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the order dated 16.3.2021 passed by the Adjudicating Authority which had achieved finality and also the Terms and Conditions of the second round of e-auction process, it is opined that the Respondent caused a serious obstruction in the sale of the property by preferring an application to obtain stay order to the third round of e-auction through order dated 28.2.2022 which was granted - In view of the facts of the case and the conduct of the Respondent in obstructing the process of liquidation, particularly the e auction of the property despite it being fully aware of the order dated 16.3.2021 in IA No.468 of 2021, it is opined that the Respondent has clearly abused the process of law to gain undue advantage and thereby caused a delay in the culmination of the liquidation process. In view of the situation and the conduct of the Respondent as discussed in detail above, we are of the view that a fine of Rs. One Lakh should be imposed on the Respondent for abusing the process of law thereby causing delay in the liquidation process, and seeking to subvert the basic objective of IBC. This fine shall be deposited in Prime Minister s Relief Fund within 30 days of this ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 75 days in terms of Para No. 4.1 of the terms and conditions of e-auction on 16.12.2020 and the Liquidator granted him extension of time to deposit the balance of sale price. However, the Respondent requested for extension of another four weeks on 01.03.2021 for the payment of balance amount and sent a cheque dated 27.03.2021 for an amount of Rs. 2,24,00,000/- drawn on the Canara Bank. It is alleged by the Appellant that the Respondent did not pay a single penny after payment of CMD on 01.12.2020 till the expiry of 90 days i.e. till 02.03.2021 from the date of sale confirmation. The Appellant, therefore, forfeited the CMD deposited by the Respondent on 03.03.2021 and issued another e-auction notice for the sale of the same immovable property on 16.03.2021 which was extended to 19.03.2021 due to nationwide strike of the banks. 3. The Appellant has further stated that the Respondent, being aggrieved by the decision of the Appellant qua forfeiture of the CMD, filed an application bearing I.A. No. 468 of 2021 before the Adjudicating Authority, in which the Adjudicating Authority passed the order on 16.03.2021 directing that no further time shall be given to the Respondent for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of 2021 before this Appellate Tribunal against the order dated 16.03.2021 passed by the Adjudicating Authority which was withdrawn vide order dated 17.12.2021 as it had become infructuous. The Respondent Pavan Enterprises filed IA No. 468/2021 regarding forfeiture of his CMD which was finally adjudicated by order dated 16.03.2021. 6. The Appellant has further stated that, upon withdrawal by Survival Technologies Pvt. Ltd., the Appellant issued fresh auction notice on 19.02.2022 at the reserve price of approx Rs. 2.89 Crores. On this, the Respondent published a public notice in the Ratnagiri Times on 23.02.2022, stating that its I.A. No. 868 of 2021 is pending before the Adjudicating Authority and the auction would be dependent upon the outcome of the said application. On 28.02.2022, the Adjudicating Authority, while hearing the application i.e. I.A. No. 485 of 2022 and 868 of 2021, passed the impugned order dated 28.2.2022, staying the third e-auction, in terms of notice published on 19.02.2022 for a period of three weeks from the date of the order. Hence, the appeal bearing CA (AT) (Ins) No. 514 of 2022 has been filed by the liquidator (Appellant). 7. On 22.03.2022, the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of e-auction vide e-mail dated 2.4.2021. He has stated that the successful bidder Pavan Enterprises was informed through email dated 2.4.2021 that no further extension would be possible in accordance with the Terms and Conditions of the e-auction. The Learned Counsel for Appellant has added that despite receiving 15 days extended time, Pavan Enterprises did not make full payment by 21.4.2021 as was required of him, and hence the Liquidator cancelled the offer made to Pavan Enterprise for sale of the said property. 11. He has submitted that the Respondent/Pavan Enterprises approached the Hon ble High Court of Bombay to seek 45 days extra time to deposit the balance consideration but the Hon ble Bombay High Court dismissed the petition of Pavan Enterprises on the ground that his application for the same relief was pending before the NCLT and granted him liberty to pursue that application before the NCLT. The Learned Counsel for Appellant has stated that the Respondent filed a Special Leave Petition bearing Special Leave to Appeal (C) No(s) 7051/2021 challenging the order dated 6.5.2021 of the Hon ble Bombay High Court, which was dismissed as withdrawn vide order dated 29.6.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days time extension as per clause 12 of Schedule I of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (hereafter called Liquidation Process Regulations ) as the stated Terms and Conditions of the e-auction very clearly stipulated the maximum time that would be given to the purchaser to deposit the balance of consideration amount and Pavan Enterprises had accepted the said terms and Conditions. He has also referred to the order dated 16.3.2021 in IA No. 468/2021 whereby the Adjudicating Authority has allowed Pavan Enterprises to participate in the second round of e-auction after taking the CMD which was forfeited by the Liquidator as valid CMD. He has claimed that this order of the Adjudicating Authority was not appealed against and hence it has achieved finality, and therefore the Respondent should not have been given indulgence or allowed to agitate the issue relating to the second round of e-auction. 15. The Learned Counsel for Appellant has argued that in the situation as explained in detail by him, the ad-interim stay granted through Impugned order dated 28.2.2022 and the extension of ad-interim stay vide the second Impugned Order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of balance amount, which was as per his request through letter dated 16.12.2022 (attached at pg. 42 of the appeal paperbook in CA No. 514 of 2022). We also note that the Liquidator cancelled the sale offer and forfeited the CMD deposited by Pavan Enterprises, when the successful bidder Pavan Enterprises could not deposit the balance consideration in the given time.. Quite clearly these actions of the Liquidator were in accordance with the Liquidation Process Regulations and the provisions in the Terms and Conditions of the e-auction document. 19. Admittedly, the second round of e-auction took place on 19.3.2021 and the sale confirmation letter was issued to the Respondent Pavan Enterprises on 22.3.2021 as he was the successful bidder. The terms and conditions of the e-auction specified that the successful bidder has to deposit the bid amount and complete the transaction within 15 days following the confirmation date of e-auction. Thus, this period of 15 days were to get over on 6.4.2021, but in the meantime the Respondent sought an extension of 15 days vide letter dated 2.4.2021 (attached at page 62 of the appeal paperbook in CA 513 of 2022) which he was given, and thus he was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order dated 16.3.2021 has achieved finality, we are of the opinion that the Respondent is precluded from raising issues that were part of this order again. 22. Thus, the Respondent had committed himself to make complete payment on or before 21.4.2021 which was in consonance with the admitted Terms and Conditions of the e-auction and that the order dated 16.3.2021 in IA No. 468/2021 was binding on the parties including the Respondent. The relevant portion of the order dated 16.3.2021 is as follows:- .It is submitted by the Applicant that the Applicant wants a direction from this Bench for acceptance of the balance amount (of the previous auction) as on 27.03.2020. The proposed auction is slated to be held on 19th March, 2021. In the circumstances, since further action has already been taken, we are not inclined to allow the present Application. However, we permit the Applicant to take part in the fresh auction process. The EMD already in deposit for the previous auction dated 2nd December 2020 may be taken towards the EMD of the present auction and the balance amount shall stand forfeited. The EMD shall abide by the terms and conditions of the present bid document. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. We note that the Respondent sent a post-dated cheque dated 27.3.2021 drawn on Canara Bank for payment of Rs. 2.24 crores to the Liquidator. We feel that this payment could have been made either through electronic online transfer in the account of the Corporate Debtor/Liquidator or through a demand draft if Pavan Enterprises was serious about making the balance payment and making payment through a post-dated cheque cannot be taken as showing his sincerity and seriousness in making the payment. The Appellant s contention that it made enquiry from Canara Bank and discovered that Pavan Enterprises had a meagre amount of Rs. 500 in its account is also not rebutted by the Respondent. Further after Appellant returned the said cheque dated 27.3.2021 drawn on Canara Bank to the Respondent we do not find that the Respondent made any sincere effort again to transfer/transmit the requisite amount to the Appellant. All these events show the casual approach of Pavan Enterprises in making the said payment. 26. We follow the judgment of Hon ble Apex Court in the matter of Kridhan Infrastructure Pvt. Ltd. vs. Venkatesan Sankarnarayan Ors. (2021) 6 SCC 94 cited by the Learned Counsel for App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, but it was not done so, and on this basis, he sought and was granted ad-interim stay to the 3rd round of e-auction by the Adjudicating Authority vide Impugned Order dated 28.2.2022. In view of the fact that the Respondent had not raised any objection or denied about the Terms and Conditions of the second e-auction and the time period for depositing balance amount contained therein before the conduct of e-auction, and also that the Respondent had raised this issue in his IA No. 468/2021 and did not get desired relief, we are of the opinion that the Liquidator did not commit any error in not giving 90 days time to the Respondent for depositing the balance amount. 28. In view of the order dated 16.3.2021 passed by the Adjudicating Authority which had achieved finality and also the Terms and Conditions of the second round of e-auction process, we are of the opinion that the Respondent caused a serious obstruction in the sale of the property by preferring an application to obtain stay order to the third round of e-auction through order dated 28.2.2022 which was granted. While it is quite probable that the Adjudicating Authority may not have had the benefit of the knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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