Potens Transmissions & Power Pvt. Ltd Vs. Gian Chand Narang
Company Appeal (AT) (Insolvency) No. 532 of 2022
Facts:
1) Appellant is the auction purchaser in the E-auction for the purchase of corporate debtor whose bid was accepted on 3rd June 2021. The earnest money of 7.3 crores was deposited on 31st May, 2021 and Bid of 73.01 Crores was submitted and he was declared to be Successful Bidder. Liquidator asked the Appellant to deposit the sale consideration by 10th June, 2021 and further balance by 3rd July, 2021
2) Appellant deposited Rs. 10,95,25,000/- on 10th and 11th June, 2021. The term sheet was executed between the parties for sale of Corporate Debtor as a going concern on 15th June, 2021 in which 3rd July, 2021 date was fixed as timeline for payment of balance amount of Rs. 54,75,75,000/- whereas after 3rd July, 2021 payment of the balance amount of Rs. 54,75,75,000/- with interest at the rate of 12% on or before 1st September, 2021.
3) Appellant failed to make payment and application was filed to adjust the balance amount. Liquidator also filed an application to set aside the sale and allow the auction again fresh since the period of 90 days to make payment was expiring.
4) AA passed the order accepting the prayer of liquidator and set aside the order.
Issue: Whether AA was correct in setting aside the sale and the period of 90 days to submit the amount is mandatory?
Arguments:
For appellants:
1) Counsel for the Appellant submitted that submits that I.A. No. 3153 of 2021 was pending and the Adjudicating Authority could have rejected the Application but the said application was kept pending. He further submits that prayers which were made in I.A. No. 3153 of 2021 some of the prayers were granted by the Adjudicating Authority in other cases
2) Counsel submitted that appellant should be provided with the time to deposit the amount
For Respondents:
1) Counsel for the respondent (liquidator) refuting the submissions submitted that the Adjudicating Authority has granted sufficient latitude to the Appellant
2) AA has granted extension of time but the Appellant having failed to deposit the amount within time, there was no option except to allow the Application filed by the Liquidator.
Decision: Hon’ble NCLAT held that order passed by the AA was correct and period of 90 days to submit the amount is mandatory
Rationale:
1) It is clear that 90 days’ period provided for making the deposit is the maximum period under which the Auction Purchaser had to make the deposit. 2nd Proviso of the Item 12 of the Schedule I provided that sale shall be cancelled if the payment is not received within 90 days.
2) When the Consequence of non-compliance of the provision is provided in the statute itself, the provision is necessary to be held to be mandatory.
