V.S. PALANIVEL versus P. SRIRAM, CS, LIQUIDATOR, ETC.

V.S. PALANIVEL versus P. SRIRAM, CS, LIQUIDATOR, ETC.

The Court held that the Adjudicating Authority was justified in granting extension of time to deposit the balance sale consideration because of the Covid-19 pandemic and Regulation 47A and that the Adjudicating Authority could exercise powers under Section 35 IBC read with its inherent powers under Rule 11 NCLT Rules to extend timelines on sufficient cause; Regulation 31A did not apply retrospectively to this liquidation; Rule 12 of Schedule I of the IBBI Regulations is mandatory in character but the extraordinary pandemic circumstances justified extension by the Adjudicating Authority and, on the facts (including purchaser's subsequent investment and operational hospital), the sale would...

Parties
Appellant (shareholder/former Managing Director of Sri Lakshmi Hotel Private Limited): V.S. Palanivel; Respondent Liquidator (sri Lakshmi Hotel Private Limited): P. Sriram, CS; Respondent Auction Purchaser (successful Bidder): M/s KMC Speciality Hospitals (India) Limited
Jurisdiction
India
Judgment Date
28 August 2024
Procedural Posture
Civil Appeal (civil Appeal Nos. 9059 9061 of 2022) / Appeal From National Company Law Appellate Tribunal Judgment Dated 16.09.2022; Supreme Court Judgment Delivered 28.08.2024
Outcome
Appeals partly allowed
Legal Topics
Covid 19 Pandemic and Lockdown, Extension of Time/limitation, E Auction and Sale in Liquidation, Regulation 47 a IBBI Regulations, 2016, Regulation 33 Schedule I Rule 12 and Rule 13 IBBI Regulations, Stakeholders' Consultation Committee (regulation 31 A), Income Tax Attachment/section 281 IT Act, Under Valuation of Property, Inherent Powers of NCLT (rule 11)
Insolvency and Bankruptcy Company Law Tax Law Covid 19 Pandemic and Lockdown Extension of Time/limitation E Auction and Sale in Liquidation Regulation 47 a IBBI Regulations, 2016 Regulation 33 Schedule I Rule 12 and Rule 13 IBBI Regulations, 2016 +4 more

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Parties

V.S. Palanivel

Appellant (shareholder/former Managing Director of Sri Lakshmi Hotel Private Limited)

P. Sriram, CS

Respondent Liquidator (sri Lakshmi Hotel Private Limited)

M/s KMC Speciality Hospitals (India) Limited

Respondent Auction Purchaser (successful Bidder)

Procedural Posture

Civil Appeal (civil Appeal Nos. 9059 9061 of 2022) / Appeal From National Company Law Appellate Tribunal Judgment Dated 16.09.2022; Supreme Court Judgment Delivered 28.08.2024

Legal Issues

  1. 1 Whether the Tribunal was correct in upholding the Adjudicating Authority's grant of extension of time to deposit balance sale consideration on account of Covid-19 lockdown and Regulation 47A
  2. 2 Whether the appellant's allegation of under-valuation of the auctioned property justified setting aside the auction
  3. 3 Whether the Liquidator was obliged to constitute a Stakeholders' Consultation Committee under Regulation 31A for this liquidation

Ratio Decidendi

The Court held that the Adjudicating Authority was justified in granting extension of time to deposit the balance sale consideration because of the Covid-19 pandemic and Regulation 47A and that the Adjudicating Authority could exercise powers under Section 35 IBC read with its inherent powers under Rule 11 NCLT Rules to extend timelines on sufficient cause; Regulation 31A did not apply retrospectively to this liquidation; Rule 12 of Schedule I of the IBBI Regulations is mandatory in character but the extraordinary pandemic circumstances justified extension by the Adjudicating Authority and, on the facts (including purchaser's subsequent investment and operational hospital), the sale would...

Court Disposition

Appeals partly allowed

Orders

  • The appeals are partly allowed.
  • M/s KMC Speciality Hospitals (India) Limited (Auction Purchaser) shall deposit an additional sum of INR 5000000 00 (500000000) with the Liquidator together with interest at 9% per annum reckoned from 26 March 2020 until actual payment; the amount shall be deposited within eight weeks from the judgment date.