Case Note & Summary
The case involves an appeal by Appellant against the dismissal of its appeals by the National Company Law Appellate Tribunal (NCLAT) regarding the refusal to extend time for payment of balance sale consideration for the purchase of assets of M/s. Surana Industries Limited, a company under liquidation. The corporate insolvency resolution process against Surana Industries Limited was initiated on 02.01.2018, and liquidation commenced on 12.10.2018. The respondent, was appointed as the liquidator. The company owned assets at Gummidipoondi (Tamil Nadu) and Raichur (Karnataka). After multiple unsuccessful auctions, the liquidator decided to sell the Raichur assets at scrap value of approximately ₹50 crores, approved by the Stakeholders Consultation Committee (SCC) on 31.07.2021. On 09.09.2021, the appellant offered ₹105.21 crores to purchase the Raichur assets as a going concern. The SCC consented, and the appellant deposited 10% as commitment advance. The liquidator filed an application before the NCLT seeking approval for the private sale, which was allowed on 22.03.2022, directing the appellant to pay the balance within 15 days. Due to delay in approval, the appellant sought extension of time. The SCC extended time till 30.05.2022 but refused further extension. The appellant filed an application before the NCLT seeking extension till 31.05.2022, which was dismissed. The NCLAT, by a majority decision, dismissed the appeals. The Supreme Court, hearing the appeal under Section 62 of the IBC, held that the extension of time is a commercial decision within the domain of the liquidator and stakeholders, and the appellant had no vested right to extension. The court found no error in the concurrent findings and dismissed the appeals.
Headnote
A) Insolvency Law - Liquidation Sale - Time Extension - Section 35, Insolvency and Bankruptcy Code, 2016 - The appellant, a prospective purchaser, sought extension of time to pay balance sale consideration for assets of a company in liquidation. The liquidator and stakeholders refused extension beyond a certain date. The NCLT and NCLAT dismissed the appellant's application. The Supreme Court held that extension of time is a commercial decision within the domain of the liquidator and stakeholders, and the purchaser has no vested right to extension. The appeal was dismissed. (Paras 1-10) B) Insolvency Law - Appeal to Supreme Court - Section 62, Insolvency and Bankruptcy Code, 2016 - The appellant filed appeals under Section 62 of IBC against the NCLAT order dismissing its appeals. The Supreme Court examined the merits and found no error in the concurrent findings of the NCLT and NCLAT. (Paras 2, 10)
Issue of Consideration
Whether the liquidator and the NCLT were justified in refusing to extend the time for payment of the balance sale consideration by the appellant, and whether the appellant was entitled to such extension as a matter of right.
Final Decision
The Supreme Court dismissed the appeals, holding that the extension of time is a commercial decision within the domain of the liquidator and stakeholders, and the appellant had no vested right to extension.
Law Points
- Time extension for payment of sale consideration in liquidation is a commercial decision for the liquidator and stakeholders
- not a matter of right for the purchaser
- Section 62 of IBC provides for appeal to Supreme Court
- Section 33 of IBC deals with liquidation order
- Section 35 of IBC deals with powers and duties of liquidator.
