Court confirmed the legitimacy of forfeiture of amounts paid during insolvency proceedings when payment timelines are not met, emphasizing the NCLT's authority to enforce such conditions to ensure expeditious resolution.

JUDGMENT :

SANJAY KUMAR, J

1. Company Appeal (AT)(CH)(Ins) No. 443 of 2022 was filed by M/s. Shri Karshni Alloys Private Limited before the National Company Law Appellate Tribunal, Chennai Bench¹ [For short ‘the NCLAT’] assailing the order dated 29.06.2022 passed by the National Company Law Tribunal, Chennai Bench² [For short ‘the NCLT’] in I.A. No. (IBC)/512 (CHE)/2021 in TCP/95/2017. Company Appeal (AT)(CH)(Ins) No. 438 of 2022 was also filed by it before the NCLAT against the order dated 10.08.2022 passed by the NCLT in I.A. No. 952/2022 in TCP/95/2017. Both the appeals were heard by a bench composed of two Members and they delivered separate judgments on 20.10.2023. However, the Member (Judicial) disagreed with the judgment authored by the Member (Technical). The Member (Technical) had partly allowed the appeals while the Member (Judicial) was inclined to dismiss them in their entirety. Owing to their difference in opinion, the Chairperson of the NCLAT referred the matter to another Member (Technical). By judgment dated 31.05.2024, the third Member agreed with the view taken by the Member (Judicial) and, in consequence, the appeals stood dismissed.

2. Aggrieved by the dismissal of its appeals, M/s. Shri Karshni Alloys Private Limited filed the present appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016.³ [For short ‘the IBC’] The respondent in the appeals, viz. Ramakrishnan Sadasivan is the liquidator of M/s. Surana Industries Limited.

3. The corporate insolvency resolution process against M/s. Surana Industries Limited was initiated on 02.01.2018 but its liquidation commenced pursuant to the order dated 12.10.2018 passed by the Adjudicating Authority. The respondent was thereupon appointed as the liquidator. The company under liquidation owned assets/plants at Gummidipoondi in the State of Tamil Nadu and Raichur in the State of Karnataka. Between 06.01.2019 and 02.02.2021, six auctions were held by the liquidator for the sale of these assets/plants. However, only the assets/plant at Gummidipoondi were sold. As regards the assets/plant at Raichur, altogether thirteen auctions were conducted unsuccessfully by the liquidator till 30.06.2021. It was then decided that the said assets/plant should be sold at the scrap value of approximately Rs. 50 crores and the same was approved by the Stakeholders Consultation Committee⁴ [For short ‘the SCC’] at its meeting held on 31.07.2021.

4. While so, on 09.09.2021, the appellant made an offer of Rs. 105.21 crores to the liquidator to purchase the assets/plant at Raichur as a going concern. This proposal was placed before the SCC at its meeting held on 15.09.2021 and they consented to the sale. The appellant’s proposal envisaged that the appellant and its associates would invest Rs. 40 crores by way of equity infusion and the balance Rs. 65.21 crores would be brought in through unsecured debts. The appellant deposited 10% of the sale consideration, i.e. Rs. 10.5210 crores, as a commitment advance. Pursuant thereto, on 22.09.2021, the liquidator filed an application, viz. IA No. 997/CHE/2021 in TCP/95/IB/2017, before the NCLT seeking its approval for the private sale of the assets/plant at Raichur to the appellant. The NCLT allowed the application on 22.03.2022 and directed the appellant to pay the sale consideration within 15 days from the date of receipt of the said order. The application was filed by the liquidator on 22.09.2021 but the same was allowed by the NCLT only on 22.03.2022.

5. The appellant claims that owing to this efflux of time and the changes in t