Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 176

NATIONAL COMPANY LAW TRIBUNAL
Umesh Kumar Shukla, Technical Member, Kishore Vemulapalli, Judicial Member
Narender Gandhari – Appellant
Versus
Shri Maruthi Textiles Limited – Respondent
IA (IBC)/36/2021 in TCP (IB)/30/7/AMR/2019

Advocates:
For the Applicant/Liquidator: Mr. Narender Gandhari
For the Successful Bidders: Mr. M. Prasanth Kumar, Adv.
For the IARCPL, Member of SCC: Mr. Chetan Sagar, Adv.
For the APSFC, Member of SCC: Mr. Anil Mukherji, Adv.

Liquidator cannot extend payment timelines beyond regulations or grant compensation for asset discrepancies in 'as is where is' sales; unpaid interest on delays vitiates sale, permitting cancellation.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 7, 54(1), 36, 53 - IBBI (Liquidation Process) Regulations, 2016 - Regulations 31A, 32(a), 45(3), 47A, Schedule I Clause 12 - Liquidation process - Application for dissolution of corporate debtor - Sale of assets through e-auction on 'as is where is', 'as is what is', 'whatever there is' basis - Successful bidders granted extensions beyond 15 days for balance 75% payment due to lockdown, with 12% interest; interest later waived and compensation given for scrap weight shortage - Held, liquidator cannot extend timelines beyond regulatory limits or grant compensation altering sale terms; non-payment of interest constitutes material breach vitiating sale - Sale of land and building cancelled, deposit forfeited; compensation to scrap buyer recoverable - Dissolution application dismissed. (Paras 17, 19, 20, 22)

(B) Liquidation Regulations - E-auction process - Mandatory compliance with payment timelines and interest on delays - Extensions condoned only to extent of lockdown exclusion under Regulation 47A; waiver of interest or reduction in consideration impermissible as sale on 'as is where is' basis binds bidder to due diligence without warranties - Supreme Court precedents affirm no recourse for post-sale discrepancies in quantity or condition. (Paras 15-18)

Facts of the case:
Corporate debtor admitted to CIRP, later liquidated; liquidator sold land/building and plant/machinery scrap via three e-auctions after reserve price reductions approved by stakeholders' consultation committee; bidders paid 25% promptly but delayed balance 75% citing COVID-19, granted extensions with interest; scrap buyer claimed shortage (656 tons vs estimated 1683 tons), SCC approved Rs.50 lakhs compensation via reduced consideration and interest waiver for amicable closure; liquidator sought dissolution after distributions.

Findings of Court:
Sale of land/building cancelled due to unpaid interest breach; deposit forfeited; scrap sale not cancelled as assets dismantled but undue compensation recoverable; liquidator to proceed per Code.

Issues: (i) Whether liquidator can permit balance payment beyond permitted period; (ii) Whether compensation grantable beyond bidding terms. (Para 12)

Ratio Decidendi: Liquidator lacks jurisdiction to extend timelines under Schedule I Rule 12 or grant compensation contrary to 'as is where is' terms; interest mandatory on delays, non-payment vitiates sale; Regulation 47A limits condonation to lockdown period only. (Paras 17(xi), 18, 19)

Result: IA dismissed; sale of land/building cancelled, compensation recovery directed.

Table of Content
1. liquidation process initiation and asset sales overview (Para 1 , 2)
2. liquidator compliance and auction extensions justified (Para 3 , 4 , 5)
3. scc members and bidders support process and compensation (Para 6 , 7 , 8 , 9 , 10 , 11)
4. court frames issues on timelines and compensation (Para 12 , 13 , 14)
5. liquidator cannot extend payment timelines beyond regulations (Para 15 , 16 , 17)
6. "as is where is" sale bars post-sale compensation claims (Para 18)
7. cancel land sale, recover scrap compensation, dismiss ia (Para 19 , 20 , 21 , 22)

[ORDER]

[PER: BENCH]

This Interlocutory Application bearing no. IA (IBC)/36/2021 (hereinafter referred to as the “IA 36/2021”) has been filed, vide Dairy No. 0405 dated 06.04.2021, by Mr. Narender Gandhari (hereinafter referred to as the “Liquidator” or the “Applicant” of M/s. Shri Maruthi Textiles Limited (hereinafter referred to as the “Corporate Debtor”) under Section 54 (1) or other provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC” or the “Code”) seeking the dissolution of the Corporate Debtor.

FACTS OF THE CASE

2. The facts of the case, as stated in the Application, are summarised below:

(i) This Adjudicating Authority, vide order dated 07.02.2019, admitted the petition and commenced the Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) of the Corporate Debtor. The Applicant was appointed as the Interim Resolution Professional and was subsequently confirmed as the Resolution Professional (hereinafter referred to as the “RP”) by the Committee of Creditors (hereinafter referred to as the “CoC”). In the 4^th CoC meeting held on 19.07.2019, the CoC resolved, with 100% voting share, to liquidate the Corporate Debtor and appointed the Applicant as the Liquidator. Accordingly, this Adjudicating Authority, vide order dated 26.08.2019 passed in IA No. 1/2019/AMR, initiated the liquidation process and appointed the Applicant as the Liquidator.

(ii) In accordance with Regulation 31A of the IBBI (Liquidation Process) Regulations, 2016 (hereinafter referred to as the “Liquidation Regulations”), the Liquidator constituted the Stakeholders’ Consultation Committee (hereinafter referred to as the “SCC”) on 25.11.2019. Further, in terms of Section 36 of the IBC, the Liquidator formed the liquidation estate comprising Land and Building and Plant and Machinery Scrap.

(iii) As per Regulation 32(a) of the Liquidation Regulations, the Liquidator issued a public announcement dated 05.12.2019 for sale of the said assets through e-auction scheduled on 07.01.2020 at a reserve price of Rs.753.16 lakhs with an EMD of Rs.75.31 lakhs. Due to poor response, the reserve price was reduced by 10% in consultation with the SCC. Pursuant to the second sale notice dated 17.01.2020, an e-auction was conducted on 28.01.2020, wherein Mr. Paidi Rakesh Reddy emerged as the successful bidder (hereinafter referred to as the “Successful Bidder-1”) for the Land and Building at the reserve price of Rs.454.76 lakhs. The Sale Certificate was issued, and 25% of the sale consideration, including EMD, was paid on 29.01.2020.

(iv) As the response for the Plant and Machinery Scrap was also not encouraging, the SCC approved a further reduction of 10% in the reserve price, from Rs.223.08 lakhs to Rs.200.77 lakhs, and a third sale notice was issued on 07.02.2020. Pursuant thereto, Nine Star International emerged as the successful bidder (hereinafter referred to as the “Successful Bidder-2”), and upon issuance of the Sale Certificate, paid 25% of the sale consideration (including EMD) on 19.02.2020.

(v) The successful bidders sought extension of time for payment of the balance 75% of the sale consideration. The Liquidator, in consultation with the SCC, permitted payment within the extended timelines, subject to interest at 12% per annum beyond the initial 30 days. The buyers also availed the benefit of the COVID-19 lockdown period, which was added to the maximum permiss