Insolvency and Bankruptcy Code, 2016 — Liquidation — Private sale under Regulation 33(2) of the Liquidation Process Regulations, 2016 — Distinction between Reg. 33(2)(c) (private sale at price higher than reserve of failed auction) and Reg. 33(2)(d) (private sale with prior NCLT approval) — Whether sale to appellant constituted a contractual arrangement attracting Section 74, Contract Act — Forfeiture of deposit / payments upon failure to adhere to extended timelines — Power of NCLT under Rule 15 of the NCLT Rules, 2016 to impose conditions including forfeiture when extending time — Appellant’s conduct including suppression before High Court — Applicability of approbate–reprobate principle — Held: Sale was under Reg. 33(2)(d), not Reg. 33(2)(c); transaction not a private commercial contract but one supervised by NCLT; forfeiture clause validly imposed under Rule 15; appellant accepted benefits of extension but defaulted; no relief available; Section 74 Contract Act inapplicable. NCLAT majority correctly upheld forfeiture and dismissal of appeals. Appeals under Section 62 IBC dismissed.

advocatemmmohan

Insolvency and Bankruptcy Code, 2016 — Liquidation — Private sale under Regulation 33(2) of the Liquidation Process Regulations, 2016 — Distinction between Reg. 33(2)(c) (private sale at price higher than reserve of failed auction) and Reg. 33(2)(d) (private sale with prior NCLT approval) — Whether sale to appellant constituted a contractual arrangement attracting Section 74, Contract Act — Forfeiture of deposit / payments upon failure to adhere to extended timelines — Power of NCLT under Rule 15 of the NCLT Rules, 2016 to impose conditions including forfeiture when extending time — Appellant’s conduct including suppression before High Court — Applicability of approbate–reprobate principle — Held: Sale was under Reg. 33(2)(d), not Reg. 33(2)(c); transaction not a private commercial contract but one supervised by NCLT; forfeiture clause validly imposed under Rule 15; appellant accepted benefits of extension but defaulted; no relief available; Section 74 Contract Act inapplicable. NCLAT majority correctly upheld forfeiture and dismissal of appeals. Appeals under Section 62 IBC dismissed.

RATIO / KEY POINTS

1. Nature of sale — Regulation 33(2)(d), not 33(2)(c):
   The auction process for Raichur assets had fully failed by July 2021; SCC had shifted to scrap-sale valuation. Therefore, the appellant’s offer of 09.09.2021 was not an offer higher than a reserve price in a failed auction under Reg. 33(2)(c) but a private sale requiring prior NCLT approval under Reg. 33(2)(d). The liquidator correctly approached NCLT, and the approval order dated 22.03.2022 governed the transaction.

2. Sale not a ‘contract’ under the Contract Act:
   When sale occurs under NCLT supervision, pursuant to IBC and Liquidation Regulations, terms of sale emanate from the Adjudicating Authority, not from consensual contractual stipulations. Thus, Section 74 of the Contract Act (liquidated damages/penalty) does not apply. The forfeiture clause was an NCLT-imposed condition, not a term of a commercial bargain.

3. NCLT’s power to impose terms when granting extension:
   Under Rule 15 of the NCLT Rules, NCLT may extend time “upon such terms as justice may require.” Extension granted on 29.06.2022 was accompanied by an explicit forfeiture clause—failure to meet the new deadlines would result in forfeiture of the entire amount paid. NCLT had jurisdiction to impose such condition, especially given the delays and IBC’s time-bound liquidation mandate.

4. Appellant’s own commitments and failure to honour them:
   The appellant’s offer expressly promised to pay the entire balance within 15 days from NCLT approval (i.e., from 22.03.2022). It failed. SCC showed leniency by granting extension till 30.05.2022; NCLT later extended time further but subject to forfeiture. Appellant paid only part amounts (₹1.50 crore thereafter) and failed to comply with extended deadlines. Its default triggered the forfeiture as per the NCLT order.

5. Approbate and reprobate — conduct disentitles relief:
   The appellant accepted the benefit of the extension by making further payments after 29.06.2022, but simultaneously attempted to challenge the very order and its forfeiture condition. A party cannot take advantage of an order and later repudiate the conditions attached to it.

6. Suppression and abuse of process before High Court:
   The appellant filed a writ petition on 05.09.2022 suppressing the fact that an appeal against the 29.06.2022 order had already been filed before NCLAT (on 13.08.2022). This conduct demonstrated lack of bona fides and justified refusal of equitable relief.

7. Stakeholders’ interest and IBC time-sensitivity:
   Delay in liquidation erodes asset value and defeats IBC’s objectives. The Court reiterated Kridhan Infrastructure v. Venkatesan Sankaranarayan (2021): time is essential in IBC proceedings. The forfeiture clause and rejection of further indulgence were justified to ensure timely conclusion of liquidation.

8. Subsequent resale irrelevant to forfeiture question:
   Even though Raichur assets ultimately sold for ₹145.38 crore (higher than appellant’s ₹105.21 crore offer), the financial creditors still suffered haircuts. Forfeiture is assessed vis-à-vis breach of NCLT’s stipulated timelines, not subsequent market appreciation.

9. Final holding:
   NCLAT’s majority correctly dismissed the appellant’s appeals. No jurisdictional or legal error exists in upholding forfeiture. Appeals under Section 62 IBC lie only on questions of law; none were made out. Supreme Court dismissed the appeals.