NCLT erred in disallowing extension to Bidder in complying with auction proceedings

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  • Last Updated on 1 April, 2022

IBBI; Liquidation Process Regulations; COVID

Case Details: Standard Surfa Chem India (P.) Ltd. v. Kishore Gopal Somani - [2022] 136 323 (NCL-AT)

Judiciary and Counsel Details

    • M. Venugoopal, Judicial Member
    • V.P. Singh and Dr. Ashok Kumar Mishra, Technical Member
    • P.H. Arvindh Pandian, Sr. Adv. and Goutham Shivshankar, Adv. for the Appellant. 
    • Ms. Anju Bhushan and K.G. Somani for the Respondent.

Facts of the Case

In the instant case, the appellant emerged as the successful bidder in the auction proceeding for the Pondicherry unit. Accordingly, the Liquidator issued a letter of intent stipulating 90 days timeline for making the full payment to complete the auction proceeding.

Before the expiry of said 90 days. The appellant preferred a plea before the NCLT, seeking a time extension in complying with the auction proceedings’ completion. The appellant prayed that the application be allowed by granting an extension of time of 3 months from the date of the present application; or in the alternative, grant an extension of 1 month from the lifting of complete Lockdown in the state of Tamil Nadu, to enable the appellant to complete the auction proceedings.

However, the appellant was unable to ensure a listing of its Application before the NCLT. Consequently, the Adjudicating Authority dismissed the plea on the ground that the application had become infructuous and hence dismissed. Against the order of NCLT appellant preferred appeal.

On Appeal, it was held that extension of 3 months due to the 2nd wave of the Covid-19 outbreak on the ground of regulation 47A which provided that the period of Lockdown imposed by the Central Government in wake of the Covid-19 outbreak shall not be counted for computation of timeline for any task that could not be completed due to Lockdown in relation to any liquidation process.

It was found that regulation 47 which deals with Model Timeline for Liquidation Process is the only directory in nature and was provided under regulation as a guiding factor to complete the liquidation process in a time-bound manner and in exceptional circumstances, such a time limit can be extended.

Further, E-Auction Process Information Document also provided discretion to the liquidator to extend the timeline, and since the impact of the 2nd wave of Covid-19 was everywhere in India, of which judicial notice could be taken.

Then NCLT held, in said special circumstances, the liquidator ought to have sought permission from Adjudicating Authority to extend the timeline, and Adjudicating Authority should have extended the timeline to the extent permissible under applicable laws and regulations.


The NCLAT held that the Adjudicating Authority did not consider that satisfaction of creditor claims while ensuring asset maximization is the underlying principle of IBC, which cannot be overridden on account of meagre delays induced by a force majeure event. Setting aside the impugned order of the AA, an appeal was to be allowed.

Case Review

List of Cases Referred to

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