Period of 90 days under Regulation 32A of IBBI (Liquidation Process) Regulations Directory is not Mandatory: NCLT [Read Order]

The Hyderabad National Company Law Tribunal (NCLT) has held that a period of 90 Days Under Regulation 32A Of IBBI (Liquidation Process) Regulations Directory is not mandatory.

As regards the reserve price, it may be stated that in terms of Clause 4 Schedule-I of IBBI Liquidation Process Regulations, 2016, the Liquidator is entitled to reduce the reserve price up to 25% whenever the auction fails. The record placed before us viz. minutes of the Stakeholders Consultation Committee meetings clearly disclose that the Liquidator discussed fixation of reserve price in every meeting and the members of the committee, which admittedly includes the Petitioner herein, have unanimously agreed for the reduced reserve price proposed by the Liquidator. According to the Liquidator, despite the Regulation allowing 25% reduction, the average of the reduced reserve price from time to time was only 8%.

It may be stated that it is natural that when there are no bids to take the property in auction at a particular minimum reserve price, the auction fails and unless the reserve price is altered suitably as per the norms, there might be no fresh bids. As already stated, in the case on hand, 15 times, the auction has failed and therefore, it became inevitable for the SCC to accept reduction in the reserve price, lest the sale can never happen and further delay result in deterioration of the asset value.

The coram of Veera Brahma and Dr. N.V.Ramakrishna has found  no reason at all in entertaining the plea of the Petitioner that too, when the sale ultimately fructified pursuant to the 16th sale notice, that the reserve price as fixed was low. If really, the Applicant had any material information enabling fixation of the reserve price higher than the what was agreed, it was always open for the Applicant to place the same before the Stakeholders Consultation Committee meeting enabling the members to consider the same while fixing the reserve price. Mere oral contention that too after the sale fructified ultimately, that the reserve price is low, we hold that the same is devoid of any substance.

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