Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT) has held that Adani Infrastructure & Developers Pvt. Ltd. is liable to pay interest at 12% on the delayed deposit of ₹305 crore for land purchased in the liquidation auction of Anil Limited. Setting aside the National Company Law Tribunal (NCLT), Ahmedabad’s ruling that had waived the interest component, the appellate tribunal ruled that the statutory timelines stipulated under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 are mandatory in nature and a successful auction purchaser cannot evade them by citing encumbrances or external hindrances.

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The appeal was heard by a Bench comprising Justice Ashok Bhushan (Chairperson) and Technical Member Barun Mitra, which made it clear that the successful auction purchaser (SAP) is under an absolute obligation to adhere to the payment schedule anchored to the auction date of December 29, 2022. The tribunal found that Adani Infrastructure had a maximum period of 90 days to deposit the full sale price but any delay beyond the first 30 days made the SAP liable to pay 12% interest on the balance sale consideration. The appellate tribunal reproduced the statutory requirement and concluded that “the SAP was clearly liable to pay interest @ 12% on the balance consideration after expiry of 30 days from 29.12.2022”.

The case arose out of the auction of 1,44,856 sq. metres of prime land situated at Bapunagar, Ahmedabad, forming part of the liquidation estate of Anil Limited. Adani Infrastructure emerged as the successful bidder with a winning bid of ₹325 crore after depositing ₹20 crore as earnest money. The tender documents and auction terms categorically provided that the sale was on an “as-is-where-is”, “as-is-what-is” and “whatever-there-is” basis, and bidders were expected to conduct independent due diligence regarding title, encumbrances, revenue entries and statutory dues. Following the auction, Adani Infrastructure expressed concerns relating to alleged encroachment on the land, a charge registered by the Gujarat State Tax Department, and discrepancies in revenue records, and sought clarity as to whether the liquidator would be able to convey the land if the full payment was made by March 29, 2023. The liquidator responded that although registration of the sale deed could be delayed until removal of the attachment, the payment timelines stipulated in the liquidation schedule would not be altered.

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Adani Infrastructure sought extension of time and waiver of interest before the NCLT. By an interim order dated June 15, 2023, the NCLT extended the time for payment and directed that the balance amount be paid within five days from the removal of attachment; however, the question of interest liability was left open. In the final order, the NCLT relieved the successful bidder of interest liability by holding that the payment timelines were directory and not mandatory, and that the delay was attributable to attachment of the land by the tax authorities.

The NCLAT firmly rejected this approach. It held that liquidation sale proceedings are governed by statutory regulations and cannot be examined through the prism of contractual principles such as reciprocal promises under the Indian Contract Act. The tribunal observed that “the present is not a case for any breach of contract entered between the parties, rather is a case of sale of liquidation estate under the statutory provisions of Liquidation Process Regulations, 2016.” It further held that the existence of encumbrances or charge cannot dilute the statutory payment requirements when the successful bidder had unequivocally accepted the terms of sale on a non-recourse basis. The tribunal stressed that timelines under Schedule I of the Liquidation Process Regulations are compulsory and non-compliance necessarily attracts the prescribed interest.

Accordingly, the appellate tribunal held that the 30-day period from December 29, 2022 expired on January 28, 2023, and therefore the balance of ₹305 crore attracted interest at 12% from January 28, 2023 until June 15, 2023, i.e., the date on which the NCLT granted extension. It directed Adani Infrastructure to remit this interest within two weeks from the date of judgment, while clarifying that no interest would accrue during the NCLT-permitted extension period. Apart from substituting the direction relating to interest, the remainder of the NCLT’s order remains undisturbed.

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Through this decision, the NCLAT has reinforced that liquidations are governed by a rigid statutory framework and that successful bidders cannot employ post-auction objections or encumbrance-related concerns to seek relaxation of payment timelines. The ruling serves as a decisive reaffirmation that liquidation auction terms must be honoured strictly and that statutory interest is the natural consequence of delayed payment without exception.

Appearance

For Appellant: Senior Advocates Ramji Srinivasan and Sunil Fernandes, with Advocates Atul Sharma, Pankaj Jain, Arjun Bhatia, Shefali Munde, Aditi Sharma, Vikram Choudhary and Sarthak Dugar.

For Respondent: Senior Advocates Arun Kathpalia and Krishnendu Datta with Advocates Siddharth Aggarwal, Aditya Dhupar, Sanidhya Kumar, Harshit Chaudhary, Yash Tandon and Harsh Gurbani.

Cause Title: CA Ramchandra Dallaram Choudhary v. Adani Infrastructure & Developers Pvt. Ltd.

Case No: Company Appeal (AT) (Ins) No. 2316 of 2024

Coram: Justice Ashok Bhushan (Chairperson), Technical Member Barun Mitra