NCLAT Orders Adani Infrastructure to Pay 12% Interest for Auction Delay in Ahmedabad Liquidation

The National Company Law Appellate Tribunal (NCLAT) has instructed Adani Infrastructure & Developers Pvt. Ltd. to pay 12% interest on a delayed balance of ₹305 crore from a liquidation auction held for land belonging to Anil Limited in Ahmedabad. 

Delayed Payment Attracts 12% Interest as per Liquidation Regulations 

On December 29, 2022, Adani Infrastructure secured a successful bid of ₹325 crore for 1,44,856 sq. metres of land in Bapunagar, Ahmedabad, under liquidation proceedings for Anil Limited.  

The company had deposited ₹20 crore as earnest money, leaving ₹305 crore outstanding. As per Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, the balance amount was mandated to be paid within 90 days, with interest applicable after 30 days at 12% annually for any delay. 

NCLAT Reverses NCLT’s Waiver of Interest 

Initially, the National Company Law Tribunal (NCLT), Ahmedabad, provided time extension and waived the interest, citing hindrances such as land encroachment and a tax department charge. 

However, the NCLAT Bench led by Justice Ashok Bhushan and Technical Member Barun Mitra overruled this by stating that statutory payment timelines under the liquidation regulations are binding and not subject to contractual flexibility. 

Obligations Cannot Be Avoided on ‘As-Is-Where-Is’ Sales 

The auction was conducted on an “as-is-where-is” basis and bidders were expected to complete full due diligence. Therefore, NCLAT held that Adani Infrastructure’s concerns about encumbrances were irrelevant as it had agreed to the terms without conditions.  

The tribunal emphasised that timelines under Schedule I of the regulations are compulsory and non-compliance leads to prescribed interest. 

Read More: NCLT Clears ₹1,950-Crore Settlement for NSEL Investors; Over 5,600 Investors Set to Be Compensated! 

Interest Period Defined Until NCLT-Granted Extension 

NCLAT concluded that interest at 12% accrued from January 28, 2023, to June 15, 2023, when NCLT granted time extension.  

It directed Adani Infrastructure to pay the accrued interest within two weeks from the date of judgment but clarified that no interest would be charged for the period allowed under NCLT’s interim order. 

Conclusion 

The tribunal’s decision reinforces compliance with statutory timelines in liquidation sales. Adani Infrastructure must now pay 12% interest on the ₹305 crore delayed amount between January 28 and June 15, 2023, as per the binding terms of the auction process. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.