Vikram Bajaj Liquidator Of Best Foods ... vs Asj Finsolutions Private Limited

I.A. No. 5885, 5886 of 2024 IN THE MATTER OF: Vikram Bajaj Liquidator of Best Foods Limited (In Liquidation) ...Appellant Versus ASJ Finsolutions Pvt. Ltd. ...Respondent

Present: For Appellant: Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Ridhima Mehrotra, Adv. For Respondent: Mr. Neeraj Malhotra, Lakshay Agarwal, Mrinal Harsvardhan, Aakash Tyagi, Naimish Kumar, Adv.

JUDGMENT

Per: Justice Rakesh Kumar Jain:

M/s Hazura Singh Bhim Singh (Operational Creditor) filed an

application bearing CP (TB) No. 117/Chd/Chd/2017 under Section 9 of the

Insolvency and Bankruptcy Code, 2016 (in short 'Code') before the National

Company Law Tribunal, Chandigarh Bench (in short 'Tribunal') against M/s

Best Foods Ltd. (Corporate Debtor) which was admitted on 02.02.2018. Atul

Kumar Kansal was appointed as the Interim Resolution Professional who was

replaced by Vikram Bajaj as RP on 17.04.2018.

2. The RP filed an application bearing I.A. No. 412 of 2020 under Section

33(1)(a) of the Code for liquidation of the CD which was allowed by the

Tribunal on 01.03.2021 and the RP was appointed as the Liquidator.'

3. The order dated 01.02.2021 was challenged by the suspended director

of the CD in appeal i.e. CA (AT) (Ins) No. 276 of 2021. In the said appeal, the

Appellant prayed for stay which was not granted vide order dated 05.04.2021

Comp. App. (AT) (Ins) No. 1612 of 2024 2

against which the said appellant filed an appeal before the Hon'ble Supreme

Court bearing CA No. 2471 of 2021 which was dismissed on 30.07.2021.

4. The Liquidator issued e-auction notice on 25.10.2021. The said auction

notice is reproduced as under:-

E-AUCTION SALE NOTICE (Under regulation 32, 32A & 33 of IBBI (Liquidation Process) Regula(ions, 2016 BEST FOODS LIMITED an Liquidation) {BF", Liquidator of BFL hereby invites, Eligible bidder(s) for participation in E-auction Sale of Assets of BFL, listed herein, et 'As is Where is, Whatever There is and Without Recourse' basis as per the auction Schedule stated bcrein and as per tht detailed terms, conditions & prawn listod in Bid Document which can he downloaded ken https:Iiwbqatieljna.çpj and www.bestfoodgrottu.corn Lot Destription of Assets Reserve - ENID Incremental Bid No. Price (Rs. Crore) Amount (Rs. Crore) (Fts. Crorn) Best Foods Led.-- As a Going Concern (Including air• 20435 20.4.5 . 1.00 assets of the Company)

2. Darer Unit of Best Foods Ltd. $7.17 .3.72 0.20 Land (232 K 8N1), Building and Plant & Machinery at Village Darer, Indri-Karnal Road, Haryana.

•Hatinidpur Unit of Best Foods Ltd. ' 7.03 0.70 0.05 Land (4840 sq. yds.) Khasra NoA411 (4-9), 441 (43-7) . Building and Plant & Machinely at Harnicipur, Delhi. Commercial Office floor (5633 sq ft.) at Unit No. 926 0.92 0.05

502. D-IViall, 5th Floor, Plot No..471, Warirpur, District Centre, Nett* Su.bhash Place, Pitampura, Deihl. .

i Land Measuring 68K 17tvl situated at Village Hangel 25.56 2.55 . 0.10

- Khurd Tehsil, Dish. Sonepat Haryana. • Land measuring 291( 13M at Village Garth Gutjan, 2.13 0.21 0.02

Teisit indri, District Kernel, Haryana

Preference will he given to the Bidder for Lot 1 end liquidator reserves right to reject Olds for other Lots on acceptance of Bid for Lot I E-A alien Schedule:

Last bete/Time for submission Olt $14 Documents & ENID: --Nov 12, 2021 (Friday) by 5;00 p.m. B-Auction Date:-- Nov 15,2021 (Monday) from 300 p.m- to 5:011 p.m. (with unlimited entewfiou of Srules) Interested applicants are required to deposit PAID amount either through NBFT/ILTOS in the YES BANK Account Number: 018463300004293 Beneficiary Name: Best Foods Lbrited-in Liquidation IFSC Code: YESB0000184 or by way of demand draft in favour of Best Foods Limited - in Liquidation drawn on any Nail:trellised or Scheduled Bank.

Interested applicants are advised to refer to Bid Document and submit completed Bid Documents along with proof of deposit of ENID in hard copy to the liquidator and upload on u,suotion weinite hitos.//www,banketutetions,com before the last date/time of bid submission. The applicants may contact Ms. Shikha Cliaudhary Crean), Liquidator) -- Email -- 1 in.bestfoodseikeinaiLcom,Ph. 011-45789408 (0) / +91- 9811527752 or Mr. Vinod Chauhan (Team E-Aueliciq Agency) -

nand-slot a.cou ,Ph. 491-9813887931 for any assistance.

V!Itrarti Beier 1113131/1PA-002/1P-N00003/20164017110003 Liquidator Best Foods Ltd. (In Liquidation) bajel.vittram@graelLeont Pb. -- 011457854084O)/ 9999989408(M) Offtee --308. Pearls Businem Park NOtskli Subhash Place, Fitsimpora, Delhi -110034

The subject matter of this appeal is the land measuring 68K 17M

situated at village Nangal Khurd Tehsil, Dist. Sonepat, Haryana which is

shown at item no. 5 in the said notice.

Comp. App. (AT) (Ins) No. 1612 of 2024 3

6. The Liquidator also issued e-auction process document on 25.10.2021

in which details of the land comprised in lot 5 has been given which is as

follows:-

Not 3 -- Details of Land Comprised in Lot 5

lintitteasuring 68K-3M. as per Regd. Sale deed no. 4903 dated 294-2008. Laud measuring OK-14M as per Regd. Sate deed no. 1317 dated 22-5-2009 -- Area OK E1M and Sale Deed No. 4902 dated 29-8-2008 -- Area OK 6M, hi respect of said sale deeds Suit no. CS/1264/2021 Shiv. Kumar G'upta its. Best Foods Ltd. has been filed before Civil Court, Sonipat. wherein it is claimed that land is Itovered by a contract to sell and therefore seeking ad-interim stay. No stay'..has been granted by Civil Court, Sonipat, The Liquidator is filing an application before NCLT for taking custody of tide deed Sale deed no. 1317 dated 22-5-2009 and Sale Deed No. 4902 dated 29-8-2008 from promoters/ ShiKuntar

7. E-auction process document also provided earnest money deposit

which is in para 9 of the process document which is as follows:-

bstOls•Ittle ID EP ()SIT -- PRE-1311) All E-Attetiort Participanns), itong with or prior to the submission cyttbeir Bids, shall deposit Interest free Earnest 1Viortey Deposit (E1V11)9 as stated against the relevant 1..at Of riosets for which the Did is to be placed.

The Earnest Isdoney shall be provided by way of a Demand Draft isaned by any cheduled commercial bank in India in favor of "Best Foods Ltd. - In Litre/dation",

EMI> can also be provided by the Bidder(s) by way of direct bank transfer (Ryas NE:121") to the hank account specified below. blo interest will be paid to the Bidder(s) in relation to the amount deposited as Earnest Money. In this regard, the following must be noted:

A. EPAID is to be paid by the Bidder(s) prior to uploading the online bid form.

The details for bank transfer of the Earnest hinney are as under:

_Account Number: 0.18463300004293 Beneficiary blame: Best Foods Limited - In Liquidation Bank Name: lees Bank Branch: Netaji Subhash Place, Pitampora, New Delhi- 110088 TFSC Code: Yesb00001 84

EVID is required to be paid by way of NEFT/B.TISS in name of "f3est Foods Liquidation) by November 12.2021 till 5 p.m.

The details of any tetYl in:law-v.5 in this regard shall. be entered in the °ultra, form submitted by the Bidder(s). The entire Earnest LVioney amount stud), be remitted. by this Bidder(s) from bank account owned by the Bidder(s).

Bidder(*) shall preserve the rentittamee cloctunerttaCed shall produce the same in front of the Liquidator as and when demanded.

AU PayMent made by the Bidder(s) under the:e-auction shall be intimated to the Liquidator pitt.bestfoodsOttmail.corst and balitLyikintniltittuaLsain, 120 f *F.

Comp. App. (AT) (Ins) No. 1612 of 2024 The Entire Amount paid by the applicant / bidder including the Earnest Money Deposit can be forfeited at any time, upon the occurrence of any of the following events:

1. If any of the conditions under this Document are breached by the Bidder(s) or in case the Bidder(s) is / are found to have made any tuisrepreseatation;ar

11. If the Bidder(s) la/ are found to be ineligible te, submit the bid under Section 29 and Section 35(1)(f) of the IBC (as amended ,frotri time to time) or is / are found to have nnade a false or misleading declaration of eligibility under Section 2,p18.. and Section 35(1) (f) of the IBC (as amended from time to time); og

If the Bidder(s) is / arc identified as the SuccessthtBidder(s) and fails to pay balance sale consideration as per terms of the sale.

If the Bidder(s) / are found to have indulged in any of fraudulent or corrupt practices.

8. In para 15 of the process document, the timeline was provided which is

also reproduced as under:-

TIME LINE

gr. vent Timeline ... ..

Public AnnOttuccuatutt (WE- Auction (Ii Octobetr 25, 2021 (Monday) suppression of public annunneentent date( 2-5-2021) .... _..._ .._ -

2.(Veninp of Auction Portal and F.- October 25; 2021 (Monday) Auction Sale Process Memorandum document made available on the wcbsites A s per Terms and Conditions

--

Last date for submission of Bid Form November l2, 2021 (Friday) including KYC, Eligibility criteria documents and Elt/ID Site Visits and Discussion Meetings From October 26, 2021 to November 11, 2021 - in discussion/ with prior appointment with .Liquidators team . E-Auction Date and Time 15-11-2021 (Monday) from 3:00 pm to 5:00 pm (In case, a bid is placed in the last 5 minutes of the closing time of the E-auction, the closing time will automatically get extended for 5 minutes , with unlimited extensions).

6. Announcement of Successful Bidder On or before November 15,2021 (Monday)

7. Issuance of Email/Letter of Intent Within 5 days (excluding Holidays if (LOI) to be issued to the Successful arty) following the end of E-Auction Bidder subject to deposit of the Successful Bid Amount with applicable taxes

8. Payment of Sale The Successful Bidder(s) shall deposit consideration by Successful the entire Sale consideration Within 30 Bidder(s) (thirty) days from the date of such denumd. ProVitled That the payments after 30 (thirty) days shall attract „,... .. ......

Comp. App. (AT) (Ins) No. 1617of 2024 5

interest at the rate of 12% p.a. Prcwi f.ed further that the sale shall be cancelled if full payment is not received within 90 (ninety) days.

Return of Earnest Money (EMI)) for Within 15 days from the declaration Unsuccessful Bidder(s) of successful bidder

Note:

The Liquidator reserves the right to amend the key terms of the E-Auction sale Process including reserve price, earnest money deposit, bid increment amounts and timelines at his sole discretion, to the extent permissible under the applicable laws and regulations. The Liquidator

-reserves the right to cancel / withdraw the E-auction process, at sole discretion, without assigning any reasons.

Any information about amendments ./ extension of any of the timelines will be available on the;. E- Auction wobnite, webeite of the Corporate Debtor and communicated to Eligible Bidder(s). . If at any stage, during/ after the process of Liquidation, for whatever reasons, any orders/ instruotions, guidance is passed by Bon'ttle NeLT to intervene the Liquidation process, the same shall he binding on all the bidders without having claim or damages whatsoever.

9. E-auction took place on 15.11.2021. The highest bidder, namely,

Respondent/ASJ Finsolutions Pvt. Ltd. sent an email on 15.12.2021 at 11:09

AM to the Appellant alleging that EMD of 25% amounting to Rs. 6,39,00,000/-

out of bid amount of Rs. 25,56,00,000 has already been paid and the balance

sale consideration of Rs. 19,17,00,000 shall be deposited by 14.02.2022 with

interest at the rate of 12% p.a. The said email is reproduced as under:-

jig Gmail ti1944 .4bajeLatierantegraellLoodiet-

„ Confirmation of Sake - Lot 5 - E-Atiction Sale - Beat Foods Ltd. (in Liquidation) EINSOLUTIONS -4usIticsolutionsaKacalLcon's, Wad, CMG 16.2021 To: Vilemo BatIrti '.1/ajal.v4lcarnettniall.cohiv- Oc. shikits.9071.200ginail.corn, hitoshetirp70136gifprittil,cont 'twat Sir.

'Please refer tO E.-OUCtiOn Sete 0it.ato. or Best roods Ltd (in Liquidedon) held on 15-11-2021. Comprised In LOt 5 as under

whereto We are declared AS The hiehost bidder "'Land measuring 6132. 1f21 sthetSd at Village Nangal Khurd, "relish Distr., Sonepat, Haryana

We hemby confirm that In respect of the total Rid Amount of Re. 25,56,011,000-00 (Rupees Twenty FiVe Croce Fifty Sbt Lacs Only) , 25.6 of the Etid Amount (including ENO amounting to Rs. 6,39,00,000 (Rupees Six chore Thirty Nine Lacs Only) already deposited by Itats ASJResolutions Pvt. Ltd.

We hereby confirm that balance sale consideration of Rs. 19,17.00,000 (Rupees Nineteen Crowe Seventeen Lacs Onty) Is to be deposited by 14-02-2022 with interest at rata of 12Sli

This is for your kind information and necessary action,

Thanks and regards Mesh Gm:100311069269) Auth.R.opresentative Zulfs.A.S.IFINSOLITTIONS PVT.LTD,

Comp. App. (AT) (Ins) No. 1612 of 2024 6

10. On 16.11.2021 the Appellant sent an email to Respondent informing it clearly that if the amount of balance sale consideration is not paid by outer

limit of 14.02.2022 then amount deposited in respect of lot no. 5 shall be forfeited. The email dated 16.11.2021 is also reproduced as under:-

.;f1140, 101A A?ot ittellile 1 Priri14 1,111. Uhl 40110

Chaltilhary %WW1 244freflte

Confinnation of Sale - Lot S E-Atictlon SaleBest Foods Ltd, (In LiquidatiOn) Vilosen Baia) 4bajaj.vikrarnegmall.c0lo Tue, Nov 10:2021 et 1:41 PIA 'To: esifininfutionsftmail,com Cc; Shikha Chaudhery RCA <e1tiki1e.00712©gmallcorn* 18-11-2021 MT. Iiitesh Clara Authorised Representative ASS Finsolutions P Ltd.

Dear Sir, Please refer to your participation in E-auction Sale of assets of Best Foods Ltd.(In Liquidation) herd on 15-11-202i. comprised in Lot 5 as under wherein you were declared as the highest bidder; ''Llaid =awing 68K 1711{ situated ai Village Narigai Muni TeheilDistt.. Soave% Haryana

hereby confirm that in respect of the total Bid Amount of Rs. 25,56,00,000-00 (Rtspees Twenty Five Cure Fifty SOt Lacs Only) , 25% at the Hid Amount (Inciuding DAD) amounting to Rs. 639,001000 (Rupees Six more Thirty Nine Lacs Only) was to be deposited by 16-11-2021, against which Rs. 09,00,000 (Rupees Six awe Thirty Nine Vice Only) has been received and accordingly the undersigned hereby confirms the sale of Lot 5 to A.S.) Fineolutions P Ltd..

The .balance sale consideration of Re„19,17,00,000 (Rupees Nineteen Cron) Seventeen Lacs Only) le required to be deposited within 30 days from today Le. by 16-12-2021. In case the balance amount Is not deposited by16-1 2-2021, any amount outstanding after 16-12-2021 shall be accepted only with Interest at rate of 12% p.a. maximum up to 90 days from today Le, upto 142-2022.

Account Number: 018463300004293 .

BeneOciary. Name: Beat Foods Litnitod - In Liquidation Bank Name: Yes Sank Broody Notriji Subbasli Piteetpura, New Delhi- 110088 IFSC Code: Yesb00001114

On receipt :of the balance sale consideration(with applicable Interest) the undersigned shall Issue a Certtiltall of Sale for the Lot 5,

Please note %et the amount deposited In respect of Lot 6 shall be liable to be forfeited on failure to deposit the balance sale consideration by outer limit of 14-2-2022 (with applicable interest) and the sale shall stand cangelled. Yours Sincerely,

Viltram Baja) IttliatiPA-802/1P-N00003/2016-201740003 Liquidator Best Foods Ltd. (In Liquidation)"

Comp. App. (AT) (Ins) No. 1612 of 2024 7

11. Thus, according to the terms and conditions of the sale, Respondent

was to deposit the balance amount of Rs. 19,17,00,000/- within 30 days i.e.

up to 16.12.2021 and in case it was not deposited by 16.12.2021 then it was

to deposit upto 90 days from the date of confirmation i.e. by 14.02.20,22 with

interest at rate of 12% p.a

12. It is alleged that Respondent, before depositing the balance amount

sought a clarification from the Appellant pertaining to the title of the subject

property vide email dated 16.01.2022 requesting him to provide certified

copies of the complete chain document of the subject property.

13. On the other hand, one M/s Agarwal Trading Company filed a writ

petition bearing CWP No. 1671 of 2022 titled as M/s Aggarvval Trading Co. tit

Anr. Vs. Liquidator for Best Foods Ltd. 8s Ors. before the Hon'ble Punjab and

Haryana High Court, Chandigarh against e-auction notice dated 25.1.0.2021.

The said writ petition was disposed of on 02.02.2022 by the Hon'ble Division

Bench of the High Court with the following order:-

"Therefore, without expressing on the opinion on the contentions

of either parties, we direct the petitioners to approach the NCLT,

Chandigarh for seeking appropriate relief in the matter. The

petitioners shall do so within a period of one week from today and

till the said date, no sale deed shall be executed by the Liquidator

in favour of the purchaser since it is stated by the first respondent

that the purchaser had been given time till 14.02.2022 to make the

full payment for purchasing the assets after participating in the e-

auction notice dt.25.10.2021. Disposed of in above terms."

14. Pursuant to the aforesaid order, M/s Aggarwal Trading Company filed

an application I.A No. 123 of 2022 on 11.02.2022 before the Tribunal but the Comp. App. (AT) (Ins) No. 1612 of 2024 8

said application was withdrawn on 22.09.2022. The order passed in the said

application is as under:-

"IA No. 123/2022 4. Learned counsel for applicant appeared and

stated that he is withdrawing this application. Keeping in view the

statement made by him, IA No. 123/2022 is dismissed as

withdrawn."

15. The Respondent also filed an application bearing CA No. 85 of 2022

under Section 60(5)(c) of the Code seeking directions to liquidator claiming

chain documents of the property sold to the applicant through e-auction

process initiated vide notice dated 25.10.2021 for verification before balance

sale consideration amounting to Rs. 19,17,00,000/ -was deposited but the

said application was dismissed on 31.03.2023 by the Tribunal. The operative

part of the order read as under:-

"13. In view of the above facts, we find merit in the contention of the respondent that the applicant had complete knowledge of the fact that the fractional land 14M (i.e. 0.0876 acres) out of total 68 K 17 M (8.60625 acres) the original title deeds are not available with the respondent. In view of such facts, we are of the view the applicant has wilfully defaulted in the payment of the balance amount of Rs. 19.17 Crores within the stipulated period. Considering the fact that the liquidation proceedings are strictly time-bound and sufficient time has already elapsed from the date of default in payment, no further extension of time is to be allowed for the payment of the balance amount."

16. The Respondent challenged the order dated 31.03.2023 by way of an

appeal i.e CA (AT) (Ins) No. 492 of 2023 before this Court which was also

dismissed on 21.04.2023. The operative part of the order read as under:-

Comp. App. (AT) (Ins) No. 1612 of 2024 9

"6. The factum of litigation by Writ Petition in High Court by a third party and suit by certain parties in the property cannot be ground for the Successful Bidder of not making payment of balance amount. The balance amount was to be deposited within the time as required in Schedule-I of Liquidation Regulation, 2016. This Appellate Tribunal while considering provisions of the Schedule-I of the Liquidation Regulation, 2016 in "Company Appeal (AT) (Insolvency) No. 532 of 2022, Potens Transmissions 86 Power Pvt.

Ltd. vs. Gian Chand Narang" has laid down that the said timeline is statutory. In Para 8 following has been laid down:

"8. When we look into the above regulation, it is clear that 90 days' period provided for making the deposit is the maximum period under which the Auction Purchaser had to make the deposit. 2nd Proviso of the Item 12 of. the Schedule I provided that sale shall be cancelled if the payment is not received within 90 days. When the Consequence of non-compliance of the provision is provided in the statute itself, the provision is necessary to be held to be mandatory. Item 12 provides that payment is to be made within 90 days and with interest after 30 days at the rate of 12 percent. Non-compliance of 2nd Proviso, sale shall be cancelled if the payment is not received within 90 days. The Adjudicating Authority has rightly observed that in view of the Appellant having not made payment in 90 days, Adjudicating Authority has no option except to allow the Application filed by the Liquidator for cancellation of the sale. The action taken. by the Adjudicating Authority is in accordance with the statutory provisions. We do not find any merit in the submissions of Learned Counsel for the Appellant as noticed above. Prayer 'a' in the Application which was filed through I.A. No. 3153 of 2021, itself is indicative that Appellant was never interesting in making the payment and he by different prayers wanted to prolong the proceedings."

Comp. App. (AT) (Ins) No. 1612 of 2024 10

7. We are of the view that the Appellant having not deposited the balance amount within the time allowed, the Adjudicating Authority did not commit any error in rejecting the application filed by the Appellant Appeal is dismissed.

8. Learned counsel for the Liquidator submits that now the SCC has taken a decision to re-auction the property and it is open for the Appellant to participate in the said auction process if they fulfil all the necessary conditions."

17. Although Respondent had the remedy to challenge the order of this

Tribunal by way of an appeal under Section 62 before the Hon'ble Supreme

Court which was perhaps the proper course but the Respondent challenged

both the orders dated 31.03.2023 and 21.04.2023 by way of a writ petition

before the Hon'ble High Court of Punjab and Haryana bearing CWP No. 13489

of 2023 which was also dismissed on 18.12.2023 with the following

observations:-

"11. Keeping in view facts and circumstances as above the writ petition is dismissed with liberty to petitioner to avail remedy(ies) as available in accordance with law. There is no expression of opinion on the merits of the pleas as raised in this writ petition with reference made thereto is only for purpose of decision of this writ petition"

18. After the aforesaid decision, the Respondent sent an email dated

01.04.2024 for refund of the EMD in response to which the Appellant

informed the Respondent vide email dated 15.04.2024 that the said amount

•has been forfeited. Thereafter, the Respondent filed the application I.A. No.

1047 of 2024 under Section 60(5) of the Code for refund of 25% of the bid

amount alongwith interest which was deposited in the auction for lot no. 5

held on 15.11.2021. the said application has been allowed by the Tribunal

vide the impugned order dated 02.07.2024 directing the Appellant to refund

Comp. App. (AT) (Ins) No. 1612,of 2024 11

the entire amount to the Respondent within two weeks but no interest was

granted. Hence, the present appeal has been filed.

19. In the appeal, notice was issued on 10.09.2024 and it was directed that

"In the meantime, direction to refund the EMD shall remain stayed."

20. Counsel for the Appellant has submitted that Respondent is not entitled

to refund of the amount deposited because the sale has been cancelled and

amount deposited is forfeited as per the provisions of the process bid

document. In this regard, he has •referred to a decision in the case of

Westcoast Infraprojects Pvt. Ltd. Vs. Mr. Ram Chandra Dallaram Choudhary,

CA (AT) (Ins) No. 1258 of 2022 to _contend that it has been held by this

Tribunal that when the clauses of the process document empowers the

Liquidator to forfeit the EMD and any payment made, in the event a default

is committed by the highest bidder, no exception can be taken to the action

of the liquidator in cancelling the sale and forfeiting the amount deposited by

the Respondent.

21. He has further submitted that the decision of this Court in the, case of

West Coast Infraprojects (Supra) has been upheld by the Hon'ble Supreme

court in Civil Appeal No. 4087 of 2023.

22. Counsel for the Appellant has further relied upon a decision of this

Court in the case of Potens Transmission &Power Pvt. Ltd. Vs. Apex Buildsys

Ltd. (in liquidation), CA (AT) (Ins) No. 1543 of 2023 and Potens Tranmission

86 Power Pvt. Ltd. Vs. Gian Chand Narang, CA (AT) (Ins) No. 532 of 2022

wherein this Court while relying upon the decision in the case of Westcoast

(Supra) held that the timelines contained under Clause 12 of Schedule I of

liquidation regulations are statutory in nature which has been confirmed by

the Hon'ble Supreme Court in Civil Appeal No. 4116 of 2022.

Comp. App. (AT) (Ins) No. 1612 of 2024 12

•23. He has also relied upon a decision of this Court in the case of BRS

Refineries Vs. Mr. Supriyo Kumar Chuadhary, Liquidator for JVL Agro

Industries Ltd., CA (AT) (Ins) No. 1477 of 2023 in which it has been held that

bidder is bound by condition provided in e-auction process information

document which contained the clause of forfeiture in the event of non-

depositing the part of sale consideration within the prescribed time.

24. Counsel for the Appellant has further argued that once the statutory

requirements under the provisions of the Code are fulfilled, the Adjudicating

Authority and even this Court is not conferred with jurisdiction to deal with

the grounds of fairness and equity rather the Tribunal is bound to abide by

the statutory provisions of the Code which is a complete code in itself. In this

, regard, he has relied upon a decision of the Hon'ble Supreme Court in the

case of Pratap Technocrats (P) Ltd. 86 Ors. Vs. Monitoring Committee of

Reliance Infratel Limited 86 Anr., Civil Appeal No. 676 of 2021.

25. He has also submitted that the Tribunal has erred in relying`upon a

decision in the case of Authorised Officer, Central Bank of India Vs.

Shanmugavelu, Civil appeal No. 235-236 of 2024 and Authorised Officer of

State Bank of India Vs. C. Natrajan 8s Anr., Civil Appeal No. 2545 of 2023

which applies to provisions of SARFAESI Act, 2002 and not the order passed

under the Code.

26. On the other hand, Counsel for the Respondent has submitted that

issue regarding forfeiture of EMD was challenged for the first time before the

Hon'ble P 86 H High Court in CWP No. 13489 of 2023 in which liberty was

granted to the Respondent to avail remedies available in law, pursuant to

which the Respondent had filed I.A No. 1047 of 2024. It is also submitted that

the Respondent, in the previous litigation, only asked for extension of time to

Comp. App. (AT) (Ins) No. 1612 of 2024 13

make the payment of the balance amount and did not seek refund of EMD,

therefore, the argument of the Appellant that the Tribunal while allowing the

application had reviewed its earlier decision is misconceived. It is submitted

that I.A No. 1047 of 2024 was filed on a fresh cause of action after liberty was

granted by the Hon'ble High Court vide order dated 18.12.2023. He has also

submitted that in the order dated 31.03.2023 the Tribunal has only held that

the Respondent has committed a wilful default and thus, the EMD was liable

to be forfeited is baseless and misconceived because the said observations of

wilful default is only for non-payment of balance amount which were resulted

in cancellation of sale but it would not mean that it would lead to forfeiture of

EMD as well.

27. Counsel for the Respondent has further submitted that• clause 1(12) of

schedule 1 of the Liquidation Regulations did not provide for forfeiture of EMD

unlike a specific provision in Rule 9(5) of SARFAESI Rules which states that

if payment is not made within 90 days of sales confirmation then the amount

can be forfeited. It is argued that liquidator can only cancel the sale certificate

if the payment is not received within 90 days but forfeiture of EMD shall

depend from case to case.

28. It is further submitted that the period of 90 days to pay balance amount

cannot be held to be mandatory in the present case because in the same

auction in respect of lot no. 2 one M/ s. Alnair Ventures Pvt. Ltd. was the

highest bidder/ successful auction purchaser and the last date of payment

was also 14.02.2022 which was not paid but the appellant and the Tribunal

was pleased to grant four extensions on the same ground of pendency of I.A

No. 123 of 2022. It is contended that Liquidator has violated the principles of

Comp. App. (AT) (Ins) No. 1612 of 2024 14

equity and parity by discriminating between two successful and similarly

placed bidders of the same auction.

29. Counsel for the Respondent has further argued that the judgments

relied upon by the Appellant in the case of Potens Transmissions &Power Pvt.

Ltd. (Supra), Westcoast Infraprojects Pvt. Ltd. (Supra) and BRS Refineries

(Supra) are not applicable and are on its own facts rather he has relied upon

a decisions in the case of Authorised Officer State Bank of India (Supra) and

the Authorised Officer, Central Bank of India (Supra) to contend that a trinity

test has been laid down by the Court as to whether or not a successful auction

purchaser is entitled to refund of EMD and the said trinity test is applicable

as a general principle / rule in all cases of refund of EMD and it cannot be

restricted to the SARFAESI as submitted by the Appellant. He has further

submitted that Respondent had always bonafide intention to pay the balance

amount which is evident from the communication made to the Appellant and

also had the financial capacity for the same. It is submitted that in the same

auction, the Respondent's sister concern, namely, M/ s SPJ Properties Pvt.

Ltd. participated for Lot No. 4 separately and was declared the successful

bidder at Rs. 9.26 Cr. and had made the payment within the stipulated period.

It is further submitted that the litigation initiated by M/ s Aggarwal Trading

Company before the Hon'ble High Court and the Tribunal were subsequent to

the publication of the Bid document and same could not have been

contemplated either by the Appellant or by the Respondent herein and had

created huge uncertainty regarding the title of the auction property. It is

argued that M/ s Aggarwal Trading Co. had filed writ petition before the High

Court wherein the title of the land which formed the subject matter but the

said writ petition was disposed of on 02.02.2022 with liberty to the said

petitioner to approach the Tribunal.

Comp. App. (AT) (Ins) No. 1612 of 2024 15

30. It is also submitted that in the said writ petition the Hon'ble High Court

had stayed on execution of the sale deed of the said land for a periocl of one

week from the date of order enabling M/ s Aggarwal Trading Co. to file an

appropriate application before the Tribunal which in fact was filed bearing I.A

No. 123 of 2022 on 12.02.2022 regarding the title of the property which was

dismissed as withdrawn on 22.09.2022 by the Said entity.

31. In the end, it is argued that there has been no loss caused to the

stakeholders because fresh auction took place on 14.06.2023 and the same

was finally auctioned for a sum of Rs. 31.10 Cr. i.e. Rs. 5.54 Cr. over and

above the price at which the Respondent had become successful and in such

circumstances forfeiture of EMD would result in unjust enrichment to the

stakeholders which is impermissible in law. In this regard, he has relied upon

a decision of the Hon'ble supreme Court in the case of India Council for Enviro

Legal Action Vs. Union of India, (2011) 8 SCC 161 and referred to para 152 to

154 which read as under:-

"152. 'Unjust enrichment' has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.

153. Unjust enrichment is "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience." A defendant may be liable "even when the defendant retaining the benefit is not a wrongdoer" and "even though he may have received [it] honestly in the first instance."

(Schock v. Nash, 732 A.2d 217, 232-33) Comp. App. (AT) (Ins) No. 1612 of 2024 16

154. Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa v. Fairbairn, [1942] 2 All ER 122, Lord Wright stated the principle thus:

"....(A)ny civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution."

32. It is further submitted that the Tribunal has examined the case on the

angle of trinity test and has passed the impugned order which does not call

for any interference.

33. We have heard Counsel for the parties and perused the record with their

able assistance.

34. The admitted facts of this case are that the liquidator issued e-auction

notice on 25.10.2021 which include lot no. 5 (in question in the present case)

bearing 68K 17 M situated at village Nangal Khurd Tehsil, Dist. Sonepat,

Haryana. In the e-auction process document, the liquidator mentioned the

details of land comprised in lot no. 5. It was clearly mentioned that only in

regard to land measuring OK-14M and OK 8M and OK 6M, a Civil Suit No.

1264 of 2021 has been filed against the CD before the Civil Court at Sonipat

alleging that the said land is covered by a contract of sale and sought ad-

interim injunction but no stay was granted by the Civil Court and in so far as

land measuring 68K - 3 M is concerned, there was no such dispute. In the e-

Comp. App. (AT) (Ins) No. 1612 of 2024 17

auction process document, clause 9 dealt with Earnest Money Deposit - Pre

Bid. It was made clear to the bidders that prior to the submission of their bid

they have to deposit Interest free Earnest Money Deposit against the lot of

assets for which the bid is to be placed. The EMD was to be paid by the bidder

prior to uploading the online bid form. In para 15 of the process document,

time line was given as per which the successful bidder was to deposit the

entire sale consideration within 30 days from the date of such demand and it

was also made clear that payment after 30 days shall attract interest at the

rate of 12% p.a. and that the sale shall be cancelled if full payment is not

received within 90 days.

35. Etauction took place on 15.11.2021. The Respondent was held to be

the highest bidder who informed the Appellant on 15.12.2021 that EMD of

25% of Rs. 6,39,00,000/- out of bid amount of Rs. 25,56,00,000/- has already

been paid and the balance sale consideration of Rs. 19,17,00,000/- shall be

deposited by 14.02.2022 with interest at the rate of 12% p.a.

36. The communication dated 15.12.2021 was to the effect that the entire

sale consideration shall be paid within 90 days with 12%. The Appellant had

informed the Respondent that if the balance amount is not paid by the

extended period of 14.02.2022 then the amount deposited in respect of lot no.

5 shall be forfeited and the sale shall be cancelled. Before 14.02.2022 could

arrive, M/ s Aggarwal Trading Co. filed a writ petition before the Hon'ble High

Court against e-au.ction notice dated 25.10.2021 which was disposed of on

02.02.2022 giving liberty to the said entity to approach the Tribunal for

seeking appropriate relief and for a period of one week the sale deed was

ordered not to be executed by the liquidator. Thereafter, M/ s Aggarwal

Comp. App. (AT) (Ins) No. 1612 of 2024 18

Trading Company filed I.A No. 123 of 2022 on 11.02.2022 before the Tribunal

but the said application was withdrawn on 22.09.2022.

37. The Respondent also filed one application bearing CA No. 85 of 2022

under Section 60(5)(c) of the Code seeking direction to liquidator claiming

chain documents of the property as has been done by the M/ s Aggarwal

Trading Company before depositing the balance sale consideration. It is

interesting to note that the said application was dismissed on 31.03.2023 by

the Tribunal holding that the Respondent had complete knowledge of the fact

that of the fractional land 14M (i.e. 0.0876 acres) out of total 68k 17M

(8.60625 Acres) the original title deeds are not available with the Appellant. It

was further held that "in view of such facts, we are of the view that the

applicant has wilfully defaulted in the payment of the balance amount of

Rs. 19.17 Cr within the stipulated period. Considering the fact that the

liquidation proceedings are strictly time bound and sufficient time has

already elapsed from the date of default in payment, no further extension

of time is to be allowed for the payment of the balance amount"

Interestingly, the order dated 31.03.2023 by which the Tribunal has held that

the Respondent was to be entirely blamed for not making the balance amount

within the stipulate period of time and has wilfully defaulted, was challenged

by the Respondent by way of an appeal CA (AT) (Ins) No. 492 of 2023 before

this court. This appeal was dismissed on 21.04.2023 holding that the factum

of litigation by writ petition in High Court by a third party and suit by certain

parties in the property cannot be a ground for the successful bidder for not

making payment of balance amount which was required to be deposited in

time as required in schedule 1 of Liquidation Regulations and that in the case

of Potens Transmissions 85 Power Pvt. Ltd. (Supra) this Court had held that

the timeline is mandatory. The appeal was thus dismissed but there was no Comp. App. (AT) (Ins) No. 1612 of 2024 19

challenge to the order passed by this court by way of statutory appeal under

Section 62 of the Code rather the Respondent filed a writ petition no. 13489

of 2023 to challenge both the orders of the Tribunal dated 31.03.2023 and

21.04.2023 passed by this Court knowing fully well that it would not succeed

in the petition because the court had no jurisdiction to set aside an Order of

the Tribunal which is amenable to appeal and hence, the writ petition was

dismissed on 18.12.2023 but liberty was granted to the Respondent to avail

remedy as available in accordance with law. Thereafter, the Respondent filed

I.A No. 1047 of 2024 under Section 60(5) of the code for refund of EMD with

interest which has been allowed by the Tribunal vide impugned order.

38. From the narration of the aforesaid admitted facts it is apparent that

the Respondent had the knowledge of all the provisions of e-auction process

document as per which it was obliged to deposit the balance sale

consideration either in 30 days or at the most within 90 days with interest at

the rate of 12% and timelin.e was also provided were held to be statutory in

nature in the case of Potens Transmissions & Power Pvt. Ltd. (Supra). The

most important aspect of the case is the order dated 31.03.2023 passed by

the Tribunal on the application bearing CA No. 85 of 2022 filed by the

Respondent under Section 60(5)© of the Code in which the Tribunal has

deprecated the conduct of the Respondent while holding that the Respondent

has wilfully defaulted in payment of balance amount within the stipulated

period and that no further extension of time is to be allowed for payment of

•balance amount. This order has merged in the order passed in appeal filed by

the Respondent which was dismissed on 21.04.2023 in which it has been

further held that the balance amount was to be deposited by the Respondent

within the time prescribed to which there cannot be any exception and it has

also been categorically held that "prayer 'a' in the application which was filed Comp. App. (AT) (Ins) No. 1612 of 2024 20

through I.A No. 3153 of 2021, itself is indicative that Appellant was never

interesting in making the payment and he by different prayers wanted to

prolong the proceedings" These findings recorded against the Respondent

were never challenged by the Respondent by way of an appeal and attained

finality. The writ petition filed to challenge the order dated 31.03.2023 and

21.04.2023 was also dismissed against which no further proceedings were

initiated before he Hon'ble Apex Court by way of a Special Leave Petition etc.

All that has been done by the Respondent is filing of an application on the

misconceived notion that liberty has been granted by the Hon'ble High Court

to file an application before the Tribunal which has been entertained to set a

naught the orders dated 31.03.2023 and 21.04.2023 which is not only

impermissible but also an act of over reaching the court at the instance of the

Respondent and as a matter of fact the Tribunal should not and could not

have entertained the said application for finding fault with the orders dated

31.03.2023 and 21.04.2023.

39. Besides the aforesaid factual circumstances, the very fact that the

decision relied upon by the Appellant in the case of Potens Transmissions &

Power Pvt. Ltd. (Supra) and Westcoast Infraprojects Pvt. Ltd. (Supra) in which

this Court has held that the timeline contained in clause 12 of schedule 1 of

the Liquidation Regulations are statutory in nature it does not lie in the month

of the Respondent to contend that the said provisions is not statutory. In the

case of BRS Refineries (Supra) it has been held that bidders were bound by

the conditions provided in e-auction process information which contained the

clause of forfeiture in the event of non-depositing the sale consideration within

the time prescribed. The Tribunal has committed an error in making a new

case for the Respondent by relying upon two decisions referred to above in the

case of Central Bank of India (Supra) and State Bank of India (Supra) as a Comp. App. (AT) (Ins) No. 1612 of 2024 21

trinity test to hold that the Respondent is a genuine bidder having adequate

financial capacity and was ready to pay the remaining amount which is

contrary to the finding recorded by this Court in its order dated 21.04.2023

that "prayer 'a' in the application which was filed through I.A No. 3153 of

2021, itself is indicative that Appellant was never interesting in making the

payment and he by different prayers wanted to prolong the proceedings".

Similarly, the Tribunal has committed an error in recording a finding that the

Respondent had no malafide intention to frustrate e-auction process of the

subject property. This finding is also contrary to the finding recorded by this

Court that the Respondent had the complete knowledge of the fact that the

original title deeds of fraction of land in question was not available for which

he had made hue and cry for not depositing the amount in time which has

been held to be mandatory requirement in the order passed by this Tribunal

on 21.04.2023 in para 6 which has been captured in para 16 of this order.

40. Argument of the Respondent of parity and equality does not arise in the

present case because every case has to be decided on its own facts and since

much water has been flown after the order of forfeiture was passed, by way of

initiation of litigation by the Respondent by filing the first application bearing

CA No. 85 of 2022 which was rejected on 31.03.2023 and appeal against it

which was dismissed on 21.04.2023 and the said order remained

uncontested and unchallenged before the Hon'ble Apex court by way of an

appeal under Section 62 of the Code which was the only correct procedure to

have been followed, the argument raised by the Respondent is only for the

sake of it otherwise it does not have any legs to stand.

Comp. App. (AT) (Ins) No. 1612 of 2024 22

41. The last argument of the Respondent that there was no loss caused to

the stakeholders is not available to it in view of the decision of the Hon'ble

Supreme Court in the case of Pratap Technocrats Pvt. Ltd. (Supra).

42. Thus, in view of the aforesaid facts and circumstances, we are of the

view that there is merit in the appeal filed by the Appellant and the impugned

order suffers from illegality, therefore, the appeal is hereby allowed and the

impugned order is set aside though without any order as to costs.

Pending IAs, if any, are hereby closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical) New Delhi 21st January 2025 Sheetal

Comp. App. (AT) (Ins) No. 1612 of 2024