Liquidator discretion in private sale upheld, with limited judicial interference in commercial liquidation choices.

In liquidation, the liquidator may choose a permissible sale mechanism, including private sale of composite assets, where it is likely to maximise realisations and achieve timely closure. Stakeholders' advice is not binding, and an anchor bidder does not acquire a vested right to insist that a Swiss Challenge or similar process be carried to completion, especially where the sale documents reserve a right to cancel, abandon or modify the process. Judicial review of such commercial liquidation decisions is limited and will not displace the liquidator's assessment absent arbitrariness, mala fides or illegality. An appellate authority should not impose an open-notice model for a private sale unless legally justified.

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Issues: (i) Whether the liquidator was justified in discontinuing the second Swiss Challenge Process and opting for private sale of the composite assets of the corporate debtor. (ii) Whether the appellate authority was justified in directing the private sale process to be restarted by issuing an open notice to all prospective buyers.

Issue (i): Whether the liquidator was justified in discontinuing the second Swiss Challenge Process and opting for private sale of the composite assets of the corporate debtor.

Analysis: The liquidation framework under the Insolvency and Bankruptcy Code, 2016 permits sale of assets by public auction or private contract, either as standalone assets or collectively. The liquidator may consult stakeholders, but their advice is not binding. The regulations also permit private sale where it is likely to maximise realisations, and the liquidator retains discretion to choose the method of sale in the interests of value maximisation and timely liquidation. The bidder's participation as anchor bidder did not confer a vested right to insist that the process be taken to its conclusion, particularly where the sale documents expressly reserved to the liquidator the right to cancel, abandon or modify the process. The composite private sale was found to be a bona fide commercial decision aimed at quicker and higher recovery for stakeholders.

Conclusion: The liquidator was justified in discontinuing the second Swiss Challenge Process and proceeding with private sale; the objection to that decision failed.

Issue (ii): Whether the appellate authority was justified in directing the private sale process to be restarted by issuing an open notice to all prospective buyers.

Analysis: Once the liquidator had adopted a permissible private sale route with stakeholder approval and the adjudicating authority's permission, the appellate authority could not substitute its own commercial assessment for that of the liquidator and the stakeholders. A private sale does not require the public-notice model of an auction, and the appellate authority had no basis to suo motu impose a fresh open notice procedure where no such relief had been sought and where doing so would set back a nearly concluded liquidation process. Judicial interference in such commercial liquidation decisions is limited unless arbitrariness, mala fides or illegality is shown.

Conclusion: The direction to restart the private sale process by issuing an open notice was unsustainable and was set aside.

Final Conclusion: The private sale negotiations already commenced were permitted to continue to their logical end, the challenge to discontinuance of the Swiss Challenge Process failed, and the direction to recommence the private sale afresh was quashed.

Ratio Decidendi: In liquidation, the liquidator's bona fide commercial choice of a permissible sale mechanism, made to maximise value and supported by stakeholders, will not be interfered with in judicial review absent arbitrariness, mala fides or illegality, and an anchor bidder acquires no vested right to compel continuation of the process.

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