2026 (2) TMI 612 - HC - IBC

Liquidator undertaking to seek setting aside of e auction and re auction at higher reserve following bank draft; petition disposed.

Where a liquidator has regulatory power to annul and restart auctions to maximise the liquidation estate, the HC recorded the liquidator's undertaking to ... Wilful disobedience of court undertaking - court recording of undertaking and disposal on terms - power of liquidator to annul or restart auction to maximise liquidation value - regulatory consultation under Regulation 31A(1)(b) of IBBI (Liquidation Process) Regulations - Earnest Money Deposit - declaration of successful bidder after consultative committee advice - maintenance of status quo by appellate tribunal - leave to approach NCLAT to set aside e auction and seek re auction - HELD THAT:- It is noticed that in terms of the 'Process Information Document' dated 06.03.2025 issued by the Liquidator for the e-auction held on 08.04.2025, the Liquidator is duly empowered and reserves the right to reject, at any stage, 'all or any of the bidder or Bid' without assigning any reason whatsoever. The 'Process Information Document' governing the auction process recognizes the rights and powers of the Liquidator to annul the auction process and initiate a re-auction, inter-alia to maximize the value received in the liquidation proceedings. Inherently, the auction process is also within the regulatory purview of the NCLT and the NCLAT. It appears that the offer of the petitioner to the tune of Rs. 54 Crores, for the very asset/s which have been sought to be e-auctioned for Rs.28.27 Crores, and the stand now taken by the liquidator that a re-auction shall be conducted with reserve price of Rs.54 Crores, is in the interest of maximization of the value of the liquidation estate. The same will also enure to the benefit of the concerned public sector banks that constitute the 'Consultative Committee of Stakeholders'. This Court is not inclined to entertain either of the aforesaid applications. In these proceedings, this Court has only taken on record the statement made by the liquidator that it seeks to make an appropriate application before the NCLAT seeking conduct of re-auction. It shall be necessarily for the NCLAT to pass further consequential orders in this regards and also deal with the objections raised by the applicant in CM. APPL. 5867/2026. Likewise, the application for the recall of the order dated 21.01.2026, is misconceived. As noticed, the order dated 21.01.2026 records the statement/undertaking of the liquidator to the effect that it shall move the NCLAT seeking to set aside the e-auction already conducted and seeks permission for conduct of a re-auction of the concerned assets with a reserve price of Rs.54,00,00,000/- (Rs.54 Crores). The liquidator would be well within its right to move such an application given the facts and circumstances. The order dated 21.01.2026 merely reflects what has transpired in the present proceedings. It shall be for the NCLAT to consider the matter further and pass appropriate orders. Any objections that may be raised by the applicant in CM. APPL. 5867/2026 (or by any other party) shall necessarily be considered by the NCLAT. The present petition stands disposed of in terms. Issues: (i) Whether the Court should record and give effect to the liquidator's undertaking that, upon the petitioner furnishing a bank draft of Rs.54 crores, the liquidator would move the NCLAT to set aside the e-auction and seek permission to conduct a re-auction with reserve price of Rs.54 crores; (ii) Whether the Court should entertain applications CM.APPL.5867/2026 and CM.APPL.6240/2026 seeking objections/recall of the order dated 21.01.2026.Issue (i): Whether to record and act upon the liquidator's statement/undertaking regarding the petitioner furnishing a bank draft of Rs.54 crores and the liquidator moving the NCLAT for setting aside the e-auction and seeking a re-auction with reserve price of Rs.54 crores.Analysis: The Court examined the chronology including the order dated 09.04.2025, the auction process, minutes of the Consultative Committee of Stakeholders, the NCLT and NCLAT orders, and the statement recorded on 21.01.2026. The Process Information Document gives the liquidator powers to annul the bid process and to restart or re-run auctions to maximize value of the liquidation estate. The petitioner furnished a bank draft for Rs.54 crores and the liquidator recorded its intention to approach the NCLAT seeking to set aside the earlier e-auction and obtain permission for a re-auction at the higher reserve price. The Court noted competing contentions but refrained from adjudicating alleged past misconduct by the liquidator, observing that matters remain for NCLAT's consideration and that the liquidator's proposed course aims at maximising the value of the liquidation estate.Conclusion: The Court recorded the liquidator's undertaking and disposed of the petition on the basis that the liquidator shall move the NCLAT to set aside the e-auction and seek permission for a re-auction with reserve price of Rs.54 crores; the bank draft furnished by the petitioner shall be dealt with subject to orders of the NCLAT and the petitioner may seek return if required.Issue (ii): Whether the Court should entertain the objections by M/s Chemester Food Industry Limited in CM.APPL.5867/2026 and the application seeking recall in CM.APPL.6240/2026.Analysis: The Court considered that the order dated 21.01.2026 merely records the liquidator's statement/undertaking and that the liquidator is entitled, on facts, to move the NCLAT for appropriate reliefs. The objections raised and the recall application relate to matters that fall to be considered by the NCLAT in the pending appeal and any consequential application filed by the liquidator. The Court observed that objections by interested parties must be considered by the NCLAT when the liquidator moves for relief.Conclusion: The Court declined to entertain CM.APPL.5867/2026 and CM.APPL.6240/2026 and directed that such objections and applications be considered by the NCLAT in the pending proceedings.Final Conclusion: The judgment records the liquidator's undertaking regarding the proposed re-auction at a reserve price of Rs.54 crores upon the petitioner furnishing a bank draft, disposes of the contempt petition on that basis, declines to adjudicate alleged past misconduct of the liquidator, and refrains from entertaining the related interlocutory applications, leaving substantive adjudication and any consequential orders to the NCLAT.Ratio Decidendi: Where a liquidator possesses regulatory powers under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 to annul and restart auction processes to maximise the liquidation estate, a court may record and permit the liquidator to pursue an agreed course (including approaching the appellate forum) while leaving substantive objections and determination of earlier steps to the appropriate tribunal.