2026 (3) TMI 1155 - AT - IBC

Assignment of Not Readily Realisable Assets: belated, non compliant bid may be rejected to preserve finality and creditor protection.

Challenge concerned refusal to entertain a belated, non compliant enhanced bid for assignment of not readily realisable assets under Regulation 37A read ... Patent illegality or fraud - Auction process/NRRA assignment process conducted under Regulation 37A of the IBBI (Liquidation Process) Regulations, 2016 - non-transparent acceptance of the offer of Respondent No.3 - transparency in bidding process - fairness in competitive bidding - maximisation of asset value - stakeholders consultation committee - finality of sale​​​​​​​ - Whether the liquidator and the SCC were obliged to consider the appellant's enhanced offer made during the SCC meeting in light of the requirement of transparency and fairness under Regulation 37A. Fairness in NRRA assignment to be evaluated in factual context - HELD THAT:- The Tribunal held that the obligation of fairness under Regulation 37A must be applied with regard to the surrounding circumstances; fairness is not one sided and must account for the interests of the liquidator and the secured creditor who had repeatedly attempted sale and opted for NRRA as a last resort. On the facts, the Court was not persuaded that denying consideration of the appellant's contemporaneous enhanced offer constituted such patent unfairness as would vitiate the process where timelines and the legitimate expectations of other stakeholders were engaged. [Paras 7] The claim that the enhanced offer should have been considered was rejected on the factual application of the fairness principle. Belated non-compliant bids after prescribed cut-off need not be entertained - HELD THAT:- The Tribunal observed that the process document fixed timelines and required compliance (including deposit of 20%) for revised bids; entertaining belated offers that fail to meet those conditions would undermine finality and allow unsuccessful bidders to indefinitely reopen the process. The appellant's revised offer was after the stated cut off and was not accompanied by the requisite deposit, and therefore the liquidator was justified in not treating it as a valid bid. [Paras 4, 7] The appellant's belated and non compliant revised offer need not be entertained and was properly excluded from consideration. Acquiescence and waiver by conduct bars post-sale challenge - vested rights of purchaser acting on sale protect completed transactions absent fraud or collusion - HELD THAT:- The Tribunal found that the appellant sought and accepted refund of its EMD and delayed filing the interlocutory application, facts which the Court treated as evidencing acquiescence and waiver. Further, the successful purchaser had taken steps to restore lease rights and made investments; absent allegations of fraud or collusion, vested rights acquired and acted upon cannot be set aside lightly. On these grounds the Court declined to disturb the completed sale. [Paras 7, 8] The appellant's challenge was barred by its conduct and the settled protection afforded to a purchaser who has acted on the sale, and therefore the sale was not disturbed. Final Conclusion: On the facts, the Tribunal dismissed the appeal: the liquidator and SCC were not obliged to consider the appellant's belated, non compliant offer; the appellant's conduct amounted to acquiescence; and the purchaser's vested and acted upon rights could not be disturbed in the absence of fraud or collusion. Issues: Whether the liquidator and the Stakeholders' Consultation Committee erred in refusing to consider the appellant's enhanced offer submitted during the SCC meeting (after the prescribed cut-off and without payment of revised 20% deposit) under Regulation 37A of the IBBI (Liquidation Process) Regulations, 2016 and Sections 35 and 53 of the Insolvency and Bankruptcy Code, 2016, so as to warrant setting aside the NRRA assignment and sale.Analysis: The relevant legal framework comprises Regulation 37A of the IBBI (Liquidation Process) Regulations, 2016 governing assignment of not readily realisable assets, read with Regulations 32 and 33 where applicable, and the liquidator's statutory duties under Section 35 and the waterfall principle under Section 53 of the Insolvency and Bankruptcy Code, 2016. The process information memorandum expressly contemplated negotiations and inter se bidding but also fixed timelines and mandatory compliance (including deposit of 20% of the bid). The appellant's enhanced offer was submitted after the advertised cut-off date and without deposit of 20% of the revised amount; the appellant accepted refund of its EMD and did not object during the SCC when the SCC resolved to consider the highest compliant bid. The facts show the SCC conducted the NRRA process in a consultative, time-bound manner, and negotiations that followed related to payment timelines rather than price. Allowing belated, non-compliant offers after sale confirmation would undermine finality, prejudice other bidders, and impair the liquidator's obligation to adhere to timelines and protect creditors' interests. The appellant's delay in approaching the Adjudicating Authority and its conduct evidenced acquiescence; no allegation of fraud or collusion was made that would justify disturbing the sale certificate and subsequent acts taken by the successful bidder.Conclusion: The challenge to the NRRA assignment and sale is rejected and the impugned order dismissing IA No. 511 of 2024 is upheld; the liquidator's and SCC's decision to proceed with the successful bidder is sustained (appeal dismissed).