TaxTMI 
TaxTMI 
2026 (7) TMI 104
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Order"). By way of the Impugned Order, the Ld. NCLT has set aside the E-auction Notice dated 30.03.2021 and E-auction conducted on 16.04.2021 in which the Appellant had emerged the successful bidder for purchase of land parcel. It further directed the Liquidator to conduct fresh E-auction and refund 10% deposit made by the Appellant towards Sale Consideration of the land parcel thereby vitiating the E-auction conducted following due procedure. 2. We note that the Adjudicating Authority, considering the higher purchase price offered by Respondent No. 1 ("R1"), inter alia directed Respondent No. 2 ("R2") - Liquidator [in first Company Appeal (AT) (Ins.) No. 811 of 2025] as the base price to conduct a fresh auction for sale of additional land earlier awarded to Appellant - Krihaan Texchem Private Limited. 3. It is the contention of the Respondent No. 1 that the Appellant has no locus to file the present appeal. It is the Learned NCLT, who has found the liquidator to have not properly conducted the e-auction and consequently had set it aside and had thereby partly allowed the I.A. 847 of 2021, which was filed by Respondent No.1 - UPL. It is further claimed by the Respondent tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....12,981.64 sq. mt.; (b) Pass an order directing the Respondent to sell / transfer the Additional Land being land with sub-division No. 825/3 admeasuring 12,981.64 sq. mt., as indicated in the map at Annexure-15, supra, to the Appellant on payment of differential consideration at the rate at which the entire Lot 2 Asset was sold to the Appellant which comes to INR. 2,86,24,516 (Rupees Two Crore Eighty Six Lakh Twenty Four Thousand Five Hundred Sixteen Only); (c) Pass any other and further order as this Hon'ble Appellate Tribunal may deem fit in the facts and present circumstance of the case." 9. On the other hand, the Appellant in the related case i.e. Krihaan Texchem Private Limited in CA (AT) (Ins.) No. 811 of 2025 has also challenged the impugned order and prays that the impugned order dated 02.05.2025 be set aside and the liquidator i.e. Respondent No.2 be directed to issue sale certificate for Plot No. 825/3 admeasuring 12,981.64 sq. mts. located in Jhagadia GIDC, Village Bharuch, Dadheda, Jhagadia Taluka, Gujarat in favour and also direct Respondent No.2 i.e. Liquidator to register the sale of plot in the name of Appellant. The Appellant has also prayed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... mtrs. The Lot 2 was proposed to be sold at a reserved price of Rs. 28.43 crores, which was a combined reserved price for the leasehold land and the freehold land." 12. On 16.01.2020, E-auction was held and M/s UPL Limited which is the Appellant in second Appeal emerged as the highest and successful bidder for the sale of assets comprised in Lot 2 at a bid price of Rs. 43.43 Cr. Subsequently on 18.01.2020 the Liquidator issued the Letter of Intent to M/s UPL Limited in relation to sale of assets comprised in Lot 2. It is to be noted that the lease hold land i.e. 1,15,632 sq. mt. which was part of Plot No. 825 was sold subject to sub-division of the entire plot which was to be done by the lesser i.e. GIDC. 13. Subsequently, on 07.02.2020 the Liquidator addressed an email to M/s UPL Limited that during the exercise of sub-division done by GIDC for the plot No. 825 there was additional area available for sale. On pointed query as to why such an email was issued by the liquidator to the M/s UPL Limited, it was brought to our notice that these letters stated that it shall not constitute an offer for sale and shall neither form the basis of any contract. The relevant portion of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,15,632 sq. mt. was purchased by you in E-Auction conducted on January 16, 2020. Please note that the said letter does not constitute an offer for sale and the information contained. herein shall not form the basis of any contract." 14. Later, on June 2020, the Liquidator filed an IA No. 1116/2020 interalia seeking concessions in respect of the sub-division by the GIDC. In this application, the Liquidator interalia mentioned the plans for private sale to UPL Limited also. The issues with respect to GIDC were settled and the IA was withdrawn on 20.06.2020 with a liberty to file a fresh application, if any, in respect of other issues. Liquidator brings to our notice that this was in line with Regulation 33 of the Liquidation Regulations, 2016 under which auction is the norm and private sale is an exception. The relevant Regulation 33 was brought to our notice which is extracted as below: "Regulation 33: Mode of sale. 33. (1) The liquidator shall ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I. (2) The liquidator may sell the assets of the corporate debtor by means of ¹[private sale....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the GIDC whereby Plot No. 825 was sub-divided as under: (i) Plot No. 825/1 admeasuring 158,541.89 sq.mtrs. (ii) Plot No. 825/2 admeasuring 112,742.20 sq.mtrs. (iii) Plot No. 825/3 admeasuring 12,981.64.89 sq.mtrs. This sub-divided Plot No.825/3 is the additional land as surveyed ("Additional Land")" 18. The real dispute started when the liquidator issued an E-auction notice for additional land on 30.03.2021 for a reserved price of Rs. 2.9 crores which was to be conducted on 16.04.2021. The Appellant herein i.e. UPL Limited filed an IA No. 847/2021 on 05.04.2021 before the Adjudicating Authority interalia seeking declaration that the E-auction sale notice dated 30.03.2021 for the sale of the said additional land is untenable and seeking declaration that UPL Limited is the successful bidder in respect of the said additional land. The Appellant i.e. UPL Limited further sought an order and direction against the Liquidator to sell the said additional land at the same rate at which it had purchased part of Plot No. 825 admeasuring 1,15,632 sq. mt. 19. In the meantime, UPL Limited also participated in the E-auction and sent a conditional Expression of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....981 sq. mts. at its bid rate which indicates that the price for the newly discovered Additional Land of 12,981 sq. mts. comes to Rs. 4.87 crores (43,43,00,000/1,15,632 x 12,981). Logically, the Liquidator ought to have set a reserve price which could fetch a bid of more than what UPL was supposedly offering to pay. However, the Liquidator chose to set the reserve price of the Additional Land at Rs. 2.90 crores and no plausible explanation has been whatsoever given by the Liquidator for arriving at this reserve price. 62. We also observe the conduct of UPL that though it had offered to purchase the Additional Land at its bid rate i.e. for Rs. 4.87 crores but when it participated in the E-Auction dated 16.04.2021, it offered a bid price of Rs. 3.99 crores." 23. It is brought to our notice that the Adjudicating Authority had committed an error in its calculations with respect to the reserved price. The liquidator has brought to our notice that the correct calculation of the reserved price is as follows: "7.3. The Ld. Adjudicating Authority has erroneously relied on only a portion of Lot 2 (i.e. Plot No. 825/2 admeasuring 1,15,632 sq. mt.) while using the entire co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i.e. 1,15,632 sq mt.) Computation of Reserve Price for Additional Land (12,981.64 sq. mt.) on the basis of Sale Consideration for the Land under Lot 2 of Earlier E-Auction held on 16.01.2020 = (INR 43.43 crore / 1,96,958 sq. mt.) * 12,981.64 sq. mt. = INR 2.86 crore Rounded off to INR 2.90 crore = (INR 43.43 crore / 1,15,632 sq. mt.) * 12,981.64 sq. mt. = INR 4.87 crore (As per Para 61 of the Impugned Order dated May 2, 2025) 24. We find that the calculations as presented by the liquidator are correct and there is an error committed by the Adjudicating Authority including only leasehold land of Plot No. 825 i.e. 1,15,632 sq. mt. for Rs. 43.43 crores instead of the total land which was 1,15,632 + 81,326 sq.mt. which is 1,96.958 sq. mt. Such a calculation would reduce the calculation from Rs. 4.87 crs. to Rs. 2.86 crores. 25. We find that the Impugned Order erroneously questions why the reserve price was set at Rs. 2.86 crores, when R1 had already agreed to purchase the Additional Land at Rs. 4.87 crores. It further states that logically the Liquidator ought to have set the reserve price more than R1's offer price which the Liquidator did not do. On this ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re of a price discovery mechanism rather than bid to sale the additional land to M/s UPL Limited. This communication also had a clear disclaimer that this is not an offer to sale the land, which has been noted by us separately. Therefore, in this condition we do not find these comments can be sustained and needs to be expunged. 29. The Appellant in CA (AT)(Ins.) No. 811 of 20 25 has specifically brought to our notice, the judgment of Hon'ble Supreme Court in Eva Agro Feeds Pvt. Ltd. v. Punjab National Bank and Anr. (2023) 10 SCC 189, to bring on record that valid auction cannot be cancelled due to the mere expectation of fetching higher price. The relevant paragraph of this judgment is as follows: "79. Thus, mere expectation of the Liquidator that a still higher price may be obtained can be no good ground to cancel an otherwise valid auction and go for another round of auction. Such a cause of action would not only lead to incurring of avoidable expenses but also erode credibility of the auction process itself. That apart, post auction it is not open to the Liquidator to act on third-party communication and cancel an auction, unless it is found that fraud or collu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, which was substantially much more than the price paid by R1 for Lot-2 Assets, i.e. Rs. 2.90 crores. Thus, there is no justification that the Additional Land should be sold to it at the same purchase price of Lot-2 Assets. 32. Further we find that the adjudicating authority cannot come to such a conclusion that an e-auction should be conducted afresh on the basis of an expectation of a higher price when the auction was conducted without any flaws. We now delve into this issue. We observe that the process of E-Auction dated 30.03.2021 was valid and not challenged by Respondent No. 1 - UPL. Further we don't find any finding in the Impugned Order of serious flaws in the conduct of the auction or any fraud or collusion that went to the root of the auction. We further observe that the courts in a catena of judgements, have ruled that an auction, when properly conducted and confirmed, ought not to be interfered with lightly. An auction can be set aside and a fresh auction can be directed only in cases where grounds of collusion, fraud or other fundamental procedural irregularities can be made out. There is no allegation of collusion, fraud or any fundamental procedural irregularity ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding. In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity. XXX And in this case, we find that the auction is not collusive, fraudulent, or vitiated by inadequate pricing or underbidding. Therefore, the judgment of the Hon'ble Supreme Court supports the case of the Appellant and goes against the justification provided by the adjudicating authority for holding the fresh auction. 35. We also find no material irregularity in the liquidator's conduct by not allowing the private sale as private sale of the additional land would require mandatory prior permission from the Ld. Adjudicating Authority. Such a situation is noted in the judgment of this Appellant Tribunal in Orissa Alloy Steel Pvt. Ltd. v. SM Steels and Power Ltd. (2025) SCC OnLine NCLAT 1758 wherein it relied on R.K. Industries (Unit-II) LLP v. HR Commercia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion price of the Lot-2 area. 36. Moreover, we observe that the R1-UPL cannot claim that the additional area formed part of Plot 825/2 of Lot 2. R1 argues that there was a discrepancy with respect to the leasehold land as stated within the first E-Auction notice which identified Plot 825/1 to have leasehold area of 1,70,133 sq. mt. and Plot 825/2 to have leasehold area of 1,15,632 sq. mt. in comparison to the leasehold area provided for both Plots in the Gujarat Industrial Development Corporation ("GIDC") Order dated 15.12.2020 which stated, that Plot 825/1 to have leasehold area of 1,58,541.89 sq. mt. and Plot 825/2 to have leasehold area of 1,12,742 sq. mt. 37. However, we observe that the GIDC issued Order dated 15.12.2020 permitting the sub-division of the Plot No. 825 into three Parts viz. 825/1, 825/2 and 825/3, more particularly as stated below: Sr. No. Proposed Plots Area in sq. mt. COP Total Area 1 825/1 1,58,541.89 0.00 1,58,541.89 2 825/2 1,12,742.20 0.00 1,12,742.20 3 825/3 12,981.64 0.00 12,981.64 Total Area of Plot 2,84,265.73 0.00 2,84,265.73 R1 claims that the original auction notice on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rve price which could fetch a bid of more than what UPL was supposedly offering to pay. However, the Liquidator chose to set the reserve price of the Additional Land at Rs. 2.90 crores and no plausible explanation has been whatsoever given by the Liquidator for arriving at this reserve price. XXX 41. We find that there is an error in the calculation of the price of land as the price of the additional land as offered by Respondent No. 1 cannot come to Rs. 4.87 crores, as it was not 43,43,00,000/1,15,632 x 12,981 as observed by the Adjudicating Authority in its impugned order. As the Respondent No. 1 had paid Rs. 43.43 crores not just for the 1,15,632 sq. mt. of leasehold land but also for 81,326 sq. mt. of freehold land in Lot 2 Area, therefore, the correct calculation should be 43,43,00,000/196958 x 12,981, which comes to Rs. 2.86 crs. The same has been confirmed in the reply of Respondent No. 2. 42. Thus, we find that Adjudicating Authority has made a factual error that R1's bid for the additional land was for a price of Rs. 4.87 crores. R2 in its reply, has clarified that as per the official bid of the E-Auction, R1's bid was only Rs. 3.99 crores and not Rs. 4.87 crores.....