EVA AGRO FEEDS PRIVATE LIMITED versus PUNJAB NATIONAL BANK AND ANR.

Citation: [2023] 13 S.C.R. 861 · Decided: 06-09-2023 · Supreme Court of India · Bench: B.V. NAGARATHNA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

[2023] 13 S.C.R. 861 : 2023 INSC 809
861
CASE DETAILS
EVA AGRO FEEDS PRIVATE LIMITED 
v.
PUNJAB NATIONAL BANK AND ANR.
(Civil Appeal No.7906 of 2021)
SEPTEMBER 06, 2023
[B. V. NAGARATHNA AND UJJAL BHUYAN, JJ. ]
HEADNOTES
Issue for consideration: Appellate Tribunal whether justifi ed in 
upholding the decision of the Liquidator to cancel the auction sale without 
assigning any reasons.
Insolvency and Bankruptcy Code, 2016 – Auction sale cancelled by 
Liquidator without assigning any reasons – Appellant submitted its bid 
dtd.16.07.21 to Respondent No.2-Liquidator in respect of the assets of 
the corporate debtor (in liquidation) – On 20.07.21, appellant received 
an E-auction certifi cate from certifying that it had won the auction of 
the subject property– On 21.07.21, the appellant received an email from 
Respondent No.2 simply informing that he had cancelled the E-auction 
u/Clause 3(k) of the Disclaimer Clause in the E-Auction Process 
Information Document and that a fresh E-auction would be conducted– 
Appellant fi led application before the Tribunal– Tribunal directed the 
respondent No.2 vide order dtd. 12.08.21 to send a communication to 
the appellant requiring him to deposit the balance sale consideration– 
Letter issued to the appellant, entire sum was deposited – Sale certifi cate 
issued in favour of the appellant – Respondent No.1-fi nancial creditor 
fi led appeal against order dtd. 12.08.21– Appellate Tribunal set aside the 
said order and reversed the steps taken pursuant thereto, liberty given 
to the Respondent No.2 to initiate fresh process of auction – He issued 
sale notice dtd. 24.12.2021 for E-auction sale of the subject property – 
Auction scheduled stayed:
Held: No reasons were assigned by the Liquidator for cancellation 
of the E-auction – While the highest bidder has no indefeasible right 
862 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
to demand acceptance of his bid, the Liquidator if he does not want to 
accept the bid of the highest bidder has to apply his mind to the relevant 
factors – Such application of mind must be visible or manifest in the 
rejection order itself – It is incomprehensible that an administrative 
authority can take a decision without disclosing the reasons for taking 
a decision aff ecting the rights of parties – Further, while it is true that 
para 1(11A), stating that where the Liquidator rejects the highest bid in 
an auction process, he shall intimate the reasons for such rejection to 
the highest bidder and mention it in the next progress report, came to 
be inserted in Schedule 1 to the Regulations w.e.f 30.09.21, it does not 
imply that an auction sale or the highest bid prior to the aforesaid date 
could be cancelled by the Liquidator exercising unfettered discretion and 
without furnishing any reason – Furthermore, in the present case, even 
after cancelling the highest bid of the appellant, in the subsequent sale 
notice dtd. 24.12.21, Respondent No.2 again fi xed the reserve price of 
the subject property at Rs.10 crores which was the reserve price in the 
previous round of auction sale and which was also the bid value of the 
appellant – There was no rationale or justifi cation in rejecting the bid of 
the appellant and going for another round of auction at the same reserve 
price – Merely because the Liquidator has the discretion of carrying out 
multiple auction it does not necessarily imply that he would abandon or 
cancel a valid auction fetching a reasonable price and opt for another round 
of auction process with the expectation of a better price – There can be no 
absolute or unfettered discretion on the part of the Liquidator to cancel an 
auction which is otherwise valid – Tribunal rightly held that there were 
no objective materials before the Liquidator to cancel the auction process 
and to opt for another round of auction – Appellate Tribunal not justifi ed 
in setting aside the order of the Tribunal dtd.12.08.2021 – Impugned order 
set aside, order dtd.12.08.2021 restored – Insolvency and Bankruptcy 
Board of India (Liquidation Process) Regulations, 2016– Regulation 33; 
Schedule 1, Para 1(11A)– Auction– National Company Law Tribunal 
Rules, 2016– Administrative Law – Principles of natural justice. [Paras 
20.1, 29, 34.1, 41, 42 and 51]
Insolvency and Bankruptcy Code, 2016 – ss.5(24), 29A – ‘related 
party’ suff ering ineligibility u/s.29A – Intervenor argued that one ‘VKG’, 
the director and principal shareholder of the appellant was also one of 
863
th

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