The Supreme Court rules that Liquidator under IBC cannot cancel auction expecting higher bids.

Supreme Court Sets Aside NCLAT Order, Puts Stay on Auction of Amrit Feeds Limited

The Court made these observations while setting aside a November 2021 order passed by the National Company Law Appellate Tribunal (NCLAT), New Delhi.

In the order under challenge, the NCLAT had allowed a fresh e-auction by the liquidator overseeing the CIRP process of one Amrit Feeds Limited (corporate debtor). Earlier, the National Company Law Tribunal (NCLT), Kolkata had admitted a petition by Huvepharma Sea (Pune) Private Limited against Amrit Feeds, which led to the commencement of the CIRP.

The auction held to sell the corporate debtor’s assets saw Eva Agro Feeds Limited emerge as the winner, with a bid amount of ₹10 crore. However, the auction was later canceled and Eva Agro Feeds was informed that a fresh auction would be conducted.

This prompted Eva Agro Feeds to approach the NCLT for relief. The tribunal disposed of the plea by Eva Agro Feeds after asking it to deposit the balance sale consideration within the time frame mentioned in the e-auction. The liquidator accepted this NCLT order.

However, one of the financial creditors of Amrit Feeds Limited, Punjab National Bank (PNB), moved the NCLAT against the NCLT order.

The appellate tribunal ruled in PNB’s favour and gave liberty to hold a fresh auction, leading to an appeal before the top court by Eva Agro Feeds Limited.

In January 2022, the Supreme Court issued notice in the matter and directed a stay on the scheduled auction.