The Liquidator's authority to forfeit EMD in liquidation auctions is valid if terms specified in the Auction Memorandum are clear and accepted by bidders; forfeiture must comply with applicable regulations.

JUDGMENT :

VIBHU BAKHRU, C.J.

1. The appellant has filed the present appeal impugning an order dated 12.12.2024 passed by the learned Single Judge in W.P.No.5759/2024 (GM-RES).

2. Respondent No.1 [writ petitioner] had filed the said petition impugning a letter dated 09.02.2024 issued by the appellant – Liquidator of M/s.Samrudhi Realty Limited [hereafter, 'the Liquidator'] – communicating his decision to disqualify the writ petitioner as a successful bidder; cancel the Letter of Intent [LOI]; forfeit the Earnest Money Deposit [EMD] and Interest Free Refundable Participation Deposit Money [PDM].

3. The learned Single Judge allowed the writ petition and directed the Liquidator to refund an amount of Rs. 70,00,000/- (Rupees seventy lacs) to the writ petitioner albeit without interest, within a period of four weeks from the receipt of the certified copy of the order. The learned Single Judge permitted forfeiture of the balance amount of Rs. 3,70,000/- by the Liquidator.

The Context

4. The National Company Law Tribunal [NCLT] had passed an order on I.A.No.116/2020 in C.P.(IB) 189/BB/2018 dated 13.03.2020, appointing the Liquidator as the Official Liquidator of M/s. Samrudhi Reality Limited [SRL].

5. In order to liquidate the assets of SRL, the Liquidator had issued a public notice dated 01.01.2024 for sale of certain assets by way of an 'eAuction'. The said notice was also accompanied by an eAuction Process Memorandum [Auction Memorandum setting out the terms and conditions. The said notice had set out twelve (12) projects of SRL, which were proposed to be sold/monetized. Additionally, the bidders could also submit their bid for SRL as a ‘going concern’ comprising of all projects, which were also separately listed out in the notice. The notice specified the reserved price for SRL as a going concern, as well as for separate projects and the EMD required to be deposited by intending bidders.

6. The notice expressly set out that the sale of assets through eAuction would be conducted strictly on "As is where is basis", "As is what is basis", "Whatever there is basis" and "Without any recourse basis."

7. The writ petitioner submitted his bid in respect of the IV Block Asset [Block-IV] which was a project named 'Song of Winds' being developed on a plot of land bearing Sy. No.256/4, measuring 3.86 acres located at Kudavathi Village, Nandi Hobli, Chikkaballapura Taluk, on 11.01.2024. The writ petitioner had prior to submission of the aforementioned bid, had also submitted the PMD of Rs. 6,70,000/- (Rupees six lacs seventy thousand only) along with the relevant documents regarding his eligibility. The writ petitioner also deposited a further amount of Rs. 67,00,000/- (Rupees Sixty Seven Lakhs only) as EMD on 03.02.2024.

8. The eAuction was held on 05.02.2024 and the writ petitioner was declared as a successful bidder for Block-IV. The Liquidator issued a LOI immediately thereafter (on 06.02.2024), calling upon the writ petitioner to