The failure of a successful bidder to pay the balance auction price in a timely manner allows the Liquidator to forfeit the Earnest Money Deposit as per the terms of the auction process.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by a Successful Auction Purchaser has been filed challenging order dated 09.03.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Allahabad Bench, Prayagraj rejecting IA No.226/2022 filed by the Appellant challenging the action of the Liquidator forfeiting EMD of Rs.96 Lakhs pursuant to e-auction of the assets of JVL Agro Industries Ltd. Further, direction was sought to refund the amount of Rs.98 Lakhs along with compensation /damages caused to the applicant due to non-issuance of Sale Certificate. Brief facts of the case necessary to be noticed for deciding this appeal are:

(i) JVL Agro Industries Ltd. was directed to be liquidated by order of the Adjudicating Authority dated 19.08.2020. The Liquidator in pursuance of order of liquidation issued public notice for sale as a going concern, which auction having failed, a public notice dated 04.03.2022 was issued by the liquidator for sale of stand-alone assets (A-1 to A-11) of the Corporate Debtor. A-11 was old expired stocks of more or less 1000 tons of packed Refined Edible Oil, not fit for human consumption, lying at JVL’s plant at Deoghat, District Purba Medinpur, Haldia, West Bengal.

(ii) E-auction was fixed for 06.04.2022. Reserved price for asset A-11 being Rs.9.60 Crore, EMD of Rs.96 Lakhs was required for participation. Appellant submitted EMD of Rs.96 Lakhs and participated in the e-auction held on 06.04.2022. Appellant submitted bid of Rs.12.60 Crores and was declared as successful bidder for Block A-11.

(iii) Letter of Intent was issued by the Liquidator on 07.04.2022 to the Appellant along with bank details for remittance of the balance consideration. Appellant wrote letter dated 08.04.2022 informing that the Appellant is ready to lift the entire material at one-time and shall make full payment, as once confirmation is given that total oil is unpacked and ready to load. On 11.04.2022, the Appellant again wrote to the Liquidator praying for loading of material confirmation. On 11.04.2022, Appellant wrote to the Liquidator that 48 hours prior intimation may be given so that payment can be made and the material can be lifted for delivery.

(iv) The Liquidator wrote to the Appellant on 12.04.2022 informing that NCLT, Allahabad Bench vide order dated 04.04.2022 has directed to proceed with the auction, however, it was directed that Liquidator shall not proceed to issue the Sale Certificate without prior approval of the Adjudicating Authority. Appellant was informed that matter was listed on 26.04.2022. The Liquidator assured that on receipt of order of the Adjudicating Authority directing in this regard, the Liquidator shall start dispatching the aforesaid oil subject to receipt of full payment successful bid amount.

(v) On 12.04.2022, the Appellant informed the Liquidator that they are ready with the full payment, however, Sale Certificate cannot be issued as per order of the NCLT. It was stated that as and when the NCLT order is received for issue of Sale Certificate, payment shall be made within 7 days of order. Letter also confirmed that they have received Letter of Intent.

(vi) Liquidator on 08.06.2022 wrote to the Appellant that payment has not been yet received of INR 11,64,00,000 plus applicable GST of INR 63,00.,000 after adjusting the amount of EMD and period of 30 days from date of Letter of Intent has expired, hence, the Appellant is required to pay interest of INR 13,01,128/-.

(vii) An application was also filed by the Appellant before the Adjudicating Authority praying for urgent listing of IA No.98/2022 in May, 2022.

(viii) The Liquidator on 22.06.2022 sent an email to the Appellant informing that the Liquidator does not have any authority to waive interest.

(ix) On 28.06.2022, the Liquidator wrote to the Appellant that Appellant has to pay the balance consideration on or before 05.07.2022 to avoid forfeiture of EMD.

(x) Appellant on 22.06.2022 written an email to the Liquidator praying for cancellation of