Forfeiture Clause in E-Auction Notice Binds Defaulting Bidder in Liquidation Sale, Rs 6.39 Crore Lost: Supreme Court

The appellant bid the reserve price of Rs 25.56 crore for land at Village Nangal Khurd, Sonepat, auctioned on 15.11.2021 on an 'as is where is' basis in the liquidation of a corporate debtor; the notice disclosed a pending civil suit over the sale deed of part of the land (paras 3-4). It paid Rs 6.39 crore, made up of a Rs 2.55 crore EMD and Rs 3.84 crore of the price, but not the Rs 19.17 crore balance due by 14.02.2022, and sought the prior title deeds instead (paras 4-6, 20). The property was resold for Rs 31.10 crore. The NCLT ordered a refund of the EMD; the NCLAT reversed it (paras 6-7).

Non-payment within 30 days, or within 90 days with interest, was admitted (para 11). Schedule I of the Liquidation Process Regulations caps the EMD at 10% and provides no express forfeiture, but the e-auction notice did, and the appellant bid with open eyes and deposited the amounts demanded without protest, so forfeiture on default was automatic (paras 11-12). Prior deeds could not be demanded at that late stage, as the sale was 'as is where is' and the notice disclosed that some sale deeds were unavailable (para 12). The Court agreed with the NCLAT, which had found wilful default in the earlier round, and not with the NCLT's view that the triple test (hidden agenda, financial capacity, extraneous reasons) favoured the appellant (paras 13-15). Once cancellation of the bid was upheld, forfeiture was a necessary consequence; financial capacity must be shown by material, not repeated assurances, and the High Court direction in another party's writ petition was an afterthought (paras 15-17). The discrimination plea came too late (para 18). Westcoast Infraprojects, approved by the Court, upheld forfeiture of the EMD and other deposits under such a clause (para 19).