NCLAT approves Private Sales in which the Entire Amount with Interest has already been Paid [Read Order]

The National Company Law Appellate Tribunal (NCLAT), approved a private sale in which the entire amount along with interest which has already been paid.

The appellant, Kuldeep Singh is the highest auction purchaser in private sale conducted by the Liquidator, in the liquidation proceedings of the corporate debtor. The last auction failed, and no one came forward for a bid. The appellant thereafter made an offer for private sale. The liquidator accepted the said offer and communicated to the appellant with the letter of intent.

The said letter of intent provided terms of payment and the appellant made the payment of 15% EMD (Earnest Money Deposit) as well but failed to make the entire balance payment within the time provided by the Liquidator. The application filed by the appellant praying for relief before the Adjudicating Authority was rejected against which the present appeal has been filed.

The Counsel for the appellant submitted that the entire amount has been deposited. The auction sale proceedings may be closed and the liquidator he directed to take all constitutional steps regarding the transfer of the property.

The Counsel for the liquidator submitted that the liquidator had issued the letter of intent providing for the timeline of payment which was breached by the appellant since the appellant failed to deposit the amount within 90 days and that the notice for forfeiture was also issued on 29.11.2022.

The Two-Member Bench comprising Justice Ashok Bhushan, Chairperson and Naresh Salecha, Member (Technical) noted that “The present is a case where sale in favour of the Appellant was culminated by means of a private sale. The public auction had failed to elucidate any bid. It is true that the Appellant failed to deposit the payment as per the timeline given by the Liquidator in his letter of intent, however, under the order of this Tribunal the Appellant has deposited the amount along with the interest of the balance payment.”

“We are thus of the view that no useful purpose shall be served in unsettling the private sale under which the entire amount with interest has already been paid” the Bench concluded.

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