NCLAT Dismisses Appeal Against Auction, Citing Delay and Finality of Sale Process [Read Order]

The National Company Law Appellate Tribunal (NCLAT), Chennai, has dismissed an appeal, stating that the appellant's delayed challenge and the completed status of the auction process left no scope for interference. The order under challenge was passed by the NCLT Division Bench II, Chennai, on 11.03.2024, in response to an application filed under Section 60(5) of the Insolvency and Bankruptcy Code read with Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016.

Ketan C. Bagadia, former Managing Director of the corporate debtor, had sought to nullify the auction notice dated 20.05.2023 and the subsequent sale of the company’s assets. He also prayed for condonation of delay in submitting a scheme of compromise under Section 230 of the Companies Act, 2013. The application before the NCLT had been dismissed on the ground that the auction process had been completed, the sale certificate issued on 17.07.2023, and proceeds already distributed, leaving no relief that could be granted at that stage.

During the appeal hearing, the appellant contended that procedural irregularities had marred the auction and that the liquidator had not fairly considered the scheme of compromise. He submitted that he was denied a fair opportunity to present the scheme and that the auction had violated various regulatory provisions. He also challenged the composition and transparency of the Stakeholders' Consultation Committee.

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The respondents, including the liquidator Radhakrishnan Dharmarajan and the auction purchaser M/s Chinar Steel Segment Centre Pvt. Ltd., argued that the auction had been conducted as per regulations and that all statutory requirements had been fulfilled. They pointed out that multiple auction attempts had failed before the assets were successfully auctioned on a piecemeal basis on 11.06.2023. The successful bidder had paid the consideration and received the sale certificate, and distribution of the proceeds had been completed.

Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member)  held that the appellant had shown a lack of diligence, as the scheme under Section 230 was submitted after the sale was concluded. They noted that the delay in filing the appeal—224 days in re-filing alone—had not been satisfactorily explained. The Tribunal also found no procedural irregularity in the conduct of the auction or the liquidator’s decision-making, especially given that the Stakeholders' Committee had rejected the appellant’s scheme and authorised the piecemeal sale.

In Conclusion, the NCLAT dismissed the appeal on 10.03.2025. All connected interlocutory applications were also closed.

To Read the full text of the Order CLICK HERE

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