NCLAT Upholds Private Sale of Liquidation Asset Despite Higher Withdrawn Offers [Read Order]

The National Company Law Appellate Tribunal (NCLAT) has dismissed a series of appeals filed by Bhavik Bhimjyani, a former director and majority shareholder of Neelkanth Township & Construction Pvt. Ltd. (NTCPL), against the sale of a prime 80-acre land parcel in Alibaug through a private sale process. The appeals challenged the National Company Law Tribunal (NCLT) Mumbai Bench’s decision to permit the sale to a related party, Leisure Enterprises LLP, for ₹58.51 crore, despite higher offers reportedly being available.

NTCPL, which owned approximately 80.6 acres of non-agricultural land in Boris, Alibaug (part of the Mumbai Metropolitan Region), had been in liquidation since 2018. While 30 acres were held directly by NTCPL, the remaining 50.6 acres were owned through its wholly owned subsidiary, Urban Rupi Infrastructure Pvt. Ltd. (URIPL).

The land was eventually sold to Leisure Enterprises LLP, a firm linked to NTCPL’s sole financial creditor Urban Infrastructure Trustees Ltd. (UITL), both entities being part of the Anand Jain-led Jai Corp group. UITL’s original claim of ₹226 crore was cut down to ₹51 crore by NCLT, but it remained the dominant creditor.

Bhimjyani, holding a 60% equity stake in NTCPL, contended that the sale price was grossly undervalued and objected to the transaction under several applications before the NCLT, all of which were dismissed, prompting the present appeal.

Bhimjyani further contended that the Liquidator proceeded with the private sale in violation of Regulation 33 of the IBBI (Liquidation Process) Regulations, 2016, which mandates public auction as the default route and requires prior approval for sales to related parties.

It was also stated that the sale was concluded without consulting the Stakeholders’ Consultation Committee (SCC) and without giving due consideration to alternative higher offers from third parties. He asserted that the alleged buyer and the only financial creditor (UITL) belonged to the same promoter group, creating a clear conflict of interest.

He also cited regulatory action against the buyer’s promoter Anand Jain, who was barred by SEBI from accessing capital markets, and referred to pending CBI investigations to question the legitimacy of the deal.

The Liquidator, defended the sale process, claiming that all auction attempts since 2019 had failed and that the ₹58.51 crore offer by Leisure Enterprises LLP was in line with the property’s fair valuation. He maintained that while Bhimjyani had paraded several interested buyers, none had deposited the mandatory Earnest Money Deposit (EMD), and most had eventually withdrawn.

He also argued that the average market valuation was pegged at around ₹67.4 crore and that the ₹58.51 crore offer was close to the minimum acceptable value. It was asserted that the Liquidator had acted in good faith and that the continued litigation by Bhimjyani had delayed closure of the liquidation, increasing costs for stakeholders.

Upholding the NCLT’s decision, the NCLAT noted that the private sale was approved only after multiple public auctions had failed and that the deal was within the regulatory framework. The bench accepted the Liquidator’s argument that many of the so-called better offers never materialized into serious bids.

It was observed that the value maximization process cannot be unending, it was asserted that especially when higher offers are withdrawn without deposit of earnest money, the process cannot be stalled endlessly in the hope of hypothetical bids.

The NCLAT also dismissed allegations of procedural impropriety, ruling that Regulation 33 does not require dual permissions before and after initiating private sale discussions. The Tribunal accepted that the NCLT had evaluated all competing offers before allowing the private sale to Leisure Enterprises.

The two-member NCLAT bench comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) also took note of a prior finding by the NCLT under Section 66 of the Insolvency and Bankruptcy Code, which held that Bhimjyani had unjustly enriched himself at the expense of the corporate debtor and its creditors. Taking this into account, the Appellate Tribunal found no merit in the appeal and affirmed the NCLT’s approval of the private sale, holding that the process was in compliance with the Code and required no further interference.

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