Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: September 28, 2026

Case Overview

  • Parties: Appellant – M/S ASJ Finsolutions Pvt. Ltd.; Respondent – Vikram Bajaj (Resolution Professional of the Corporate Debtor).
  • Nature of Proceeding: Appeal against the National Company Law Appellate Tribunal (NCLAT) order that affirmed the National Company Law Tribunal (NCLT) decision to forfeit the Earnest Money Deposit (EMD) of the appellant.
  • Background: The corporate debtor’s assets, including Lot No.5 (68 K, 17 M) at Village Nangal Khurd, Tehsil Sonepat, Haryana, were put up for e‑auction on 25‑Oct‑2021 with a reserve price of Rs 25.56 crore. The appellant submitted the required EMD of Rs 2.55 crore (10% of reserve price) and, together with a portion of the balance consideration, deposited a total of Rs 6.39 crore (25% of the bid) by 16‑Nov‑2021.
  • Payment Timeline: The auction required the balance sale consideration of Rs 19.17 crore to be paid within 30 days (by 14‑Dec‑2021). A provision allowed payment within 90 days (by 14‑Feb‑2022) with interest at 12% per annum. The appellant emailed the RP on 15‑Dec‑2021, confirming intention to pay the balance with interest before the 90‑day deadline.
  • Subsequent Developments: The appellant failed to make the balance payment. A separate applicant, M/s Agarwal Trading Company, sought relief in the Punjab & Haryana High Court, which directed an approach to the NCLT. Agarwal filed an application before the NCLT on 11‑Feb‑2022 and withdrew it on 22‑Sep‑2022. The appellant’s own application (Company Application No.85 of 2022) for prior deeds was rejected on 31‑Mar‑2023; an appeal was dismissed on 21‑Apr‑2023 and later taken to the High Court.
  • Fresh Auction: While the writ petition was pending, a fresh auction of Lot No.5 was conducted, resulting in a sale price of Rs 31.10 crore – Rs 5.54 crore higher than the appellant’s bid.
  • Legal Contentions: The appellant argued that Schedule I of the Insolvency and Bankruptcy Board (Liquidation Process) Regulations, 2016 does not provide for forfeiture of EMD and that the EMD cannot exceed 10% of the reserve price. It also claimed discrimination because other bidders received extensions, and invoked the “Triple Test” (no hidden agenda, genuine financial capacity, no extraneous reasons) to contest forfeiture.
  • Respondent’s Position: The RP contended that the appellant was aware of the pending civil suit over part of the land, voluntarily deposited the required amounts, and that the forfeiture clause was a clear condition of the e‑auction notice. Failure to pay the balance within the stipulated period triggered automatic forfeiture.
  • Court Reasoning: The Supreme Court observed that the e‑auction notice expressly stipulated forfeiture of the entire amount paid (including EMD) upon failure to pay the balance consideration. No statutory provision in the 2016 Regulations limits forfeiture to 10% of the reserve price. The Court held that the appellant’s email promising payment did not cure the default, and the prior‑deed issue was irrelevant because the auction was on an “as‑is where‑is” basis. The alleged discrimination was deemed untimely, and the Triple Test was not applicable once the bid was cancelled.

Final Outcome

  • The appeal is dismissed; the forfeiture of the EMD and all other amounts deposited by ASJ Finsolutions is upheld.
  • Any pending applications, if any, are rejected.

Topics: Legal Dispute, Insolvency Auction, Earnest Money Deposit