Case Details

Case Name: Comp. App. (AT) (Ins) No. 1820 of 2025 - JFC Finance (India) Ltd. vs. Arvind Garg & Others

Parties: Appellant - JFC Finance (India) Ltd.; Respondents - Arvind Garg (Liquidator), PSB Alliance Pvt. Ltd. (BAANKNET), Chemester Food Industry Pvt. Ltd. (Successful Bidder)

Court/Authority: National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi

Date of Order: 29 May 2026

Period of Dispute: Liquidation proceedings initiated on 30 May 2019; Auction dispute relates to April 2025

Parties Involved

Petitioner: JFC Finance (India) Ltd. (Financial entity represented by Senior Advocate Abhijeet Sinha)

Respondents:

  • Arvind Garg (Liquidator of Moser Baer Solar Ltd.)
  • PSB Alliance Pvt. Ltd. (operating BAANKNET e-auction platform)
  • Chemester Food Industry Pvt. Ltd. (Successful Auction Purchaser with bid of ₹28.27 crore)

Intervenor: Alchemist Asset Reconstruction Company Ltd. (Financial Creditor who acquired debt from Indian Overseas Bank)

Legal Representatives: Multiple senior advocates including Krishnendu Datta (for Liquidator), Arun Kathpalia (for Chemester Food), and Abhinav Vashist (for Intervenor)

Issues / Allegations / Violations

JFC Finance alleged serious material and procedural irregularities in the liquidation auction process of Moser Baer Solar Ltd.:

  • The Liquidator enforced a sudden changeover from eBKray to BAANKNET platform despite IBBI circular dated 28.03.2025 requiring BAANKNET only for auctions with notices published on or after 01.04.2025
  • Appellant complied with all requirements - registered on BAANKNET, uploaded documents to Document Library, and deposited ₹2.5 crore EMD in e-wallet by 07.04.2025 deadline
  • Technical glitch in BAANKNET platform prevented receipt of pre-qualification link necessary for auction participation, despite multiple login attempts on 07-08 April 2025
  • Liquidator failed to facilitate participation or investigate technical issues, adopting a "hands-off" approach contrary to Section 35(1)(d) of IBC
  • Liquidator did not place Appellant's enhanced offer of ₹35 crore (25% higher than winning bid) before Stakeholders Consultative Committee
  • The auction process failed to achieve value maximization, with ₹28.27 crore bid being substantially lower than Appellant's demonstrated capability of ₹54 crore

Findings & Observations

NCLAT made several key observations in overturning the NCLT order:

  • The Liquidator's emails dated 03.04.2025 and 07.04.2025 did not specifically mention the separate pre-qualification process requirement under Stage II of the User Guide
  • Appellant demonstrated bona fide intent through multiple login attempts (documented in appeal papers), compliance with EMD requirements, and proactive communication with BAANKNET support at 1517 hours on 08.04.2025
  • BAANKNET's failure to appear before NCLAT or controvert the technical glitch allegations warranted giving benefit of doubt to Appellant
  • The Liquidator's hyper-technical approach contradicted the statutory mandate under Section 35(1)(c) of IBC to maximize value of corporate debtor's assets
  • The ₹54 crore deposit by Appellant (twice the winning bid value) demonstrated serious financial capability and aligned with IBC's value maximization objective
  • Previous judgments (Valji Khimji, Eva Agro Feeds) distinguished as present case involves active participant excluded due to technical issues, not third-party intervention

Penalties / Settlements / Directions

NCLAT Directions:

  • Sets aside the e-auction of Moser Baer Solar Ltd. conducted on 08.04.2025
  • Directs Liquidator to conduct fresh e-auction proceedings with reserve price of ₹54 crore
  • Auction to be open to all eligible prospective bidders including JFC Finance
  • If no higher bid emerges, JFC Finance to be declared highest bidder at ₹54 crore
  • If higher bid emerges, Liquidator to immediately return ₹54 crore to JFC Finance
  • Complete liquidation process within 60 days from judgment date (29.05.2026)

Financial Implications:

  • The ₹54 crore deposit represents 91% premium over winning bid of ₹28.27 crore
  • Public sector banks and financial institutions stand to recover significantly higher amounts
  • Successful bidder Chemester Food's rights crystallized through full payment on 20.11.2025 now unsettled

Corrective Actions & Future Obligations

  • Liquidator must ensure fair, transparent auction process with maximum participation
  • BAANKNET/platform providers must ensure technical reliability and adequate support mechanisms
  • All bidders must receive clear communication about all process requirements, including pre-qualification steps
  • Liquidators must actively facilitate bidder participation rather than adopting passive "do it yourself" approach
  • Enhanced offers from bona fide participants must be placed before Stakeholders Consultative Committee

Final Ruling & Enforcement

NCLAT Final Decision:

  • Appeal allowed entirely with costs borne by respective parties
  • Impugned order dated 19.11.2025 passed by NCLT Principal Bench set aside
  • All interim applications stand closed

Enforcement Status:

  • ₹54 crore already deposited by JFC Finance with Liquidator on 02.02.2026 per Delhi High Court direction
  • Fresh auction process must commence immediately with 60-day completion deadline
  • Liquidator must comply with all procedural requirements under IBC and Liquidation Process Regulations