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A Successful Bidder Cannot Be Permitted To Forfeit Its Bid Claiming His Bid To Be A Conditional Offer Held NCLAT: M/S Visisth Services Limited Vs SV Ramani

Abhijeet Malik ,
  19 January 2022       Share Bookmark

Court :
National Company Law Appellate Tribunal
Brief :

Citation :

11th January 2022

Justice Anant Bijay Singh
Ms. Shreesha Merla
Member (Technical)

Appellants (s): M/s. Visisth Services Limited (Bidder)
Respondent (s):
1. S. V. Ramani (Liquidator)
2. United Chloro – Paraffins Private Ltd.
3. State Bank of India


In the present case, an appeal was filed in the National Company Law Appellate Tribunal, Principal Bench, New Delhi against the order of the Adjudicating Authority that upheld the terms and conditions of the Bid issued by the Liquidator.


  1. The facts of the matter are such that on 12th October 2018, an Application under Section 10 (Corporate Insolvency) of the Insolvency and Bankruptcy Code (hereinafter referred to as “the code”) was filed by the Corporate Debtor and the same was accepted by the Adjudicating Authority. Mr. S. V. Ramani (1st Respondent) was appointed as the Liquidator.
  2. On 1st September 2019, the Liquidator issued advertisements inviting Bids from prospective buyers through e-Auction for sale of the Company under Liquidation as a ‘Going Concern’. Selling the Corporate Debtor as a going concern means the sale of the business of the Corporate Debtor along with all its assets and properties, which enables it to keep up the value of the Corporate Debtor even during the process of Liquidation. In essence, it means selling a business as a whole instead of bit by bit.
  3. “E-Auction Process Information Document” was purchased by the Appellant from the Liquidator upon payment of Rs. 5 Lakhs which detailed all the terms and conditions.
  4. On 04th September 2019, an email was issued by the appellant to the Liquidator seeking clarifications on several issues concerning the e-Auction process. The appellant proposed not only different payment terms for the bid but also specified that the acceptance was conditional to extinguish claims of Financial Creditors, Tax Department, Operational Creditors, Provident Fund Employees, and other contingent liabilities, hence ditching all the liabilities of the company.
  5. On 05th September 2019, the Liquidator issued two emails to the Appellant informing that the Terms and Conditions of the Bid Document cannot be changed or revised once the public notification has been published. State Bank of India also replied to the mail clarifying the conditions. The Appellant then submitted EMD (Earnest Money Deposit) of Rs. 37,10,000/- to the Liquidator and later sent a mail on 8th September 2019 that if any litigation arises from any source, the EMD amount and the bidding document purchase amount was to be refunded within 3 days.
  6. A “Provisional Letter of Sale” was issued by the liquidator on 26th September 2019 in favor of the Appellant upon receipt of communication from SBI confirming that the Appellant was the highest successful bidder in the e-Auction.
  7. The Appellant on 29th October 2019 sent a letter to the Liquidator stating that the “Provisional Letter of Sale” was inconsistent with the terms of payment specified by the Appellant. The Appellant sought the refund of the money paid along with interest. In an affidavit filed by the appellant in front of the adjudicating authority, the appellant sought direction for ‘Approval of the Sale’ as a ‘Going Concern’, and sought for approval without transfer of any liabilities and if there exists any impediment, the Appellant sought for withdrawing from the Bid and the refund of the amount paid.
  8. Learned Counsel appearing for the appellant argued that in the later dated 4th September 2019, the appellant made it categorically clear that it is only willing to participate in the e-Auction if the liabilities of Corporate Debtor, both statutory and non-statutory, were clarified and dispensed with and/or extinguished liquidation process once the liquidation process is completed.
  9. The appellant only deposited the EMD on the pretext that the SBI had accepted most of the conditions made by the Appellant (as informed by the liquidator) of the later dated 4th September, argued by the Counsel for the appellant. The counsel for the appellant further argued that the appellant also sought to reconfirm the clarifications vide letter dated 6th September, and despite the contentions of the appellant, the liquidator issued the “Provisional Letter of Sale”.
  10. Hence, if the Liquidator failed to clarify the terms of the sale and the Appellant cannot be subjected to the terms that it did not agree to abide by, argued by the Counsel for the appellants.
  11. The Learned Counsel appearing for the Liquidator argued that the Appellant wrote a letter to the Liquidator after the payment of EMD on 6th September that the sale of the Corporate Debtor Company should be transferred without any liabilities. The Counsel for the liquidator argued that this fact signifies that the Appellant was aware that the sale of the assets of the Corporate Debtor included its liabilities as the sale was on an ‘as is very basis’. The same was specified by the E-Auction Process Information Document.
  12. The Liquidator via a letter dated 5th September also specified that no changes can be made to the E-Auction Process Document once it has been published in the public domain, argued by the counsel for the respondents. Hence, the appellant is bound by the conditions.
  13. Learned Counsel for the SBI submitted that after putting its Bid on September 06, the Appellant having been declared the Successful Bidder, cannot seek to impose conditions as it has attempted to do so via emails dated 6th, 8th, and 29th September. Hence, the Bidder is bound by the terms and conditions of the Bid Document, wherein the payment of all statutory dues, taxes, fees, charges, as is specified to be the sole responsibility of the Successful Bidder. Moreover, the liquidator never accepted any terms of the appellant. It’s the appellant that accepted the conditions of forfeiture of the EMD as mentioned in the Bid Document.


Insolvency and Bankruptcy Code

Section 10: Initiation of corporate insolvency resolution process by corporate applicant.


  1. Whether the sale of Corporate Debtor as a ‘Going Concern, in Liquidation Proceedings, includes its liabilities?
  2. Whether the Appellant herein can withdraw from the Bid after payment of the EMD and seek a refund of the amount paid on the ground that the offer made by the Bidder was a ‘conditional offer’?


1. To explain the first issue, the Court referred to multiple sources to identify the true meaning of the phrase “a going concern”:

a) Section 32A Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

Sale as a going concern:

2. For the purpose of sale under sub-regulation (1), the group of assets and liabilities of the corporate debtor, as identified by the committee of creditors under sub-regulation (2) of regulation 39C of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall be sold as a going concern.

b) Paragraph 3.2.1 of IBBI Discussion Paper on Corporate Liquidation Process along with Draft Regulations

3.2.1 Sale under regulation 32(e):

In this form of GCS, the CD will not be dissolved. It will form part of the liquidation estate. It will be transferred along with the business, assets and liabilities, including all contracts, licences, concessions, agreements, benefits, privileges, rights or interests to the acquirer.

c) Paragraph 4.2 of IBBI Discussion Paper on Corporate Liquidation Process along with Draft Regulations

4.2 Should ‘Going Concern Sale’ be defined?:

All such assets and the liabilities, which constitute an integral business or the CD, that must be transferred together and the consideration must be for the business or the CD. The buyer of the assets and liabilities should be able to run business without any disruption.

2. The court concluded that the aforementioned sources make it clear that the term “A Going Concern” includes the sale of assets as well as liabilities.

3. Explaining the issue no. 2, the Court first referred to certain excerpts from the mail by the appellant to the Liquidator on 4th September where the appellant demanded that,

Any Liabilities, claims, demands, capital contributions, or any other form of financial commitment; including but not limited to pledge of shares or any security interest created or provided, whether guaranteed or contractually agreed in writing or otherwise by the Company on behalf of or for its subsidiary companies, associate companies, Group companies and/or their respective Affiliates, shareholders/associates; as the case may be, which are in existence before the Closing Date and which may be invoked before the Closing date or at any time thereafter, shall stand irrevocably and unconditionally waived and extinguished.

The appellant in the same mail also stated that in case of non-compliance with the terms mentioned in the mail, the bid money shall be refunded.

4. In reply to the mail dated 4th September, the Liquidator on 5th September unequivocally communicated that the legal issues about the e-auction can’t be changed after public notification. Replying to this, in another mail dated 6th September, the appellant once again reiterated the same stance as the previous mail. The Court identified that it is the main case of the Appellant that before the bid he informed the Liquidator that if their Bid is not accepted with its terms they would seek to withdraw from the Bid.

5. To resolve the issue, the Court referred to the “Terms and Conditions of the Proposed Sale” which state that the submission of the bid means that the Applicant has read carefully and unconditionally and once Bids are submitted, they cannot be withdrawn or revised.

6. Relying on the multiple clauses that clarify the conditions of the bid, the Court concluded that the Applicant has accepted all the terms and conditions of the bid and cannot revise the same. The Bidder-Appellant is bound by the terms and conditions of the Bid document and no communication to the Liquidator stating that it is a conditional offer, is sustainable. The Court further stated that if the Appellant had any apprehensions and conditions about the liabilities the Appellant could have exercised their choice of not participating in the Bid.

7. Explaining the duties of the Liquidator the Court stated that, the Liquidator will carry on the business of the Corporate Debtor for its beneficial Liquidation as prescribed under Section 35 of the Code. The Liquidator will only act and cannot modify/revise the terms of the contract.

8. The Court further stated that if the Bidder is allowed to withdraw from the Bid at this stage and seek a refund on the ground that their conditional offer has not been accepted, then the liquidation process would be a never-ending one, defeating the scope and objective of the Code. To buttress this position, the Court relied on the judgment in the case of Punjab Urban Planning and Development Authority and Ors. Vs. Raghu Nath Gupta and Ors and UT Chandigarh Admn. Vs. Amarjeet Singh.

9. The Court concluded that the decision of the adjudicating authority requires no interference and dismissed the appeal.


National Company Law Appellate Tribunal in the present case clarified that the Bidder cannot wriggle out of the contractual obligations arising out of acceptance of his Bid. If the bidder is allowed to make a conditional offer to every bid, it would very well defeat the whole purpose of the Auction Process and Dilute the Corporate provisions of Insolvency.

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