Full Judgment Text
Non-reportable
IN THE SUPREME COURT OF INDIA
2025 INSC 1411
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 3625-3628 OF 2025
M/s. Shri Karshni Alloys Private Limited … Appellant
versus
Ramakrishnan Sadasivan … Respondent
J U D G M E N T
SANJAY KUMAR, J
Company Appeal (AT)(CH)(Ins) No. 443 of 2022 was filed by M/s. Shri
1.
Karshni Alloys Private Limited before the National Company Law Appellate
1
Tribunal, Chennai Bench , assailing the order dated 29.06.2022 passed by
2
the National Company Law Tribunal, Chennai Bench , in I.A. No. (IBC)/512
(CHE)/2021 in TCP/95/2017. Company Appeal (AT)(CH)(Ins) No. 438 of
2022 was also filed by it before the NCLAT against the order dated
10.08.2022 passed by the NCLT in l.A. No. 952/2022 in TCP/95/2017. Both
the appeals were heard by a bench composed of two Members and they
delivered separate judgments on 20.10.2023. However, the Member
Signature Not Verified
Digitally signed by
Deepak Guglani
Date: 2025.12.10
16:39:31 IST
Reason:
1
For short, ‘the NCLAT’
2
For short, ‘the NCLT’
(Judicial) disagreed with the judgment authored by the Member (Technical).
The Member (Technical) had partly allowed the appeals while the Member
(Judicial) was inclined to dismiss them in their entirety. Owing to their
difference in opinion, the Chairperson of the NCLAT referred the matter to
another Member (Technical). By judgment dated 31.05.2024, the third
Member agreed with the view taken by the Member (Judicial) and, in
consequence, the appeals stood dismissed.
2. Aggrieved by the dismissal of its appeals, M/s. Shri Karshni Alloys
Private Limited filed the present appeals under Section 62 of the Insolvency
3
and Bankruptcy Code, 2016 . The respondent in the appeals, viz.,
Ramakrishnan Sadasivan is the liquidator of M/s. Surana Industries Limited.
3. The corporate insolvency resolution process against M/s. Surana
Industries Limited was initiated on 02.01.2018 but its liquidation commenced
pursuant to the order dated 12.10.2018 passed by the Adjudicating Authority.
The respondent was thereupon appointed as the liquidator. The company
under liquidation owned assets/plants at Gummidipoondi in the State of Tamil
Nadu and Raichur in the State of Karnataka. Between 06.01.2019 and
02.02.2021, six auctions were held by the liquidator for the sale of these
assets/plants. However, only the assets/plant at Gummidipoondi were sold.
3
For short, ‘the IBC’
2
As regards the assets/plant at Raichur, altogether thirteen auctions were
conducted unsuccessfully by the liquidator till 30.06.2021. It was then
decided that the said assets/plant should be sold at the scrap value of
approximately ₹50 crores and the same was approved by the Stakeholders
4
Consultation Committee at its meeting held on 31.07.2021.
While so, on 09.09.2021, the appellant made an offer of ₹105.21 crores
4.
to the liquidator to purchase the assets/plant at Raichur as a going concern.
This proposal was placed before the SCC at its meeting held on 15.09.2021
and they consented to the sale. The appellant’s proposal envisaged that the
appellant and its associates would invest ₹40 crores by way of equity infusion
and the balance ₹65.21 crores would be brought in through unsecured debts.
The appellant deposited 10% of the sale consideration, i.e., ₹10.5210 crores,
as a commitment advance. Pursuant thereto, on 22.09.2021, the liquidator
filed an application, viz., IA No. 997/CHE/2021 in TCP/95/IB/2017, before the
NCLT seeking its approval for the private sale of the assets/plant at Raichur
to the appellant. The NCLT allowed the application on 22.03.2022 and
directed the appellant to pay the sale consideration within 15 days from the
date of receipt of the said order. The application was filed by the liquidator
on 22.09.2021 but the same was allowed by the NCLT only on 22.03.2022.
4
For short, ‘the SCC’
3
5. The appellant claims that owing to this efflux of time and the changes
in the market scenario, it had difficulty in making the payment within the time
stipulated. On 13.04.2022, a meeting of the SCC was held and it was
decided to extend the timeline till 30.05.2022 to enable the appellant to make
the payment. This extension was stated to be a measure of prudence,
factoring in unforeseen circumstances. The stakeholders were unwilling to
extend the time till 28.06.2022 as sought by the appellant, opining that a
three-month extension may result in cancellation of the proposal.
6. Thereupon, the appellant filed IA No. (IBC)/512(CHE)/2022 in IA No.
997/CHE/2021 in TCP/95/IB/2017 before the NCLT, seeking extension of
time till 31.05.2022 to make the balance payment. By order dated
29.06.2022, the NCLT noted that the appellant had paid ₹36.30 crores till
that date, as was admitted by the liquidator, and granted extension of time.
The appellant was directed to pay 50% of the balance sale consideration,
i.e., ₹34.60 crores, with 12% interest thereon from 15.04.2022 till the date of
payment, on or before 30.06.2022; and the remaining 50%, i.e., ₹34.60
crores, with 12% interest thereon from 15.04.2022 till the date of payment,
on or before 31.07.2022. The NCLT categorically recorded that the appellant
should strictly comply with these timelines and any deviation from the same
would result in forfeiture of the entire amount paid by the appellant.
4
7. Admittedly, the appellant failed to abide by the extended timelines.
It, however, paid a further sum of ₹1.50 crores, thereby bringing the total
amount paid by it to ₹37.80 crores. At the SCC’s meeting held on 01.08.2022,
the stakeholders decided to enforce forfeiture of the entire payment made by
the appellant, as per the NCLT’s order, and that the liquidator should issue a
fresh auction notice to dispose of the assets/plant at Raichur. By letter dated
02.08.2022, the liquidator informed the appellant that, as the payment had
not been made by it as directed by the NCLT, the entire amount of ₹37.80
crores paid by it stood forfeited, in adherence to the order dated 29.06.2022
passed by the NCLT. The appellant, thereupon, filed IA No. 952 of 2022 in
TCP/95/2017 assailing the liquidator’s letter dated 02.08.2022, whereby the
sum of ₹37.80 crores paid by it stood forfeited. It also sought further
extension of time to pay the balance sale consideration with waiver of
interest. However, by order dated 10.08.2022, the NCLT dismissed the
application. The NCLT noted therein that the liquidator had issued the letter
dated 02.08.2022 based on its earlier order dated 29.06.2022 and if the
appellant had been aggrieved thereby, it ought to have challenged the same
but had not done so. The NCLT, therefore, opined that merely challenging
the liquidator’s letter dated 02.08.2022 would not suffice as, once there was
non-payment of the sum as directed by it, the forfeiture became automatic.
5
8. The liquidator published a fresh e-auction sale notice in relation to the
Raichur assets/plant on 12.08.2022. On 13.08.2022, the appellant filed
Company Appeal (AT)(CH)(Ins) No. 443 of 2022 before the NCLAT
challenging the earlier order dated 29.06.2022 passed by the NCLT.
Thereafter, on 31.08.2022, the appellant filed Company Appeal (AT)(CH)
(Ins) No. 438 of 2022 against the later order dated 10.08.2022. Having filed
the said appeals, the appellant chose to file a writ petition before the High
Court of Madras, viz., Writ Petition No. 24262 of 2022. Therein, it sought a
writ of certiorarified mandamus to call for the records of the NCLT’s order
dated 29.06.2022 and to quash the same along with the subsequent actions
taken by the liquidator. It also sought extension of time to enable it to make
the balance payment and conclude the sale or, in the alternative, to direct
the liquidator to refund the entire amount paid by it along with interest.
9. Before the High Court, it was contended by the learned senior counsel
who appeared for the appellant that it could not file an appeal before the
NCLAT in relation to the order dated 29.06.2022, impugned in the Writ
Petition, owing to the limitation prescribed under the IBC. Having noted this
submission in the order, the High Court observed that the appellant had not
exhausted the statutory remedy of preferring an appeal, though it had the
opportunity and time to do so. It was noted that, after the dismissal of its
6
extension application on 10.08.2022, the appellant still had four days’ time to
file an appeal against the order dated 29.06.2022, but without doing so, the
appellant had chosen to file a writ petition on 05.09.2022. Holding that there
were several factual disputes which could not be adjudicated under Article
226 of the Constitution of India, the High Court dismissed the writ petition as
not maintainable, vide order dated 24.11.2022.
Significantly, the appellant did file an appeal against the order dated
10.
29.06.2022 before the NCLAT on 13.08.2022 but did not disclose the same
in its writ petition filed on 05.09.2022. This is clear not only from its senior
counsel’s statement but also from para 14 of the order, wherein the High
Court noted that the appellant filed an appeal against the order dated
10.08.2023 passed by the NCLT relating to the same issue and left all
contentions available to the appellant to be raised in the said appeal.
11. As noted earlier, the Member (Judicial) of the NCLAT, by his judgment
dated 20.10.2023, dismissed both the appeals filed by the appellant while,
by her separate judgment of the same date, the Member (Technical) partly
allowed the appeals holding that, out of the forfeited amount of ₹37.80 crores
only 10%, i.e., ₹10.5210 crores, was liable to be forfeited, as per Clause 9 of
the appellant’s offer, and directed the balance amount to be refunded. In the
light of this split verdict, the matter was referred to the third Member, i.e., a
7
Member (Technical), and he agreed with the view taken by the Member
(Judicial), by way of his judgment dated 31.05.2024. In effect, the appeals
filed by the appellant stood dismissed in their entirety, as per the majority
opinion. The appellant is before us challenging the two majority opinions.
Perusal of the two opinions under appeal reflects that the majority were
12.
of the view that the sale in favour of the appellant was under Regulation
33(2)(d) of the Insolvency and Bankruptcy Board of India (Liquidation
5
Process) Regulations, 2016 . The contention of the appellant that the sale
was under Regulation 33(2)(c) of the Liquidation Regulations, which
provides for private sale of the assets of the corporate debtor by the liquidator
when the asset is sold at a price higher than the reserve price of a failed
auction, was rejected. The consequential argument of the appellant that its
sale transaction was, in effect, a contract governed by the provisions of the
Indian Contract Act, 1872, was also rejected. Reference was made to Rule
6
15 of the National Company Law Tribunal Rules, 2016 , which empowers
the NCLT to extend time upon such terms, if any, as the justice of the case
may require, and it was opined that as the forfeiture clause in the order dated
29.06.2022 was to come into effect only if the appellant failed to make the
5
For short, ‘the Liquidation Regulations’
6
For short, ‘the NCLT Rules’
8
payment by 31.07.2022, the condition was rational as the intent was to
resolve the liquidation process expeditiously. It was held that this stipulation
was well within the power of the NCLT under Rule 15 of the NCLT Rules.
13. We must also note that the liquidation value of the assets/plant at
Raichur was assessed thrice. In December, 2018, it was assessed at
₹338.01 crores; in August, 2019, it fell to ₹227.31 crores; and in August,
2020, it fell further to ₹117.23 crores. However, pursuant to the liquidator’s
efforts to sell the assets/plant, after the appellant’s failure to make the
payment, the same was sold to M/s. Texcon Steels Limited for ₹145.38
crores on 30.08.2022. In that context, the appellant contended before the
NCLAT that, as the resale value was far higher than the amount offered by
it, i.e., ₹105.21 crores, there was no actual loss suffered by the stakeholders.
Dealing with this argument, the majority observed that the outstanding dues
of the financial creditors were never fully recovered and they had to suffer a
major haircut even if the assets/plant at Raichur were eventually sold at a
value higher than that offered by the appellant. The majority also took note
of the crucial fact that the appellant had accepted and acted upon the order
dated 29.06.2022 by making two more payments, amounting to ₹1.50 crores
on 13.07.2022 (₹0.50 crore) and on 25.07.2022 (₹1.00 crore). Given the
aforestated facts, the majority opined that the appellant could not approbate
9
and reprobate in relation to the order dated 29.06.2022, that is, by acting
upon it, on the one hand, and assailing it, on the other. They, therefore, held
against the appellant and dismissed its appeals against the NCLT’s orders
dated 29.06.2022 and 10.08.2022.
The learned senior counsel appearing for the appellant would contend
14.
that, as the stakeholders did not suffer any loss in the long run as the
assets/plant at Raichur were sold for a much higher price than that offered
by the appellant, forfeiture of the amounts paid by the appellant was not just
and lawful. Reliance was sought to be placed on case law pertaining to
Section 74 of the Indian Contract Act, 1872, apropos compensation payable
for breach of contract. On the other hand, the learned counsel appearing for
the liquidator would argue that extension of time was granted by the NCLT
in exercise of power under Rule 15 of the NCLT Rules, which was duly acted
upon by the appellant by making a further payment of ₹1.50 crores, and
having done so, the appellant could not seek to assail the condition included
therein as regards forfeiture. The learned counsel would, therefore, contend
that this is not a case of penalty or unjust enrichment falling under Section
74 of the Indian Contract Act, 1872, and that the judgments relied upon by
the other side have no relevance. He would point out that the appellant filed
its appeal against the order dated 29.06.2022 before the NCLAT on
10
13.08.2022, but deliberately kept the same defective till 28.12.2022, and
having done so, the appellant chose to file the writ petition on 05.09.2022
and it was stated before the High Court by the learned senior counsel
appearing for the appellant that the time for filing an appeal against the
NCLT’s order dated 29.06.2022 had already expired. He also pointed out that
the appellant, by resorting to this subterfuge, secured an interim order on
29.09.2022, which continued to operate till the dismissal of the writ petition
and even by the said date, the appellant did not inform the High Court that it
had filed an appeal against the NCLT’s order dated 29.06.2022. The learned
counsel stated that after dismissal of the writ petition, the liquidator
distributed the forfeited amount amongst the stakeholders as per law and
there is, therefore, no cause to turn back the clock at this stage when the
appellant was wholly disentitled from claiming any relief.
15. Having given our earnest consideration to the matter, we must stress
upon certain critical facts. The last auction in relation to the assets/plant at
Raichur was held on 28.07.2021 with a reserve price of ₹105 crores.
However, no bids were forthcoming on that date. Thereupon, the SCC held
a meeting on 31.07.2021 and decided to sell the said assets/plant at the
scrap value of approximately ₹50 crores. The auction process, therefore,
stood concluded in its entirety, having culminated in failure, and the later
11
decision of the stakeholders to resort to a scrap sale was in place on the date
the appellant made its offer on 09.09.2021, proposing to buy the assets/plant
at Raichur as a going concern. Perusal of the said proposal demonstrates
that the appellant made a commitment that, after deducting its initial deposit
of ₹10.5210 crores made along with its offer as a commitment advance, the
balance payable out of the offered ₹105.21 crores would be deposited within
15 days from the date of receipt of the approval of the sale by the competent
authority, i.e., the NCLT. This offer was considered by the stakeholders in
th
their 9 meeting held on 15.09.2021. All 15 secured financial creditors/
stakeholders were present online and upon being informed of the proposal
made by the appellant, including its commitment to pay the balance amount
after deduction of the commitment advance of ₹10.5210 crores within 15
days from the date of approval of the sale by the NCLT, the stakeholders
asked the liquidator to take the process forward in keeping with the IBC.
Pursuant thereto, the liquidator filed IA No. 997/CHE/2021 in
16.
TCP/95/IB/2017 seeking approval of the NCLT for the sale in favour of the
appellant. It is, therefore, clear that this sale did not fall within the ambit of
Regulation 33(2)(c) of the Liquidation Regulations but was squarely covered
by Regulation 33(2)(d) thereof. Regulation 33(2), to the extent relevant,
reads as follows:
12
‘(2) The liquidator may sell the assets of the corporate debtor by means
of private sale in the manner specified in Schedule I when-
(a) the asset is perishable;
(b) the asset is likely to deteriorate in value significantly if not sold
immediately;
(c) the asset is sold at a price higher than the reserve price of a failed
auction; or
(d) the prior permission of the Adjudicating Authority has been obtained
for such sale:’
Once the stakeholders directed the liquidator to take the process
forward in accordance with the IBC and the liquidator filed an IA seeking
approval of the NCLT for the sale, there is no possibility of the appellant trying
to bring the sale within the ambit of Regulation 33(2)(c). Be it noted that the
auction process failed in July, 2021, itself and was thereafter followed by the
decision of the stakeholders to resort to a scrap sale and the question of the
assets/plant being sold at a price higher than the reserve price of the failed
auction was not available thereafter. It was thus a private sale that required
prior permission of the NCLT and the liquidator, accordingly, resorted to that
procedure. By order dated 22.03.2022, the NCLT accepted the proposal put
forth by the appellant and directed it to pay the sale consideration within 15
days from the date of receipt of its order, as proposed by the appellant itself.
Contrary to its own commitment in the offer made on 09.09.2021, the
appellant then sought extension of time beyond the stipulated 15 days.
th
The stakeholders showed lenience in that regard in their 10 meeting
17.
held on 13.04.2022 and agreed to extend the time till 30.05.2022, subject to
13
the condition that the appellant would pay interest at 12% per annum on the
payments made post 15.04.2022. The appellant was asked to submit an
application before the NCLT seeking approval of the proposed revision in the
timeline for making the payment. Pursuant thereto, the appellant filed IA No .
(IBC)/512/CHE/2022 before the NCLT seeking extension of time till
31.05.2022. This application was filed on 25.04.2022. It is on this application
that order dated 29.06.2022 was passed by the NCLT, stating as follows:
‘(i) The Applicant is directed to pay on or before 30.06.2022 the balance
50% of the sale consideration i.e., 34.60 Crore with 12% interest from
15.04.2022 till the date of payment.
(ii) The remaining sum of Rs. 34.60 Crore shall be paid on or before
31.07.2022 with 12% interest from 15.04.2022 till the date of payment.
(iii) The Applicant is directed to strictly comply with the said timelines. Any
deviation from the same would amount to forfeiture of the entire amount
paid by the Applicant.’
18. We may note that the appellant itself had asked for extension of time
till 31.05.2022 in its prayer in the aforestated IA and as the order was being
passed on 29.06.2022, the NCLT seems to have acted upon the appellant’s
own suggested time frame and directed it to pay ₹34.60 crores with 12%
interest from 15.04.2022 by 30.06.2022, i.e., the very next day. As the
appellant had approached the NCLT for extension of time two months earlier,
stipulating that it required time till 31.05.2022, the NCLT would have
obviously expected that the appellant would have arranged for the funds to
be paid in terms of the extended timeline prayed for by the appellant itself.
14
Therefore, when the NCLT granted just one day’s time to the appellant to pay
50% of the balance amount due, it was justified in doing so and the appellant
cannot make much of the fact that it was required to pay that amount by the
very next day. Further, as the appellant had already backtracked on the
commitment in its offer made on 09.09.2021 with regard to paying the entire
amount within 15 days from the date of approval by the NCLT, i.e., from
22.03.2022, and the appellant was being given an extended timeline to make
the payment at least by 31.07.2022, i.e., nearly 4 months later, the NCLT was
fully justified in adding the forfeiture clause that if the appellant deviated from
the timelines as set out in the order dated 29.06.2022, the entire amount paid
by it was liable to be forfeited. As rightly noted in the clinching judgment dated
31.05.2024, the NCLT was exercising power under Rule 15 of the NCLT
Rules and was, therefore, at liberty to stipulate such terms as the justice of
the case required. As pointed out by this Court in Kridhan Infrastructure
7
, time is a
Private Limited vs. Venkatesan Sankaranarayan and others
crucial facet of the scheme under the IBC and to allow such proceedings to
lapse into indefinite delay would plainly defeat the very object of the statute.
Further, the conduct of the appellant during the course of the
19.
proceedings also disentitled it from seeking relief. The clandestine act of
7
(2021) 6 SCC 94
15
filing a writ petition before the High Court, suppressing the fact that it had
already filed an appeal before the NCLAT against the order dated
29.06.2022, and attempting to challenge the very same order under Article
226 of the Constitution, clearly reflected on its lack of bonafides. Such abuse
of process warranted non-suiting of the appellant on that ground itself. Even
on merits, we find that the appellant had no justifiable claim to seek refund
of the amounts paid by it, which stood forfeited in keeping with the order
passed by the NCLT. This was not a case of a contract between the appellant
and the liquidator/stakeholders, whereby the appellant could seek to fall back
on Section 74 of the Indian Contract Act,1872. The sale in question was
purely under the supervision of the Adjudicating Authority, i.e., the NCLT, and
the forfeiture condition stipulated by the NCLT while granting extension of
time cannot be equated with a forfeiture clause in a contract. Having made
an offer, coupled with a temporal commitment, which was duly accepted by
the NCLT, vide its order dated 22.03.2022, the appellant went before the
NCLT and sought extension of time. That extension was granted, saddled
with the condition of forfeiture in the event of failure, and was duly accepted
and acted upon by the appellant, as already noted supra . The appellant
actually made payments to the tune of ₹1.50 crores after the passing of the
extension order dated 29.06.2022 but failed to make the full payment by
16
31.07.2022. The appellant cannot, therefore, seek to approbate and
reprobate at this stage by assailing the forfeiture clause in the said order,
having accepted and acted upon the extension granted thereunder.
20. On the above analysis, be it viewed from any angle, we find no merit
in the contentions advanced on behalf of the appellant. The appeals are,
therefore, bereft of merit, be it on facts or in law. No grounds are made out
to interfere with the majority opinions of the Member (Judicial) and the
Member (Technical) of the National Company Law Appellate Tribunal,
Chennai Bench, holding against the appellant and dismissing its appeals.
The appeals are, accordingly, dismissed.
Parties shall bear their respective costs.
……………………...J
[SANJAY KUMAR]
……………..………J
[ALOK ARADHE]
December 10, 2025
New Delhi.
17