NCLAT New Delhi Upholds NCLT Order Cancelling Anil Syal Property Auction Over Procedural Lapses

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 25 March, held that the auction of Anil Syal's 50% undivided share in a Uday Park residential flat was procedurally flawed due to inadequate notice, undervaluation, and lack of stakeholder consultation, justifying fresh valuation and re‑auction.

A Bench of Judicial Member Justice N Seshasayee and Technical Members Arun Baroka and Indevar Pandey dismissed an appeal filed by successful bidder Akshat Gupta. It held:

“For specialised complex assets like fractional property, even a single additional bidder could significantly raise the price.”

The appeal arose from an order of the National Company Law Tribunal, New Delhi that invalidated the completed public auction of Anil Syal's property. Syal's bankruptcy proceedings commenced on 30 September 2022, with Ajay Gupta appointed as Bankruptcy Trustee. Among the assets forming part of the bankruptcy estate was Syal's 50% undivided share in the Uday Park residential flat.

On 2 June 2023, Trustee Ajay Gupta published an auction notice in Financial Express and Jansatta. The auction was conducted on 27 June 2023, where Akshat Gupta bid Rs. 91.72 lakh, above the reserve price. A sale certificate was issued on 5 July 2023, vesting rights in Akshat Gupta.

Union Bank of India (UBI), the principal secured creditor, challenged the sale, alleging undervaluation and procedural irregularities. The NCLT set aside the auction, ordered a refund of the sale consideration, and directed fresh valuation and re‑auction.

Akshat Gupta contended that the auction was transparent, competitive, and compliant with law, with two bidders participating and the final bid exceeding the reserve price. Gupta submitted that he was a bona fide third-party purchaser with no nexus to Anil Syal, UBI, or any creditor, and that the rights of such purchasers cannot be divested even if the underlying process is later challenged.

He further argued that UBI had not pleaded a 25–30 day notice requirement nor raised it during arguments. He submitted that the NCLT introduced the 30‑day notice period suo motu, without statutory backing, as the Insolvency and Bankruptcy Code does not mandate such notice.

UBI countered that the appeal was barred by res judicata, pointing out that the NCLAT had already upheld re‑auction directions in earlier appeals filed by Anil Syal. The Bank also argued that the auction was grossly undervalued and that Trustee Ajay Gupta had conducted the auction only 25 days after notice publication, depriving stakeholders of adequate time. UBI noted that the valuation was never shared with the Bank before the auction.

The Trustee defended his actions, stating that the valuation was conducted by an IBBI‑approved valuer using international standards. He submitted that the Committee of Creditors, dominated by UBI, was informed through progress reports and raised no objections until after the auction. He also argued that regulations do not mandate a 30‑day notice and that the NCLT relied on a judgment delivered post-auction.

The NCLAT observed that while the IBC does not prescribe a 30‑day notice period, complex assets like fractional property require longer exposure to the market. It held:

“This is the type of property, where buyers require more time to understand co-ownership issues, marketability risks, legal limitations, and the practical feasibility of purchasing an undivided share. In such a circumstance, a longer notice period 30 days or more may be practical to ensure that the market has a proper window to respond. The shorter 25-day window, coupled with limited prior consultation and delayed sharing of crucial information, increased the risk that fewer bidders would participate or that bidders would not have adequate time for due diligence.”

The Tribunal further noted that the drastic undervaluation (Rs. 90 lakh vs. Rs. 3.82–4.5 crore) was never shared with UBI. Regulation 30(3) permits appointment of additional valuers in complex cases, but Trustee Ajay Gupta failed to do so. The Bench observed:

“This omission, when read with the short 25-day notice period and post-facto information sharing, reinforces the conclusion that the auction process did not ensure proper value discovery and justified the direction for fresh valuation and re-auction.”

Accordingly, the NCLAT upheld the NCLT finding that the auction process was neither fair nor transparent and dismissed Akshat Gupta's appeal.

For the Appellants: Advocate Sameer Rohtagi

For the Respondent 1: Advocates Brijesh Kumar Tamber, Prateek Kushwaha, Aryan Data and Kirit Baithwal

For Respondent 2: Advocates Mila Singh Negi, Nikhil Kumar Jha and Gautam Goel

For Intervenor: Advocates Ms. Prachi Johri and Ms. Mrigangi Parul,