Inadvertent Email to Bidder Not A Breach Of Confidentiality: NCLT Indore Dismisses Plea Against Tax Officials

The National Company Law Tribunal (NCLT), Indore Bench, has dismissed a plea by the liquidator of Girdharilal Sugar & Allied Industries Limited seeking action against Commercial Tax Department officials for allegedly sharing details of a Stakeholders' Consultation Committee (SCC) meeting with a prospective bidder via email, holding that the inclusion was inadvertent and caused no prejudice.

“In continuation thereof, it is of the considered view that a singular and isolated instance of inadvertent communication, as established in the present case, cannot be construed as an intentional or deliberate breach of confidentiality, particularly in the absence of any material indicating wrongful gain or undue advantage conferred upon any stakeholder. The explanation furnished by Respondent Nos. 3 and 4 appears plausible and consistent with the surrounding circumstances. Therefore, such an isolated and unintentional lapse, viewed in the light of the clarifications provided, does not warrant any adverse or punitive inference against the Respondents,” the tribunal observed.

A bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta was dealing with an application filed by liquidator Amresh Shukla under Rule 11 of the NCLT Rules, seeking directions against the officials for allegedly sharing SCC discussions through an email dated February 9, 2024 with a prospective bidder.

The liquidator had asked the tribunal to direct the officials to explain why the email was sent, submit an affidavit committing to maintain confidentiality going forward, and face departmental action.

While considering the issue, the tribunal looked at the scheme of the Insolvency and Bankruptcy Code and emphasised that confidentiality is central to the insolvency process, especially where competitive bidding is involved.

It also relied on the Supreme Court's ruling in Vijay Kumar Jain v. Standard Chartered Bank, noting that although transparency is important, commercially sensitive information cannot be freely shared without risking the fairness of the process.

At the same time, the bench examined the email itself and found that, despite the bidder being marked on it, the contents were confined to objections raised by the Commercial Tax Department during the SCC meeting. There was nothing in it that revealed financial bids, valuation figures, or any negotiation strategy.

As for how the bidder ended up on the email chain, the respondents said it was a result of the “auto-suggest” feature in the email system.

The tribunal accepted this explanation, noting that earlier emails sent by the liquidator himself had included the same bidder in the communication chain.

Significantly, the bench held that there was no material to establish any deliberate attempt to confer an undue advantage or any mala fide intent behind the email.

“The alleged act, even if assumed to be inadvertent or improper, does not, by itself, establish that the Applicant has suffered any permanent or irreversible harm. There is no evidence to suggest that any confidential information has been misused in a manner that has adversely affected the legal or commercial position of the Applicant,” it observed.

On the question of relief, the tribunal held that a single inadvertent lapse without demonstrable harm could not justify coercive directions. It also clarified that it does not have the jurisdiction to direct initiation of departmental proceedings against government officials under service rules.

While declining relief, the bench observed that inclusion of a bidder in internal communications reflects a lack of due caution and is not a desirable practice, adding that all stakeholders must exercise greater diligence in handling such communications during the liquidation process.

The application was accordingly dismissed.