NCLAT Finds No Fault In Jet Airways Aircraft Auction, Rejects Losing Bidder's Challenge

The National Company Law Appellate Tribunal (NCLAT) has recently dismissed a challenge by a losing bidder to the auction of two Jet Airways aircraft during the airline's liquidation, holding that the process was transparent and that adequate opportunity had been given to inspect the assets before bidding.

“The appellant's bid was lower to successful auction purchaser, the appellant was also given opportunity to inspect the Aircraft. No error can be found in the process adopted by liquidation in carrying the auction,” the bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra observed.

The appeal was filed by Industrial Asset Transaction Services Pvt Ltd against a May 12 order of the Mumbai bench of the National Company Law Tribunal, which had rejected its plea to set aside the March 29 auction and accept its higher post-auction offer.

The liquidator had put the two aircraft up for sale on an “as is where is”, “as is what is” and “as is how is” basis. Industrial Asset Transaction Services, one of the bidders, had sought a more detailed inspection of the aircraft engines, including a borescope inspection, arguing that it could not properly assess their condition without it. While it was allowed to inspect the aircraft on March 26 and 27, it said the inspection was insufficient.

Despite this, the company participated in the auction, where its bid lost to a higher offer from the successful purchaser. It later offered ₹25 crore more for each aircraft and sought cancellation of the auction.

The liquidator opposed the plea, saying the sale terms were clear, inspection had been allowed, and the Stakeholders' Consultation Committee declined to reopen the process after the auction concluded.

Rejecting the challenge, the appellate tribunal agreed with the NCLT's finding that the auction process was transparent and that the liquidator was not required to reopen bidding merely because a losing bidder later improved its offer.

“The adjudicating authority has considered all aspect of the matter and all submission of the appellant,” the tribunal said.

The tribunal also upheld the NCLT's reliance on the Supreme Court's ruling in Valji Khimji v Official Liquidator, which held that rights accrue in favour of a successful auction purchaser once a sale is confirmed, absent fraud.