Highest Bidder Has No Vested Right To Enforce Auction Sale Before Completion: NCLT Kochi

The National Company Law Tribunal (NCLT), Kochi, on 16 October held that a highest bidder does not acquire a vested or enforceable right merely by being declared the highest bidder in an auction.

A Bench of Judicial Member Vinay Goel and Technical Member Ravichandran Ramasamy permitted the liquidator of Asten Realtors Private Limited to sell the Asten Aurum Woods Project in Ernakulam privately to a consortium of homebuyers for Rs. 4.96 crore. It stated:

“Thus, the amended regulatory framework expressly recognises the role of the Committee of Creditors in approving decisions concerning the sale of assets during liquidation, subject to compliance with the applicable statutory requirements,”

The liquidator sought the Tribunal's approval for the private sale after the Committee of Creditors (CoC) approved the proposal. The consortium comprises Dr. Mathew Joseph and Lizy Mathew, Chandy John Samuel and Dr. Dane Chandy, and Pinnacle Piling (India) Private Limited.

The property had earlier been put up for e-auction, in which Muhammed Aslam emerged as the highest bidder with an offer of Rs. 4.96 crore. However, the sale remained incomplete because the balance consideration was not paid after the Kerala High Court stayed further proceedings pursuant to the auction notice.

Meanwhile, the homebuyers approached the Kerala High Court seeking relief concerning the project. The CoC subsequently resolved to consider a private sale to the homebuyers, following which they withdrew their writ petition.

During the NCLT proceedings, counsel for Aslam sought time to file an application for impleadment. The Bench declined the request, observing that the highest bidder had no vested right in the proceedings.

The Tribunal noted that Clause 3 of the auction notice expressly reserved the liquidator's right to cancel, modify or extend the terms of the e-auction at any time. Relying on the Supreme Court's decision in Eva Agro Feed v. Punjab National Bank, it reiterated that a successful bidder does not acquire a vested right to enforce an auction sale before its conclusion.

The Bench also upheld the CoC's decision to refund Aslam's earnest money deposit along with accrued interest, although the auction terms did not provide for payment of such interest. It further examined the amendments to the IBBI (Liquidation Process) Regulations, 2016, which took effect on 2 June 2026.

Under the amended framework, the CoC may approve the rejection of the highest bid with a voting share of at least 66%, subject to the prescribed requirements, including communicating the reasons for rejection to the bidder.

It held that, under both the pre-amendment and amended regulatory frameworks, a highest bidder could not claim a vested or enforceable right merely by being declared the highest bidder. It further held that the CoC could exercise its commercial wisdom to decide whether to proceed with an auction or a private sale.

Accordingly, the NCLT disposed of the application.

For Liquidator: Advocate Vinod P.V and Srinivasan P.R, Liquidator

For Homebuyers: Senior Counsel T.K Bhaskar

For Bidder: Advocate Basil Mechery