Inconsistencies Between E-Auction Notice And Process Memo Vitiate Liquidation Sale: NCLT Amaravati

The National Company Law Tribunal (NCLT) at Amaravati has prima facie held that inconsistencies between an e-auction sale notice and the auction process memorandum create serious ambiguity regarding the assets offered for sale and render the liquidation auction process legally unsustainable under the Insolvency and Bankruptcy Code.

“This Adjudicating Authority is of the considered view that the inconsistency between the E-Auction Sale Notices and the Auction Process Memorandum creates serious ambiguity and uncertainty with respect to the scope and nature of the assets being offered for sale. The Auction Process Memorandum, being a subsidiary and facilitative document, cannot expand, alter, or override the terms, conditions, or asset descriptions expressly set out in the E-Auction Sale Notice,” the tribunal observed.

Judicial Member Kishore Vemulapalli was dealing with applications filed by the suspended directors of IND TOB International Pvt Ltd, which is undergoing liquidation. The company was admitted into liquidation in proceedings initiated by the State Bank of India in 2021.

During liquidation, the liquidator issued an e-auction notice fixing January 28, 2026 as the deadline for submission of expressions of interest and earnest money deposit, and January 31, 2026 as the auction date. The timelines were later altered by an addendum dated January 28, 2026, extending the deadline for submission of EoI and EMD to February 10, 2026, while fixing the auction on February 12, 2026.

The liquidator argued that the e-auction process was conducted in accordance with the auction process memorandum and the permissions earlier granted by the tribunal, including approval for a combined sale of assets.

Rejecting this defence, the tribunal prima facie held that an auction process memorandum cannot override or enlarge the scope of assets expressly notified in the e-auction sale notice. It noted that such inconsistencies undermine transparency and value maximisation in liquidation.

“Such lack of clarity and inconsistency has the effect of discouraging prospective bidders, narrowing participation, and consequently defeating the objective of value maximization, thereby causing potential financial prejudice to the stakeholders, including the Financial Creditors.” the tribunal said.

The tribunal accordingly stayed all further proceedings pursuant to the impugned e-auction notices and granted two weeks' time to the liquidator and the other respondent to file their replies.