The National Company Law Appellate Tribunal has affirmed the finality of liquidation auctions conducted under strict 'as is' terms, rejecting post-auction attempts to revise bids even when the bidder claims to have been deprived of critical technical inspections. This judgment reinforces that transparency and procedural compliance, not speculative bid upgrades, govern the insolvency process.
Background & Facts
The Dispute
The liquidator of Industrial Asset Transaction Services Pvt. Ltd. (formerly Jet Airways) initiated a sale process for two aircraft (Asset IDs 3751 and 3753) under the Insolvency and Bankruptcy Code, 2016. The sale process document explicitly stated that the sale was on an 'as is where is', 'as is what is', and 'as is how is' basis, with no recourse to the liquidator for defects or undisclosed conditions.
Key Facts
- The auction was scheduled for 29.03.2026
- The appellant, a bidder, requested inspection of the aircraft engines via letter dated 18.03.2026
- A reminder was sent on 25.03.2026 seeking permission for engine inspection
- The liquidator responded on 25.03.2026 at 08:10 PM, confirming that Airport Entry Passes had been issued for inspection on 26.03.2025 and 27.03.2025
- The appellant conducted physical inspection but could not perform a Borescope inspection due to timing and access constraints
- The minimum reserve price was set at Rs. 171 crore, with bid increments fixed at Rs. 9 crore
- The appellant submitted a final bid of Rs. 300 crore for each aircraft
- The successful resolution applicant (SRA) bid Rs. 309 crore for each aircraft
- The liquidator accepted the SRA’s bid on 29.03.2026
- On 08.04.2026, the liquidator issued a formal letter confirming the SRA as the successful bidder after consultation with the Stakeholders Consultation Committee (SCC)
- On 11.04.2026, the appellant wrote to the liquidator offering to increase its bid by Rs. 25 crore per aircraft
- The SCC declined to permit re-auction or bid revision on 12.04.2026
- The appellant filed I.A. No. 1879/2026 before the NCLT Mumbai on 15.04.2026, seeking to set aside the auction and compel acceptance of its enhanced bid
- The NCLT dismissed the application on 12.05.2026
- The appellant filed this appeal on 19.05.2026
Procedural History
- 18.03.2026: Appellant requests engine inspection
- 25.03.2025: Inspection windows granted (note: date appears to be a typographical error; context implies 2026)
- 25.03.2026: Liquidator confirms inspection dates and timeline constraints
- 29.03.2026: Auction conducted; SRA emerges as highest bidder
- 08.04.2026: Liquidator confirms SRA as successful bidder after SCC consultation
- 11.04.2026: Appellant submits revised bid of Rs. 25 crore more per aircraft
- 12.04.2026: SCC rejects bid revision request
- 15.04.2026: I.A. No. 1879/2026 filed before NCLT Mumbai
- 12.05.2026: NCLT Mumbai dismisses I.A.
- 19.05.2026: Appeal filed before NCLAT
The Parties' Positions
Appellant: Argued that the inability to conduct Borescope inspection deprived it of material information, rendering the auction unfair. It claimed bona fides by offering to increase its bid by Rs. 25 crore per aircraft post-auction and sought quashing of the auction and confirmation of its revised bid.
Liquidator & SRA: Contended that the sale terms were unequivocally 'as is', inspections were permitted within the stipulated window, and the SCC’s decision to finalize the auction was lawful and aligned with value maximization objectives under the IBC.
Relief Sought
The appellant sought:
- Quashing of the auction dated 29.03.2026
- Direction to conduct a new auction with full inspection access
- Rejection of SRA’s I.A. 1707/2026 seeking modification of sale terms
- Acceptance of its enhanced bid of Rs. 3,34,24,90,000 and Rs. 2,83,93,00,000 for Asset IDs 3751 and 3753 respectively
- Stay on issuance of sale certificates to SRA
- Maintenance of status quo over the aircraft
The Legal Issue
The central question was whether a bidder, having participated in an auction conducted under explicit 'as is' terms and granted inspection opportunities within the stipulated timeline, can compel the liquidator to accept a post-auction bid enhancement after the successful bidder has been confirmed, absent fraud or procedural illegality.
Arguments Presented
For the Appellant
The appellant relied on the principle of value maximization under Section 30(2)(d) of the IBC, arguing that rejecting its Rs. 25 crore enhancement would result in suboptimal asset realization. It cited Valji Khimji v. State of Gujarat to assert that auctions are not final until confirmed, and that the SCC’s refusal to permit bid revision was arbitrary. It further contended that the lack of Borescope inspection deprived it of material information, violating the duty of transparency under Regulation 31(1) of the Liquidation Process Regulations, 2016.
For the Respondent/State
The liquidator and SRA countered that the sale process document clearly disclaimed all warranties and imposed 'as is' conditions. The inspection window was provided as a courtesy, not a contractual obligation. The SCC, comprising financial creditors, had the statutory discretion under Clause 12C of Schedule 1 to finalize the sale. The liquidator had no authority to reopen bids after confirmation, and permitting such revisions would undermine auction finality and cause indefinite delays, contrary to the time-bound nature of the IBC.
The Court's Analysis
The NCLAT examined the interplay between Clause 11 and Clause 12C of Schedule 1 to the Liquidation Process Regulations, 2016. Clause 11 permits the liquidator to conduct multiple rounds of auction but uses the word 'may', indicating discretion, not obligation. Clause 12C mandates that the liquidator must consult the SCC before confirming the successful bidder.
"In the present case, the sale of Aircrafts to Respondent No. 2 & 3 was subject to declaration of highest bidder by the Liquidator after consultation with SCC... and which was done vide letter dated 8.4.2026, thereby certain rights in favor of Respondent No. 2 & 3 stood accrued."
The Court emphasized that once the SCC confirms the successful bidder, rights accrue to the purchaser, and such rights cannot be extinguished absent fraud or illegality, as held in Valji Khimji. The appellant did not allege fraud, nor did it demonstrate procedural irregularity in the conduct of the auction.
The Court further noted that the appellant had been granted two days of inspection, and the absence of a Borescope inspection was a commercial risk assumed under 'as is' terms. The liquidator was under no duty to facilitate inspections beyond what was reasonably provided.
"Value maximisation cannot be read to make a process endless. Even if it is assumed that such charges may not be required to be paid in priority, but, the parking of Aircrafts is resulting into avoidable blockage of infrastructure resources..."
The Court rejected the appellant’s argument that its post-auction bid enhancement should be considered, holding that allowing such revisions would destabilize the entire auction framework, encourage strategic bidding, and defeat the purpose of finality under the IBC.
The Verdict
The appeal was dismissed. The NCLAT upheld the liquidator’s decision to confirm the SRA as the successful bidder and rejected the appellant’s request to accept its post-auction bid enhancement of Rs. 25 crore per aircraft. The Court affirmed that the auction conducted on 29.03.2026 was valid, final, and binding. No stay was granted on the issuance of sale certificates, and the status quo order was vacated. The liquidator was directed to proceed with the transfer of assets to the SRA in accordance with the confirmed sale.
What This Means For Similar Cases
Auction Finality Is Absolute After SCC Confirmation
- Practitioners must advise bidders that post-auction bid enhancements are legally unenforceable once the SCC confirms the successful bidder
- Any attempt to reopen bids after confirmation will be dismissed unless fraud or procedural illegality is proven
- The 'as is' clause, when clearly worded and disclosed, operates as a complete bar to post-sale claims regarding asset condition
Value Maximization Has Limits Under IBC
- The principle of value maximization does not justify indefinite delays or reopening of auctions
- Liquidators must balance asset value with time-bound resolution; delays incur costs and hinder creditor recovery
- SCC’s role as final arbiter of bid confirmation is statutory and non-reviewable absent mala fide
Inspection Rights Are Discretionary, Not Entitlements
- Bidders cannot demand specialized inspections beyond what is explicitly permitted in the sale process document
- Failure to conduct technical inspections is a commercial risk borne by the bidder under 'as is' terms
- Liquidators are not obligated to facilitate inspections beyond the timeline specified in the process document
