The National Company Law Appellate Tribunal has set a critical precedent in insolvency proceedings by holding that a technical malfunction on an e-auction platform, which excludes a bonafide and financially capable bidder, cannot be dismissed as a procedural lapse. When such exclusion undermines the core statutory objective of value maximization under the Insolvency and Bankruptcy Code, 2016, the resulting auction must be set aside and a fresh process initiated.
Background & Facts
The Dispute
The liquidation of Moser Baer Solar Ltd. (MBSL), initiated on 30.05.2019, required the sale of its assets through a transparent auction process under the Insolvency and Bankruptcy Code, 2016 (IBC). The Appellant, JFC Finance (India) Ltd., had actively participated in the first round of sale, submitting a bid of Rs. 26 Crores on 11.01.2023. In the second round, the Liquidator issued a sale notice on 06.03.2025 for auctioning MBSL as a going concern, inviting bids under the Process Information Document. The Appellant submitted all eligibility documents and an Earnest Money Deposit (EMD) of Rs. 3 Crores on 27.03.2025.
Key Facts
- The Appellant had previously bid Rs. 8 Crores on 27.12.2022, later revised to Rs. 30 Crores, then Rs. 26 Crores.
- On 29.10.2024, the Insolvency and Bankruptcy Board of India (IBBI) issued a circular introducing the eBKray platform for auctions.
- On 10.01.2025, IBBI mandated that all auctions be conducted exclusively on the BAANKNET platform (successor to eBKray) w.e.f. 01.04.2025.
- On 28.03.2025, IBBI issued a circular requiring all auctions with notices issued on or after 01.04.2025 to use BAANKNET.
- The Liquidator issued a public notice on 06.03.2025, later amended via email on 03.04.2025 and 07.04.2025, directing bidders to register on BAANKNET, upload documents, and deposit EMD.
- The Appellant registered on BAANKNET on 04.04.2025, uploaded documents to the Document Library, and deposited Rs. 2.5 Crores in the e-wallet by 13:44:42 on 07.04.2025.
- The Appellant logged into the BAANKNET portal multiple times on 07.04.2025 and 08.04.2025.
- On 08.04.2025 at 15:17 hours, the Appellant contacted BAANKNET support (Kashyap Patel) reporting non-availability of the pre-qualification link.
- The auction closed at 18:00 hours on 08.04.2025 with Respondent No. 3 (Chemester Food Industry Pvt. Ltd.) as highest bidder at Rs. 28.27 Crores.
- On 08.04.2025 at 18:01 hours, the Appellant emailed the Liquidator and BAANKNET seeking postponement or inter-se bidding.
- On 15.04.2025, the Consultative Committee of Stakeholders (SCC) approved Respondent No. 3 as successful bidder.
- On 16.04.2025, the Appellant filed I.A. No. 1746 of 2025 before the NCLT seeking quashing of the auction.
- On 11.09.2025, the Appellant filed an affidavit offering Rs. 35 Crores.
- On 02.02.2026, acting on directions of the Delhi High Court, the Appellant deposited Rs. 54 Crores with the Liquidator.
- On 20.11.2025, the Sale Certificate was issued to Respondent No. 3.
- On 19.11.2025, the Adjudicating Authority dismissed the Appellant’s application and imposed a fine of Rs. 1.5 Lakhs.
Procedural History
- 30.05.2019: Liquidation of MBSL initiated.
- 06.03.2025: Liquidator issued auction notice under Process Information Document.
- 27.03.2025: Appellant submitted documents and EMD.
- 03.04.2025: Liquidator emailed bidders directing use of BAANKNET, modified Process Information Document.
- 07.04.2025: Liquidator sent reminder email; Appellant deposited EMD.
- 08.04.2025: Auction held; Appellant unable to access pre-qualification link; bid closed at Rs. 28.27 Cr.
- 09.04.2025: Delhi High Court stayed further steps pending adjudication.
- 15.04.2025: SCC approved Respondent No. 3 as highest bidder.
- 16.04.2025: Appellant filed I.A. No. 1746 of 2025 before NCLT.
- 21.04.2025: NCLT ordered status quo pending hearing.
- 11.09.2025: Appellant offered Rs. 35 Crores before NCLT.
- 31.01.2025: NCLT reserved judgment on I.A.
- 19.11.2025: NCLT dismissed I.A. and imposed Rs. 1.5 Lakh fine.
- 28.03.2026: Appeal filed before NCLAT.
- 02.02.2026: Appellant deposited Rs. 54 Crores with Liquidator per Delhi High Court order.
- 29.05.2026: NCLAT delivered judgment.
Relief Sought
The Appellant sought: (i) quashing of the 08.04.2025 auction; (ii) conduct of a fresh auction permitting its participation; (iii) inter-se bidding with Respondent No. 3; and (iv) setting aside the fine of Rs. 1.5 Lakhs.
The Legal Issue
The central questions were: (1) whether the Appellant’s failure to access the pre-qualification link on BAANKNET constituted abandonment or a technical glitch beyond its control; (2) whether the Liquidator’s failure to facilitate participation despite clear evidence of a platform malfunction violated its statutory duty under Section 35(1)(d) of the IBC; and (3) whether a substantially higher offer of Rs. 54 Crores, already deposited with the Liquidator, justifies setting aside a concluded auction to uphold the statutory mandate of value maximization.
Arguments Presented
For the Appellant
The Appellant contended that it had fully complied with all instructions issued by the Liquidator: it registered on BAANKNET, uploaded documents to the Document Library, and deposited the EMD in the e-wallet by the deadline. The Appellant argued that the pre-qualification link was never visible due to a technical glitch on the BAANKNET platform, as corroborated by its communication with BAANKNET support at 15:17 hours on 08.04.2025. It relied on JSW Cement Ltd. v. State of Rajasthan and Om Sakthi Sekar v. V. Sukumar to argue that when a bonafide bidder is excluded due to a platform malfunction and a substantially higher offer is available, the auction must be set aside to fulfill the IBC’s value maximization objective. It emphasized that the Liquidator had a duty to ensure fair participation and could not hide behind the ‘do-it-yourself’ nature of the platform.
For the Respondent
The Liquidator and Respondent No. 3 argued that the Appellant failed to complete the mandatory two-stage process under the BAANKNET User Guide: while it completed Stage I (registration and deposit), it did not click the ‘Submission of Pre-Qualification’ link in Stage II. They contended that the platform was fully functional, as other bidders completed the process without issue. They relied on Eva Agro Feeds v. Punjab National Bank and Celir LLP v. Sumati Prasad Bafna to assert that a concluded auction cannot be reopened merely because a non-participant later offers a higher price. They argued that the Appellant’s failure to use the helpline before the deadline and absence of contemporaneous proof (screenshots, error logs) rendered its claim of a technical glitch speculative. The fine of Rs. 1.5 Lakhs was justified as a deterrent against frivolous litigation.
The Court's Analysis
The NCLAT undertook a meticulous review of the sequence of events, the communications between the Appellant, Liquidator, and BAANKNET, and the User Guide. The Tribunal found that the Appellant had demonstrably complied with the Liquidator’s instructions: it registered on BAANKNET, uploaded documents, and deposited the EMD before the 07.04.2025 deadline. Crucially, the emails of 03.04.2025 and 07.04.2025 did not explicitly mention the requirement to click a separate ‘pre-qualification link’ - a step that was only detailed in the User Guide’s Stage II, which was not referenced as mandatory in the Liquidator’s communications.
"The Appellant had logged on to the auction platform several times... and contacted BAANKNET support at 15:17 hours on 08.04.2025... the BAANKNET support email confirmed receipt of the call and acknowledged the complaint regarding the unavailability of the PQ submission link."
The Tribunal rejected the Adjudicating Authority’s insistence on proof of the glitch, noting that neither the Liquidator nor the NCLT possessed the technical competence to verify the platform’s functionality. The BAANKNET support team, the only entity with such expertise, neither confirmed nor denied the glitch, despite being summoned by the Tribunal. The Tribunal held that in such circumstances, the benefit of doubt must accrue to the Appellant.
The Court further emphasized that the IBC’s statutory objective under Section 35(1)(d) is to maximize asset value through fair and inclusive participation. The Appellant’s Rs. 54 Crore deposit - nearly double the winning bid - was not a speculative offer but a concrete, realized financial commitment. The Liquidator had, in fact, before the Delhi High Court, undertaken to seek permission for a fresh auction if the Rs. 54 Crore deposit was made.
"The objective of auction... is to secure optimum realisable value of the property by giving opportunity to the potential buyers facing competitive bids... If that path is cut down or closed, the possibility of underbidding... cannot be ruled out."
The Tribunal distinguished Eva Agro Feeds and Celir LLP, noting those cases involved third-party offers made after auction, not by a bonafide participant excluded due to a platform failure. The Court held that the Liquidator’s passive stance - failing to verify the glitch or assist the Appellant - constituted a breach of its fiduciary duty under the IBC.
The Verdict
The Appellant succeeded. The NCLAT set aside the e-auction conducted on 08.04.2025. The Liquidator is directed to conduct a fresh e-auction with a reserve price of Rs. 54 Crores, open to all eligible bidders including the Appellant. If no higher bid is received, the Appellant shall be declared the highest bidder and the transaction processed. If a higher bid emerges, the Rs. 54 Crore deposit shall be returned. The Liquidator must complete the liquidation proceedings within 60 days of this judgment. The fine of Rs. 1.5 Lakhs imposed by the Adjudicating Authority is set aside. Parties shall bear their own costs.
What This Means For Similar Cases
Technical Glitches Cannot Be Dismissed Without Verification
- Practitioners must now argue that when a bidder demonstrates active participation and logs platform access, a claim of technical failure must be investigated by the platform provider, not dismissed on the absence of screenshots.
- Courts and tribunals must not assume platform reliability; they must summon technical administrators when glitches are alleged.
Liquidator’s Duty to Facilitate Participation Is Non-Negotiable
- The ‘do-it-yourself’ nature of digital platforms does not absolve the Liquidator of the duty to ensure fair access.
- Liquidators must proactively verify platform functionality, especially when a bidder raises concerns before the deadline.
- Failure to assist a bonafide bidder may be construed as a breach of Section 35(1)(d) IBC.
Substantially Higher Deposits Trigger Re-Auction Obligations
- A deposit of a substantially higher amount (e.g., 100%+ above winning bid) that is already realized by the Liquidator creates a strong prima facie case for re-auction.
- Such deposits, when made in good faith and in compliance with court directions, override the sanctity of a concluded auction if the exclusion was due to procedural or technical failure.
- The IBC’s value maximization mandate trumps rigid adherence to auction closure timelines when stakeholder recovery is at stake.
