Successful bidder in SBI's liquidation auction of Vindhyavasini Corporation Pvt Ltd. lands must pay Rs. 5.25 crore within 30 days with interest or risk cancellation of entire sale and forfeiture of earnest money deposit.
The National Company Law Tribunal (Mumbai Bench) on October 16, 2026, delivered a significant judgment in the matter of State Bank of India (SBI) versus Vindhyavasini Corporation Pvt Ltd., directing the successful auction purchaser to pay the balance sale consideration for two land parcels within a stipulated timeframe, failing which the entire auction sale would be cancelled and earnest money forfeited.
The case arose from the liquidation proceedings of Vindhyavasini Corporation Pvt Ltd. initiated under the Insolvency and Bankruptcy Code, 2016 (IBC) following SBI's petition. During the liquidation, the Liquidator conducted an e-auction on three interdependent land parcels situated at Village Silli, Dadra and Nagar Haveli. The auction was conducted on the terms "AS IS WHERE IS", "AS IS WHAT IS" and "WHATEVER THERE IS", explicitly placing responsibility on the purchaser to conduct due diligence and obtain necessary statutory approvals, including Non-Agricultural (N.A.) permissions.
The successful bidder, Vindhyavasini Corporation Pvt Ltd., acquired all three parcels with an aggregate bid of nearly Rs. 20 crore, depositing earnest money of Rs. 1.78 crore. While the purchaser paid the entire balance for one parcel (Survey No. 151/1/4), enabling issuance of a Sale Certificate and possession, payment for the remaining two parcels (Survey Nos. 150/2 and 161/1) was withheld, citing non-obtainment of fresh N.A. permissions due to ownership and access issues.
The Liquidator sought directions under Section 60(5) of IBC and Rule 11 of NCLT Rules, 2016, to compel the purchaser to pay the balance amount of Rs. 5.25 crore along with 12% interest within 30 days, failing which cancellation of the entire sale and forfeiture of the earnest money deposit would follow. The Liquidator also highlighted that the two parcels lacking independent access could only be accessed through the parcel already transferred to the purchaser, underscoring the interdependence of the three parcels.
The purchaser contended that its payment obligations were contingent upon the Liquidator's ability to transfer clear title and obtain necessary N.A. permissions, which were pending and not guaranteed. It argued that the auction terms did not absolve the Liquidator from securing lawful transfer and that the purchaser had acted in good faith by seeking extensions and paying for the accessible parcel.
After detailed analysis, the Tribunal held that the auction terms clearly required the purchaser to pay the balance consideration within 90 days, with interest for delayed payment, and that the purchaser alone bore responsibility for obtaining statutory permissions. The Tribunal referred to the Calcutta High Court's ruling in Cotton Casuals India Pvt. Ltd. v. State of West Bengal, which affirmed that "as is where is" sales entail purchasers accepting the asset with all encumbrances and liabilities.
Recognizing the extraordinary circumstances of the pending N.A. permissions and the interdependence of the land parcels, the Tribunal exercised its inherent powers to grant the purchaser one final time-bound opportunity to complete payment with interest, consistent with the judgment in Sushil Jejani v. Pasad Dharap (Liquidator of Jejani Pulp & Paper Mills Pvt. Ltd.).
The Tribunal warned that failure to comply would result in cancellation of the entire auction sale, including the parcel already conveyed, forfeiture of all amounts including earnest money, and restoration of possession to the Liquidator, who would be free to conduct a fresh auction.
This judgment reinforces the principle that purchasers in liquidation auctions must adhere strictly to payment terms and cannot indefinitely withhold payments on contingencies such as statutory permissions, especially when auctions are conducted on an "as is" basis. It also illustrates the Tribunal's balanced approach in granting limited relief for genuine impediments while safeguarding the liquidation process and stakeholders' interests.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Liquidation sale - Successful auction purchaser in liquidation sale cannot indefinitely withhold balance sale consideration on ground of non-obtaining of N.A. permissions where auction was on "as is where is", "as is what is" and "whatever there is" basis and auction terms placed responsibility of obtaining statutory permissions on purchaser - However, in extraordinary circumstances, NCLT can grant final time-bound opportunity to pay balance consideration with interest under Rule 11 - On failure, entire auction of interdependent land parcels, including parcel already conveyed, liable to be cancelled and EMD forfeited.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 35(1)(f), Section 60(5); IBBI (Liquidation Process) Regulations, 2016 Regulation 33 and Schedule I; NCLT Rules, 2016 Rule 11
