EVA AGRO FEEDS PRIVATE LIMITED  versus PUNJAB NATIONAL BANK AND ANR.
[2023] 13 S.C.R. 861, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
[2023] 13 S.C.R. 861 : 2023 INSC 809
861
CASE DETAILS
EVA AGRO FEEDS PRIVATE LIMITED 
v.
PUNJAB NATIONAL BANK AND ANR.
(Civil Appeal No.7906 of 2021)
SEPTEMBER 06, 2023
[B. V. NAGARATHNA AND UJJAL BHUYAN, JJ. ]
HEADNOTES
Issue for consideration: Appellate Tribunal whether justiﬁ ed in 
upholding the decision of the Liquidator to cancel the auction sale without 
assigning any reasons.
Insolvency and Bankruptcy Code, 2016 – Auction sale cancelled by 
Liquidator without assigning any reasons – Appellant submitted its bid 
dtd.16.07.21 to Respondent No.2-Liquidator in respect of the assets of 
the corporate debtor (in liquidation) – On 20.07.21, appellant received 
an E-auction certiﬁ cate from certifying that it had won the auction of 
the subject property– On 21.07.21, the appellant received an email from 
Respondent No.2 simply informing that he had cancelled the E-auction 
u/Clause 3(k) of the Disclaimer Clause in the E-Auction Process 
Information Document and that a fresh E-auction would be conducted– 
Appellant ﬁ led application before the Tribunal– Tribunal directed the 
respondent No.2 vide order dtd. 12.08.21 to send a communication to 
the appellant requiring him to deposit the balance sale consideration– 
Letter issued to the appellant, entire sum was deposited – Sale certiﬁ cate 
issued in favour of the appellant – Respondent No.1-ﬁ nancial creditor 
ﬁ led appeal against order dtd. 12.08.21– Appellate Tribunal set aside the 
said order and reversed the steps taken
pursuant thereto, liberty given 
to the Respondent No.2 to initiate fresh process of auction – He issued 
sale notice dtd. 24.12.2021 for E-auction sale of the subject property – 
Auction scheduled stayed:
Held: No reasons were assigned by the Liquidator for cancellation 
of the E-auction – While the highest bidder has no indefeasible right
862 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
to demand acceptance of his bid, the Liquidator if he does not want to 
accept the bid of the highest bidder has to apply his mind to the relevant 
factors – Such application of mind must be visible or manifest in the 
rejection order itself – It is incomprehensible that an administrative 
authority can take a decision without disclosing the reasons for taking 
a decision aﬀ ecting the rights of parties – Further, while it is true that 
para 1(11A), stating that where the Liquidator rejects the highest bid in 
an auction process, he shall intimate the reasons for such rejection to 
the highest bidder and mention it in the next progress report, came to 
be inserted in Schedule 1 to the Regulations w.e.f 30.09.21, it does not 
imply that an auction sale or the highest bid prior to the aforesaid date 
could be cancelled by the Liquidator exercising unfettered discretion and 
without furnishing any reason – Furthermore, in the present case, even 
after cancelling the highest bid of the appellant, in the subsequent sale 
notice dtd. 24.12.21, Respondent No.2 again ﬁ xed the reserve price of 
the subject property at Rs.10 crores which was the reserve price in the 
previous round of auction sale and which was also the bid value of the 
appellant – There was no rationale or justiﬁ cation in rejecting the bid of 
the appellant and going for another round of auction at the same reserve 
price – Merely because the Liquidator has the
discretion of carrying out 
multiple auction it does not necessarily imply that he would abandon or 
cancel a valid auction fetching a reasonable price and opt for another round 
of auction process with the expectation of a better price – There can be no 
absolute or unfettered discretion on the part of the Liquidator to cancel an 
auction which is otherwise valid – Tribunal rightly held that there were 
no objective materials before the Liquidator to cancel the auction process 
and to opt for another round of auction – Appellate Tribunal not justiﬁ ed 
in setting aside the order of the Tribunal dtd.12.08.2021 – Impugned order 
set aside, order dtd.12.08.2021 restored – Insolvency and Bankruptcy 
Board of India (Liquidation Process) Regulations, 2016– Regulation 33; 
Schedule 1, Para 1(11A)– Auction– National Company Law Tribunal 
Rules, 2016– Administrative Law – Principles of natural justice. [Paras 
20.1, 29, 34.1, 41, 42 and 51]
Insolvency and Bankruptcy Code, 2016 – ss.5(24), 29A – ‘related 
party’ suﬀ ering ineligibility u/s.29A – Intervenor argued that one ‘VKG’, 
the director and principal shareholder of the appellant was also one of
863
the promotor director and principal shareholder of the corporate debtor 
and therefore, a ‘related party’ of the corporate debtor and as such was 
not eligible; rather debarred from participating in the auction of the 
subject property of the corporate debtor:
Held: The disqualiﬁ cation sought to be attached to the appellant is 
without any substance as the related party had ceased to be in the helm 
of aﬀ airs of the corporate debtor more than a decade ago – He was not in 
charge of the company or an inﬂ uential member of the company i.e., the 
corporate debtor when the appellant had made its bid pursuant to the auction 
sale notice. [Para 50]
Insolvency and Bankruptcy Board of India (Liquidation 
Process) Regulations, 2016 – Schedule 1, Para 1(11A) – Plea of the 
intervenor that since para 1(11A) was inserted in Schedule I vide 
notiﬁ cation dtd.30.09.2021 w.e.f 30.09.2021 and this provision is 
prospective thus, it cannot be applied to auctions conducted prior to 
30.09.2021, including the auction in question – Therefore, there was 
no requirement for the Liquidator to give reasons for cancellation of 
the bid of the appellant:
Held: Plea not accepted – Furnishing of reasons is an important aspect 
rather a check on the arbitrary exercise of power – It presupposes application 
of mind to the relevant factors and consideration by the concerned authority 
before passing an order – Absence of reasons may be a good reason to draw 
inference that the decision making
process was arbitrary – Therefore, what 
para 1(11A) has done is to give statutory recognition to the requirement for 
furnishing reasons, if the Liquidator wishes to reject the bid of the highest 
bidder – Furnishing of reasons, which is an integral facet of the principles 
of natural justice, is embedded in a provision or action, whereby the highest 
bid is rejected by the Liquidator – Thus, what para 1(11A) has done is to 
give statutory recognition to this well-established principle – It has made 
explicit what was implicit. [Para 29]
Insolvency and Bankruptcy Code, 2016 – Powers and duties of the 
Liquidator – Discussed – Insolvency and Bankruptcy Board of India 
(Liquidation Process) Regulations, 2016.
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB 
NATIONAL BANK AND ANR.
864 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
LIST OF CITATIONS AND OTHER REFERENCES
S.N. Mukherjee versus Union of India (1990) 4 SCC 594: [1990] 
1 Suppl. SCR 44; State of Orissa versus Dhaniram Luhar (2004) 5 
SCC 568: [2004] 2 SCR 68; East Coast Railway versus Mahadev Appa 
Rao (2010) 7 SCC 678: [2010] 7 SCR 908; Kranti Associates (P) Ltd. 
Versus Masood Ahmed Khan (2010) 9 SCC 496: [2010] 10 SCR 1070; 
Valji Khimji and Company Versus Oﬃ  cial Liquidator of Hindustan Nitro 
Product (Gujarat) Limited and Others (2008) 9 SCC 299: [2008] 12 
SCR 1; K. Kumara Gupta Versus Sri Markendaya and Sri Omkareswara 
Swamy Temple and Ors (2022) 5 SCC 710 – relied on.
Swiss Ribbons Private Limited and Another versus Union of India 
and Others (2019) 4 SCC 17: [2019] 3 SCR 535; Phoenix ARC Private 
Limited versus Spade Financial Services Limited (2021) 3 SCC 475; 
Arcelor Mittal (India) (P) Ltd. V. Satish Kumar Gupta (2019) 2 SCC 1: 
[2018] 12 SCR 362; Arun Kumar Jagatramka Versus Jindal Steel and 
Power Limited and Another (2021) 7 SCC 474: [2021] 3 SCR 114 – 
referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED 
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION : Civil Appeal No.7906 of 2021.
From the Judgment and Order dated 30.11.2021 of the National 
Company Law Appellate Tribunal (Principal Bench) at New Delhi in 
Company Appeal (AT) (Insolvency) No.757 of 2021.
Appearances:
Neeraj Kishan Kaul, Sr. Adv., Parag Maini, Varun Lamba, Raghav 
Chadha, Ms. Nishtha Kumar, Ms. Ira Mahajan,
Advs. for the Appellant.
Siddharth Bhatnagar, Sr. Adv., Rajesh Kumar Gautam, Anant Achuni, 
Dinesh Sharma, Sumit Sharma, Krishnaraj Thaker, Ms. Pallavi Langar, 
Rahul Arya, Ashish Choudhury, Ms. Pracheta Kar, Aditya Sidhra, Nadeem 
Afroz, Rohit Amit Sthalekar, Advs. for the Respondents.
865
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
UJJAL BHUYAN, J.
Application (I. A. No.14220 of 2022) for intervention is allowed. 
2. This appeal has been preferred under Section 62 of The Insolvency 
and Bankruptcy Code, 2016 (hereinafter referred to as the ‘Code’) against 
the order dated 30.11.2021 passed by the National Company Law Appellate 
Tribunal, Principal Bench, New Delhi (brieﬂ y ‘the Appellate Tribunal’ 
hereinafter) allowing the appeal of Punjab National Bank i.e. Respondent 
No.1 being Company Appeal (AT) (Insolvency) No.757 of 2021. The 
aforesaid appeal was ﬁ led by the Punjab National Bank against the order 
dated 12.08.2021 passed by the National Company Law Tribunal, Kolkata 
Bench, Kolkata (brieﬂ y the ‘Tribunal’ hereinafter) in I.A. (IB) No.663/
KB/2021 in CP (IB) 440/KB/2018.
3. At the outset, it would be necessary to advert to the relevant facts:-
 (i)  One Huvepharma Sea (Pune) Private Limited ﬁ led an application 
under Section 9 of the Code against M/s. Amrit Feeds Limited i.e. 
corporate debtor before the Tribunal. The same was registered 
as CP(IB) No.440/KB/2018. The Tribunal passed an order dated 
22.10.2019 admitting the application ﬁ led under Section 9 of the 
Code as a result of which corporate insolvency resolution process 
of the corporate debtor commenced. 
(ii)  On 19.02.2021, the Tribunal passed an order for liquidation of 
the corporate debtor. Respondent No.2 was appointed as the 
Liquidator to oversee the corporate insolvency
resolution process. 
(iii)  Respondent No.2 by an e-mail dated 07.06.2021 forwarded a sale 
notice dated 02.06.2021 for sale of the assets of the corporate 
debtor. 23.06.2021 was the date ﬁ xed by Respondent No.2 for 
auction sale of the assets of the corporate debtor. It appears that 
the aforesaid auction sale did not materialize. Thereafter by way 
of an e-mail dated 29.06.2021, Respondent No.2 forwarded a 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB 
NATIONAL BANK AND ANR.
866 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
similar notice dated 28.06.2021 for auction sale of the assets of 
the corporate debtor scheduled on 20.07.2021. 
(iv)  It is stated that the appellant i.e., Eva Agro Feeds Private Limited 
was incorporated on 09.07.2021 under the provisions of the 
Companies Act, 2013. 
(v) Appellant submitted its bid dated 16.07.2021 to Respondent 
No.2 on 17.07.2021 in respect of the assets of the corporate 
debtor (in liquidation). The assets put up for auction were lands 
admeasuring 1,05,250.40 sqft at Plot No.56, Khata Nos.27, 26, 
29, 36, 36 (Old) and 362/363 (New), Mouza - Deoria, Pargana 
Bhuli, Tehsil - Chunar, District - Mirzapur, Uttar Pradesh with 
building, plant and machinery and other ﬁ xed assets thereon on 
a lump sum basis as mentioned at serial No.3 of the sale notice. 
(vi)  In terms of the sale notice, appellant paid the earnest money 
deposit (EMD) of Rs.1 crore in respect of the subject property. 
While the last date/time for submission of bid was 20.07.2021 at 
14:30 hours, appellant had submitted its bid on 19.07.2021 for 
a sum of Rs.10 crores which was equivalent to the reserve price 
as notiﬁ ed in the bid which ended at 14:30 hours on 20.07.2021. 
(vii)  On 20.07.2021, appellant received an E-auction certiﬁ cate from 
Respondent No.2 certifying that it had won the auction for the 
assets of the corporate debtor put up for auction sale (referred to 
hereinafter as the ‘subject property’). On 21.07.2021, appellant by
way of an e-mail requested Respondent No.2 to issue allotment 
letter in respect of the subject property. It is stated that on 
21.07.2021 itself appellant received an e-mail of the aforesaid 
date from Respondent No.2 informing that Respondent No.2 had 
cancelled the E-auction held on 20.07.2021 under Clause 3(k) 
of the Disclaimer Clause in the E-Auction Process Information 
Document. The appellant was further informed that a fresh 
E-auction would be conducted for the subject property.
(viii) Aggrieved by the same, appellant ﬁ led an application before 
the Tribunal under Section 60 and related provisions of the 
Code read with The Insolvency and Bankruptcy Board of India
867
(Liquidation Process) Regulations, 2016 as well as under Rule 
11 of the National Company Law Tribunal Rules, 2016 which 
was registered as I.A. (IB) No.663/KB/2021 in CP (IB) 440/
KB/2018. Tribunal vide order dated 12.08.2021 disposed of 
the said application by directing the Liquidator i.e. respondent 
No.2 to send a communication to the appellant requiring him to 
deposit the balance sale consideration within the time speciﬁ ed 
in the E-auction notice. 
(ix)  According to the appellant, Respondent No.2 complied with 
the order of the Tribunal and issued a letter to the appellant to 
deposit the balance consideration money. Pursuant to the said 
letter, appellant deposited the entire sum on 10.09.2021 following 
which Respondent No.2 issued a sale certiﬁ cate dated 15.09.2021 
in respect of the subject property in favour of the appellant. 
(x)  While the Liquidator accepted the order of the Tribunal, one of 
the ﬁ nancial creditors i.e. Punjab National Bank (Respondent 
No.1) ﬁ led an appeal before the Appellate Tribunal under Section 
61 of the Code against the order dated 12.08.2021 passed by the 
Tribunal. The appeal was contested by the appellant. However, 
by the impugned order dated 30.11.2021, Appellate Tribunal 
allowed the appeal and set aside the order dated 12.08.2021 
passed by the Tribunal. Consequently, the steps taken pursuant to 
the said order were also reversed. Liquidator was given liberty to 
initiate fresh process of auction in accordance with the
provisions 
of the Code read with The Insolvency and Bankruptcy Board 
of India (Liquidation Process) Regulations, 2016 (brieﬂ y the 
‘Regulations’ hereinafter). 
(xi)  Aggrieved, the auction purchaser as the appellant has preferred 
the present appeal. 
4. This court by order dated 10.01.2022 had issued notice and passed 
an interim order staying the subsequent auction which was scheduled on 
17.01.2022. 
5.  Respondent No.1 - Punjab National Bank in its counter aﬃ  davit at 
the outset pleaded that the appeal deserves to be dismissed at the threshold 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
868 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
and that the impugned order of the Appellate Tribunal upholding the decision 
of the Liquidator to cancel the auction sale is fully justiﬁ ed. Appellant was 
the sole bidder and quoted exactly the reserve price. Reasoning given by 
the Appellate Tribunal in paragraphs 11 to 22 of the impugned order are 
just and proper and calls for no interference. In this connection, Respondent 
No.1 has referred to Clause 3 (k) of the auction sale notice which says that 
the Liquidator has the absolute right to accept or reject any or all the bids 
or adjourn/postpone/cancel the E-auction or withdraw any asset/property or 
portion thereof from the E-auction at any stage without assigning any reason. 
Reliance has also been placed on Clause 5 (m) of the auction sale notice 
as per which the bidder with the highest oﬀ er/bid does not get any right to 
demand acceptance of its bid. It is in the above context that Respondent 
No.1 has contended that the Liquidator was well within his rights to cancel 
the auction sale, which decision has been rightly aﬃ  rmed by the Appellate 
Tribunal. 
5.1. According to Respondent No.1, it is a settled position that any 
auction sale, before completion, can always be cancelled. Tribunal had 
overlooked the provisions contained in Clause-13 of the Regulations which 
makes it clear that auction sale shall stand completed only on payment of 
full amount and not at the stage when the highest bidder is invited to
provide 
balance sale consideration within 90 days from the date of demand. Tribunal 
relied upon Clause 12 of the Regulations as per which, on the closure of 
auction, the highest bidder shall be invited to provide the balance sale 
consideration within 90 days of the date of demand; ﬁ rst proviso mentions 
that payments made after 30 days would attract interest of 12% with the 
second proviso clarifying that the sale would be cancelled if the payment 
is not received within 90 days. According to Respondent No.1, Tribunal by 
placing reliance on Clause 12 mis-directed itself in directing the Liquidator 
to send a communication to the appellant for depositing the balance sale 
consideration within the time speciﬁ ed in the E-auction notice. 
5.2. There is no express bar or prohibition either under the Code or 
under the Regulations restraining the Liquidator from cancelling an auction 
sale even after declaration of the highest bidder but before completion of 
sale as understood under Clause 13 of the Regulations. In the absence of 
such express bar or prohibition and when the auction sale was yet to be
869
concluded, Liquidator was well within his rights in cancelling the auction 
sale with the intent to have another round of auction sale. Tribunal had erred 
in interfering with such action of the Liquidator. 
5.3. Appellant had accepted the terms and conditions of the auction 
sale notice while participating in the auction sale, including Clause 3 (k). 
Therefore, it was not open to the appellant to question the decision of the 
Liquidator to cancel the auction sale. 
5.4. Respondent No.1 has also alleged that the appellant had made 
incorrect statements in the appeal and did not bring on record relevant 
documents. It is stated that Respondent No.2 in his written submission 
before the Tribunal had stated that he was informed by way of e-mail 
dated 05.08.2021 by Kapila Krishi Udyog Pvt. Ltd. that the promoters of 
the appellant were also the founder promoters of the corporate debtor. On 
receipt of such e-mail, Liquidator veriﬁ ed the record and found that one of 
the present directors of the appellant, Mr. Vijay Kumar Ghidia was a director 
of the corporate debtor from its inception i.e. 22.09.1994 to 13.01.2009. 
Liquidator had submitted that later on it had received letter dated 05.08.2021 
from Sugna Feeds Pvt. Ltd. expressing its intention to participate in the 
auction sale of the subject property. It was contended that Sugna Feeds 
Pvt. Ltd. is a well-established player in the poultry feeds sector, whereas 
appellant was incorporated only on 09.07.2021 i.e. after
issuance of the 
E-auction sale notice. 
5.5. Appellant while submitting its bid vide application dated 
16.07.2021 had accepted the terms and conditions of the auction process 
shared by the Liquidator which contained paragraph-7. Paragraph-7 is 
speciﬁ c: it mentions that applicant would adhere to the terms and conditions 
of the E-Auction Process Information Document as shared by the Liquidator. 
6.  Mr. Sunil Mohan Acharya- Liquidator of the corporate debtor i.e., 
Respondent No.2 has ﬁ led counter aﬃ  davit. He was appointed as Liquidator 
of the corporate debtor by the Tribunal vide order dated 19.02.2021. 
According to him, the admitted debts of the corporate debtor are Rs.530 
Crores of which claims of ﬁ nancial creditors are Rs.371 Crores. 
6.1. By an E-auction notice dated 02.06.2021, the assets of the 
corporate debtor being, inter alia, poultry feed farms at Lucknow (Lot 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
870 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
No.2) and Mirzapur (Lot No.3) were put up for auction with reserve prices 
of Rs.11.30 crores and Rs. 12.69 crores respectively. By an e-mail dated 
07.06.2021, respondent No. 2 had forwarded the E-auction notice to the 
prospective bidders, including to the appellant. However, as no bids were 
received in respect of any of the assets of the corporate debtor, reserve 
prices were reduced by 25% as provided in the Regulations, whereafter Lot 
No.2 and Lot No.3-subject property, with revised reserve prices of Rs.8.50 
crores and Rs. 10.00 crores respectively were again put up for auction vide 
E-auction notice dated 28.06.2021. By an e-mail dated 29.06.2021, the 
E-auction notice along with E-Auction Process Information Document were 
sent to the prospective bidders, including the appellant. 
6.2. Before the date of auction on 20.07.2021, earnest money deposit 
(EMD) was paid by the appellant and another intending bidder both for Lot 
No.2 and the subject property. Five minutes before the scheduled closure of 
bidding time there was a spurt of counter bids for Lot No.2 by the appellant 
and the other bidder, taking the price from Rs.8.50 crores to Rs.14.79 crores. 
The pattern of bidding in respect of Lot No.2 and the fact that the same 
two entities had submitted EMD for the subject property, but the bid being 
ultimately made only by the appellant led Respondent No.2 to believe that 
higher bids could be received for the subject
property on further re-auction. 
6.3. According to Respondent No.2, the subject property had a cost of 
Rs.17.30 crores and written down book value of Rs.8.59 crores as compared 
to Lot No.2, which had cost of Rs.9.28 crores and written down book value 
of only Rs.2.45 crores. However, Lot No.2 was sold for Rs.14.39 crores 
as against its reserve price of Rs.8.50 crores. Respondent No.2 therefore 
expected a price higher than Rs.10 crores for the subject property as Lot 
No.2 despite having a substantially lower worth as per the available record 
had fetched bids higher than Rs.10 crores. 
6.4. For the aforesaid reasons and to maximise the value of the 
subject property which would enure to the beneﬁ t of all stakeholders, 
Respondent No.2 thought it prudent to explore the possibility of further 
price enhancement in respect of the subject property and therefore decided 
to cancel the auction for the subject property. 
6.5. In support of the above averments, Respondent No.2 has referred 
to certain terms and conditions in the E-auction notice and the E-Auction
871
Process Information Document. Clause 3(f) binds the applicant to accept 
the terms of the disclaimer, which forms an integral part of the E-Auction 
Process Information Document. Clause 3 (k) says that the Liquidator has the 
absolute right to accept or reject any or all bids or adjourn/postpone/cancel 
the E-auction or withdraw any asset/property or portion thereof from the 
E-auction at any stage without assigning any reason thereof. As per Clause 
5 (m), the bidder with the highest oﬀ er/bid does not get any right to demand 
acceptance of his bid. Clause 5 (n) provides for intimation to be sent to the 
successful bidder via e-mail. Date of sending the mail would be considered 
as the date of receipt of the intimation. As per Clause 2 (h), on the close 
of the auction, the highest bidder shall be invited to provide balance sale 
consideration within 90 days of the date of such demand. Clause 2 (i) makes 
it clear that on payment of the full amount, the sale shall stand completed. 
The Liquidator shall then execute certiﬁ cate of sale or sale deed to transfer 
such assets and thereafter the assets shall be delivered to the highest bidder 
in the manner speciﬁ ed in terms of the sale. 
6.6. Respondent No.2 has contended that while submitting its bid for 
the subject property, the appellant was well aware of the terms and conditions 
governing the sale by auction. Appellant expressly accepted the aforesaid 
terms and conditions while submitting its application dated
16.07.2021 for 
participating in the auction bid process. According to him, on expiry of the 
time to submit bids on 20.07.2021, an auto generated e-mail from the web 
portal of ‘eauctioneer.com’ was sent to the appellant stating that the bid 
submitted by it was the highest. 
6.7.  Thereafter, by an e-mail dated 21.07.2021, Respondent No.2 
informed the appellant about cancellation of E-auction held on 20.07.2021 
under Clause 3(k) of the E-Auction Process Information Document. 
Appellant was advised to collect the EMD as a fresh E-auction sale was to 
be conducted. 
6.8. Respondent No.2 has mentioned that he had received an e-mail 
dated 10.09.2021 from one Mr. Amit Ghidia alleging that the directors of 
the appellant were also the founder promoters of M/s. Amrit Feeds Limited, 
the corporate debtor. On receipt of such e-mail, Respondent No.2 carried 
out inspection and upon veriﬁ cation came to know that one of the present 
directors of the appellant, Mr. Vijay Kumar Ghidia was a director and the 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
872 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
principal shareholder of the corporate debtor during the period 22.09.1994 
to 13.08.2019. Respondent No.2 has also mentioned that appellant was 
incorporated only in July, 2021. 
6.9. Referring to the proceeding before the Tribunal instituted by the 
appellant, he submits that the application ﬁ led by the appellant against 
cancellation of the E-auction was taken up for hearing on 29.07.2021 and 
concluded on the same day without giving any opportunity to Respondent 
No.2 to ﬁ le reply. However, the parties were permitted to ﬁ le written 
submissions which were duly ﬁ led by Respondent No.2. 
6.10. By order dated 12.08.2021, Tribunal allowed the application of 
the appellant and directed Respondent No.2 to send a communication to 
the appellant for depositing the balance sale consideration within the time 
speciﬁ ed in the E-auction notice. 
6.11. Punjab National Bank i.e., Respondent No.1, a ﬁ nancial creditor 
of the corporate debtor, having claims of Rs.136,61,93,948/- assailed the 
order dated 12.08.2021 before the Appellate Tribunal. In such proceedings, 
Respondent No.2 supported the stand of Respondent No.1. Appellate 
Tribunal by order dated 30.11.2021 allowed the appeal of Punjab National 
Bank and directed Respondent No.2 to initiate a fresh process of auction in 
accordance with the provisions of the Code and the Regulations. 
6.12. It is stated that after the order dated 30.11.2021 was passed by the 
Appellate
Tribunal, Respondent No.2 had sent an e-mail dated 02.12.2021 
calling upon the appellant to comply with the order of the Appellate Tribunal 
and to handover peaceful possession of the subject property. As there was no 
response from the appellant, Respondent No.2 made several calls to Navneet 
Kumar Ghidia, Director of Eva Agro Feeds Pvt. Ltd. on his mobile phone but 
the calls went unanswered. Appellant did not allow even the representative of 
Respondent No.2 to enter into the subject property. That apart, representative 
of Respondent No.2 had informed him that the appellant was wrongfully 
removing materials and equipments from the subject property. 
6.13. It is further stated that subsequent to cancellation of the E-auction 
sale of the subject property, Respondent No.2 had received a letter dated 
05.08.2021 from Sugna Feeds Pvt. Ltd., a well-established player in the 
poultry feeds sector, expressing its intention to participate in the auction of
873
the subject property. It is stated that in addition to the above, respondent 
No.2 had received an e-mail dated 20.08.2021 from IFFCO KISAN Delhi, 
a subsidiary company of Indian Farmers Fertilisers Cooperative (IFFCO) 
expressing its interest in the assets of the corporate debtor. 
6.14. In the above circumstances, Respondent No.2 has contended that 
cancellation of E-auction was justiﬁ ed and was done in the best interest of 
the stakeholders of the corporate debtor.  
7. Appellant has ﬁ led rejoinder aﬃ  davit to the counter aﬃ  davit of 
Respondent No.1.
7.1. While reiterating its contentions, appellant has stated that the 
adjudicating authority i.e., the Tribunal had rightly set aside the decision 
of the Liquidator (Respondent No.2). Respondent No.2 after issuing the 
certiﬁ cate certifying that appellant had won the auction of the subject property, 
cancelled the E-auction without giving any justiﬁ cation or reason for such 
cancellation. Referring to Clause 3 (a) of the E-Auction Process Information 
Document, appellant has contended that the said clause is contrary to the 
Regulations. In the facts and circumstances of the case, Respondent No.2 
could not have cancelled the auction. Such act of cancellation of E-auction 
was wholly illegal and arbitrary. In this connection, reliance has been 
placed upon para 1(12) of Schedule I to the Regulations. Appellant was the 
highest and sole bidder in the second round of auction and its bid amount 
matched the reserve
price as mentioned in the sale notice. Reserve price 
in the ﬁ rst round of auction was ﬁ xed at Rs.12,69,00,000/-. However, as 
the auction sale did not materialise, Respondent No.2 in the second round 
reduced the reserve price in order to get bidders to at least match the reserve 
price. This was done successfully by the appellant whereafter appellant was 
informed that it had won the bid. Action of Respondent No.2 in cancelling 
the E-auction after e-mailing the appellant that it had won the bid is a clear 
case of abuse of the process.
7.2. Respondent No.2 vide public notice dated 24.12.2021 scheduled 
fresh E-auction on 17.01.2022 again ﬁ xing the reserve price in relation 
to the subject property at Rs.10 crores which was the same amount as the 
reserve price in the second round of bidding and which was the bid amount 
of the appellant 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
874 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
7.3. Respondent No.1 has misinterpreted Clause 3 (k) to mean that 
since full amount was not paid, it was entitled to invoke the said clause 
and cancel the bid. Such a contention is wholly untenable having regard 
to the overall scheme of the Regulations. No reasons were assigned by the 
Liquidator while cancelling the auction process. The order cancelling the 
auction being devoid of any reasons does not indicate application of mind 
by the Liquidator.
7.4. Appellant has asserted that the Liquidator i.e. Respondent No.2 
had accepted the decision of the Tribunal by not ﬁ ling any appeal against 
the order dated 12.8.2021. Therefore, it is not open to the Liquidator to 
contest the claim of the appellant. 
8. As noticed above, one Mr. Harish Bagla has ﬁ led an application 
seeking intervention which we have allowed.
9. In addition to narrating the facts and commenting thereupon, the 
intervenor has averred that the principal person in control of the appellant 
is one Mr. Vijay Kumar Ghidia who is a director and principal shareholder 
of the appellant. Mr. Vijay Kumar Ghidia was also one of the promoter 
directors and principal shareholders of the corporate debtor. Sale of any 
asset of the corporate debtor could not have been conducted in favour of 
a related party of the corporate debtor in view of the speciﬁ c bar under 
Section 29A of the Code. As a matter of fact, Mr. Vijay Kumar Ghidia is 
also the maternal uncle of the
intervenor who is the ex-managing director 
of the corporate debtor. Mr. Vijay Kumar Ghidia therefore comes within 
the meaning of ‘related party’ as deﬁ ned under Sections 5(24) and 5(24A) 
of the Code. Therefore, the auction sale in favour of the appellant is bad in 
law and cannot be sustained.
9.1. This aspect was also brought to the notice of Respondent No.2 
i.e. the Liquidator.
9.2. It is stated that the intervenor had ﬁ led an appeal before the 
Appellate Tribunal being Company Appeal (AD) (Insolvency) No.789 of 
2021. In the said appeal, an interim order was passed on 27.09.2021 directing 
the parties to maintain status quo. Before the appeal of the intervenor could 
be heard, the Appellate Tribunal had passed the order dated 30.11.2021 
allowing the appeal of Respondent No.1 by setting aside the order of the
875
Tribunal dated 12.08.2021. Therefore, when the appeal of the intervenor 
came up for hearing before the Appellate Tribunal, the same was disposed 
of vide order dated 09.12.2021 as having been rendered infructuous. When 
the intervenor came to know that the appellant has ﬁ led the present appeal, 
it had ﬁ led the intervention application.
10. We have heard Mr. Neeraj Kishan Kaul, learned senior counsel for 
the appellant; Mr. Rajesh Kumar Gautam, learned counsel for Respondent 
No.1; Mr. Krishnaraj Thakker, learned counsel for Respondent No.2; and 
Mr. Siddharth Bhatnagar, learned senior counsel for the intervenor - Mr. 
Harish Bagla.
11. Mr. Neeraj Kishan Kaul, learned senior counsel for the appellant 
at the outset submits that Appellate Tribunal fell in complete error in setting 
aside the order of the Tribunal and restoring the order of the Liquidator. 
Adverting to the order of the Liquidator cancelling the auction sale, he 
submits that the same is devoid of any reasons. Such an order is not only 
arbitrary but is non est in the eye of law. There could not have been any 
occasion for the Liquidator to go for a fresh auction keeping the reserve 
price at the same amount of Rs.10 crores which was the bid oﬀ ered by the 
appellant and accepted by the Liquidator. In fact, Liquidator had declared 
that the appellant had won the bid. Tribunal had rightly appreciated the 
grievance of the appellant and interfered with the aforesaid order of the 
Liquidator. Liquidator
did not challenge the order of the Tribunal dated 
12.08.2021, rather Liquidator had complied with the same by accepting 
the balance sale consideration from the appellant and issuing the sale 
certiﬁ cate. Since Liquidator had accepted the order of the Tribunal, it was 
not open for him to support Respondent No.1 or the order of the Appellate 
Tribunal in the appeal ﬁ led by the appellant. He has also pointed out that at 
the time of auction, Mr. Vijay Kumar Ghidia was no longer connected with 
the corporate debtor having retired from the said company way back in the 
year 2011. Therefore, he cannot come within the ambit of the expression 
‘related party’ as deﬁ ned under the Code. He submits that the present is a 
ﬁ t case for setting aside the order of the Appellate Tribunal and restoring 
the order of the Tribunal which as a matter of fact has been complied with 
by the Liquidator.
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
876 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
12. Mr. Rajesh Kumar Gautam, learned counsel for Respondent 
No.1 submits that appellant has failed to point out any particular provision 
either in the Code or in the Regulations prohibiting the Liquidator from 
cancelling the auction sale after declaring the highest bidder but before 
completion of sale. Power of cancellation is available to the Liquidator under 
Clause 3(k) of the auction notice. Such a power could be exercised by the 
Liquidator without assigning any reason. While bidding, the appellant had 
unconditionally accepted all the clauses of the auction notice, including 
Clause 3(k). Therefore, the Tribunal was not justiﬁ ed in interfering with 
such a decision of the Liquidator and further directing the Liquidator to 
conclude the auction sale process. Before completion of sale, highest bidder 
has no vested right for conﬁ rmation of sale in his favour. Insofar as the 
maintainability of the appeal before the Appellate Tribunal is concerned, 
he submits that there is no bar or prohibition restraining a ﬁ nancial creditor 
from preferring an appeal against an order of the Tribunal since the ﬁ nancial 
creditor is certainly an aggrieved person and has substantial interest in the 
auction sale of the subject property of the corporate debtor. That apart, 
under para 1(11) of Schedule I to the Regulations, the Liquidator has the 
discretion to conduct multiple rounds of auction to maximize realization in 
the sale of
assets and to promote the best interest of the ﬁ nancial creditors. 
He submits that reliance on para 1(13) of Schedule I to the Regulations by 
learned senior counsel for the appellant is misplaced inasmuch as a sale 
can be said to have been completed only on payment of the full amount 
and not on declaration of a bidder as the highest bidder who in any case 
has no vested right to claim conﬁ rmation of sale. He submits that appellant 
is in no way prejudiced by the next round of auction which was scheduled 
on 17.01.2022 but could not proceed because of the restraint imposed by 
this Court. Appellant can certainly participate in the next round of auction.
12.1. In the above context, he submits that Tribunal was not justiﬁ ed 
in interfering with the decision of the Liquidator and therefore, Appellate 
Tribunal rightly set aside the said order of the Tribunal and in restoring the 
order of the Liquidator. He has referred to Clause 3 (k) of the auction notice 
which confers discretion upon the Liquidator to cancel the E-auction at any 
stage without assigning any reason. Adverting to the facts of the present 
case, he submits that the appellant was the sole bidder and his bid amount 
was exactly the same as the reserve price. It was in that context that the
877
Liquidator decided to cancel the auction with a view to have another round 
of auction to fetch a better price. There was nothing wrong or illegal in the 
exercise of such discretion by the Liquidator.
13. Mr. Krishnaraj Thakker, learned counsel for Respondent No.2 has 
also adopted and reiterated the above submissions made by learned counsel 
for Respondent No.1. Additionally, he submits that Liquidator had received 
an e-mail dated 10.09.2021 from one Mr. Amit Ghidia informing him that 
the promoter of the appellant was also the founder promoter of the corporate 
debtor. Mr. Vijay Kumar Ghidia who is one of the directors of the appellant 
was also a director and principal shareholder of the corporate debtor. Recent 
incorporation of the appellant in the month of July 2021 also raised suspicion 
about the nature of the appellant and its intentions. 
13.1. Appellant while submitting its bid had accepted the terms and 
conditions of the auction process. Therefore, it is not open to the appellant 
to question the exercise of discretion by the Liquidator, which is one of the 
terms and conditions of the auction.
13.2. In so far issuance of e-mail to the appellant declaring it as the 
winner of the auction process is concerned, he submits that on expiry of 
the time for placing of bids, an auto generated e-mail from the e-auction 
website “www.eauctioneer.com” was sent to the appellant stating that the 
bid submitted by it was the highest. It was an auto-generated e-mail and
cannot be construed to be the E-auction certiﬁ cate. In so far acceptance of 
the balance sale consideration and issuance of sale certiﬁ cate is concerned, 
he submits that the same was done as per the direction of the Tribunal. 
13.3. In the course of the hearing, he submitted that there were two 
assets of the corporate debtor; one at Lucknow (Lot No. 2) and the other at 
Mirzapur (Lot No.3). Since the assets at Lot No.2 fetched Rs.4.79 crores 
more than the reserve price, Liquidator believed that the subject property 
could fetch a higher amount than the reserve price of Rs.10 crores. Keeping 
this in mind, he had cancelled the E-auction process.
13.4. On the submission that Liquidator did not assail the decision of 
the Tribunal and therefore had accepted the same, his contention is that in all 
the proceedings Liquidator had contested the case projected by the appellant. 
Now that the appeal of Respondent No.1 has been allowed by the Appellate 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
878 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
Tribunal, Liquidator is bound by the same. He submits that decision of the 
Liquidator to cancel the auction was vindicated when post cancellation of 
auction, Liquidator received letter dated 05.08.2021 from Sugna Feeds 
Private Limited expressing its intention to participate in the auction of the 
subject property. Sugna Feeds Private Limited is a well-established player 
in the poultry sector whereas appellant was incorporated after issuance of 
the E-auction sale notice.
14. Mr. Siddharth Bhatnagar, learned senior counsel appearing for 
the intervenor highlighted the issue of ‘related party’. According to him, 
appellant should have been disqualiﬁ ed from participating in the E-auction 
by reason of being a ‘related party’. Promoter director of the appellant, 
Mr. Vijay Kumar Ghidia, is the maternal uncle of Mr. Harish Bagla, the 
intervener. Mr. Vijay Kumar Ghidia is one of the directors of the appellant. 
He was also one of the promoter directors and original subscribers to 
the Memorandum and Articles of Association of the corporate debtor. 
Elaborating further, he submits that mother of the intervenor Smt. Chanda 
Bagla is the sister of Mr. Vijay Kumar Ghidia. Intervenor has a signiﬁ cant 
stake in the corporate debtor having held about ﬁ fty-three per cent of the 
paid-up share-capital of the corporate debtor. Liquidator, therefore, should 
have cancelled the auction sale notice only on the ground that appellant 
is a
‘related party’ to the corporate debtor. Referring to the e-mail dated 
10.09.2021, he submits that Mr. Amit Ghidia, son of Mr. Vijay Kumar Ghidia 
had brought to the notice of the Liquidator that Mr. Vijay Kumar Ghidia is 
the maternal uncle of the intervenor. By virtue of such relationship, appellant 
would attract disqualiﬁ cation under Section 29A read with Section 5(24) 
and Section 5(24A) of the Code.
15. Referring to the above contentions, Mr. Neeraj Kishan Kaul, 
learned senior counsel for the appellant submits that it was because of the 
activities of persons like the intervenor that the corporate debtor has landed 
in the present situation. Therefore, it is not open to such persons to talk about 
getting proper valuation of the auctioned assets of the corporate debtor. In so 
far allegation of ‘related party’ is concerned, he submits that the same is no 
bar at all and cannot be held as a disqualiﬁ cation for the appellant inasmuch 
as Mr. Vijay Kumar Ghidia had ceased to be a director of the corporate 
debtor way back in the year 2011. To attract disqualiﬁ cation under Section
879
29A, the relationship has to be proximate. In this connection, he has placed 
reliance on the decision of this Court in the case of Swiss Ribbons Private 
Limited and Another versus Union of India and Others1.
16. Submissions made by learned counsel for the parties have received 
due consideration of the Court.
17. As we have noted above after initiation of the corporate insolvency 
resolution process, Liquidator i.e. Respondent No.2 had issued sale notice 
dated 02.06.2021 for sale of the subject property of the corporate debtor. 
The reserve price of the subject property was ﬁ xed at Rs.12.69 crores, 
whereas EMD was ﬁ xed at Rs.1,26,19,000.00. E-auction was scheduled 
on 23.06.2021 between 14.00 to 14.30 hrs. This E-auction did not fructify 
in the absence of any bidders. Thereafter, Respondent No. 2 issued second 
sale notice dated 28.06.2021 for auction sale amongst others of the subject 
property. This time the reserve price was scaled down to Rs.10 crores and 
correspondingly, the EMD was ﬁ xed at Rs.1 crore. Last date for deposit of 
EMD was 19.07.2021 and the date and time of bid was ﬁ xed as 20.07.2021 at 
14.30 hrs. It was mentioned therein that the E-auction sale would be subject 
to the terms and conditions prescribed in E-Auction Process Information 
Document available at the website of the second Respondent.
17.1. As it appears, appellant was the sole bidder and its bid value was 
Rs.10 crores which was equivalent to the reserve price. 
18. Pausing here
for a moment, we may advert to the Bid Application 
Form. As per Clause-7 of the Bid Application Form, the applicant i.e. the 
bidder was required to adhere to the terms and conditions mentioned in 
the E-Auction Process Information Document. Clause-9 provided that the 
applicant would participate in the E-auction for the sale of assets on as is 
where is basis, as is what is basis, whatever there is basis and no recourse 
basis. Further, if selected as the highest bidder, the bid amount would be 
unconditionally binding on the applicant. Clause-12 made it clear that the 
applicant would at all time adhere to the provisions of the Code and the 
Regulations. 
1 
(2019) 4 SCC 17
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
880 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
19. The E-Auction Process Information Document was issued by the 
Liquidator i.e. Respondent No.2 for regulating the E-auction of the subject 
property of the corporate debtor. As per Clause 2 (g), unless speciﬁ ed 
otherwise, EMD of the successful bidder would be retained towards part of 
the sale consideration and EMD of unsuccessful bidder would be refunded, 
which would not bear any interest. Clause 2 (h) says that in accordance with 
para 1(12) of Schedule I to the Regulations, on the closure of the auction, 
the highest bidder would be invited to provide balance sale consideration 
within 90 days of the date of such demand. As per proviso (i) of Clause 
2(h), payments made after 30 days would attract interest at the rate of 12 per 
cent and as per proviso (ii) of Clause 2(h), the sale shall be cancelled if the 
payment is not received within 90 days. Clause 2 (i) says that on payment 
of the full amount, the sale would stand completed and the Liquidator 
would execute the certiﬁ cate of sale or sale deed to transfer such assets 
which would be delivered to him in the manner speciﬁ ed in the terms of 
sale. As per Clause 2(m), the information provided in the E-Auction Process 
Information Document should be read together with the provisions of the 
Code and the Regulations. In the event of a conﬂ ict between the E-Auction 
Process Information Document and the Code or the Regulations, provisions 
of the Code or the
Regulations, as the case may be, would prevail. Mandate 
of Clause 2(r) is that the successful bidder would have to take over possession 
of the movable assets being sold under the E-auction within 15 days from 
the date of the complete payment to the Liquidator without any damage to 
the premises where the assets were kept. 
19.1. Clause 3 of the E-Auction Process Information Document deals 
with disclaimer. While Clause 3 (a) says that the said document has been 
issued by the Liquidator for general information purposes only; sub-clause 
(b) clariﬁ es that the said document is not a statutory document; it has not 
been approved or registered with any regulatory or statutory authority of 
Government of India or any State Government. Further, nothing relating to 
the E-Auction Process Information Document should be construed as legal, 
ﬁ nancial, accounting, regulatory or tax advice by the Liquidator. Clause 3 
(f) declares that by procuring a copy of the E-Auction Process Information 
Document, the recipient accepted the terms of the disclaimer, which forms an 
integral part of the E-Auction Process Information Document. As per Clause 
3(i), E-Auction Process Information Document is neither an agreement nor
881
an oﬀ er by the Liquidator to the prospective bidders or any other person. 
Objective of the E-Auction Process Information Document is to provide 
interested parties with information that may be useful to them in making 
their bids. Clause 3(k) declares that the Liquidator has absolute right to 
accept or reject any or all bids or adjourn/postpone/cancel the E-auction or 
withdraw any asset/property or portion thereof from the E-auction at any 
stage without assigning any reason thereof. As per Clause 5(m), the highest 
bid on the E-auction shall supersede all the previous bids of the respective 
bidders. However, the bidder of the highest oﬀ er/bid does not get any right 
to demand acceptance of his bid. 
20. On 21.07.2021, appellant received a congratulatory e-mail from the 
second respondent i.e., the Liquidator. The language of this e-mail is quite 
important. Appellant was informed that it had won the auction for the subject 
property. The winning bidders’ order had been prepared and the item was 
listed on the appellant’s web page. If the appellant had any queries, it was 
advised to contact the auction administrator. When the appellant requested 
Respondent No.2 for issuance of allotment letter in respect of the subject 
property, it received an e-mail from the Respondent No.2 on 21.07.2021 itself 
at 17:56 pm. Appellant was informed that in terms of Clause 3 (k) of the 
E-Auction Process Information Document, he had cancelled the E-auction 
held on 20.07.2021.
Appellant was informed that the Liquidator would come 
up with a fresh E-auction for sale of the subject property. 
20.1. From the aforesaid, we ﬁ nd that no reasons were assigned 
by the Liquidator for cancellation of the E-auction held on 20.07.2021. 
Appellant was simply informed that the E-auction was cancelled in terms 
of Clause 3(k) of the E-Auction Process Information Document. Clause 3 
(k) as discussed above only declares that the Liquidator has absolute right 
to accept or reject any or all bids or adjourn/postpone/cancel the E-auction 
etc., at any stage without assigning any reason therefor. We will advert to 
this clause a little later. 
21. To complete the narrative, we may mention that aggrieved by such 
cancellation, appellant had ﬁ led an application under Section 60 of the Code 
before the Tribunal assailing such cancellation. Issue before the Tribunal was 
whether the Liquidator was justiﬁ ed in cancelling the E-auction. Tribunal 
noted that the Liquidator had cancelled the auction without assigning any 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
882 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
reason. Though a contention was advanced by the Liquidator before the 
Tribunal that the other assets (at Lucknow) of the corporate debtor put up 
for auction fetched a higher price and therefore, the Liquidator chose to 
cancel the auction expecting a higher price in future auction process, the 
same was not accepted by the Tribunal. It would amount to comparing apples 
with oranges. Tribunal further noted that there was no material on record to 
support the perception of the Liquidator that cancelling the present auction 
and going for further auction would result in better price for the assets in 
question and that there cannot be an endless wait to obtain a better price. 
Holding that there was no reason for the Liquidator to cancel the E-auction 
when the earlier round of auction process did not fructify resulting in 
decrease in reserve price, Tribunal vide the order dated 12.08.2021 directed 
the Liquidator to send a communication to the appellant for depositing the 
balance sale consideration within the time speciﬁ ed in the E-auction notice. 
21.1. It has come on record that following the aforesaid order of the 
Tribunal, Liquidator i.e. Respondent No.2 had called upon the appellant 
to pay the balance sale consideration and on payment of the same by the 
appellant, issued the sale certiﬁ cate to the appellant in respect of the subject 
property. 
22. We may further mention that Respondent No.2, i.e. the Liquidator 
did
not assail the order of the Tribunal before the Appellate Tribunal. One of 
the ﬁ nancial creditors i.e. Respondent No.1 had ﬁ led the appeal before the 
Appellate Tribunal assailing the order of the Tribunal. Appellate Tribunal 
by the judgment and order dated 30.11.2021 observed that appellant was 
the sole bidder, its bid being equal to the reserve price. Liquidator invoked 
Clause 3(k) of the E-Auction Process Information Document and decided to 
cancel the auction. There was no concluded contract till that point of time; 
it is only after the total amount is paid that the sale is concluded. Before the 
sale can be successfully concluded, Liquidator had the right to cancel the 
sale. Successful bidder in the auction sale does not acquire any vested right 
in law to enforce the auction. Therefore, the Tribunal was not justiﬁ ed in 
setting aside cancellation of auction by the Liquidator. Tribunal had further 
failed to notice that the terms of the auction sale notice provided absolute 
right to the Liquidator to accept or reject any bid or to cancel the auction 
without assigning any reason. While setting aside the order of the Tribunal
883
as well as the steps taken in compliance thereto, Appellate Tribunal gave 
liberty to the Liquidator to initiate fresh process of auction. Pursuant thereto, 
Liquidator i.e. Respondent No.2 had issued a subsequent sale notice dated 
24.12.2021 for E-auction sale of the subject property, the date of auction 
being 17.01.2022. Interestingly, in this round of auction, the reserve price 
was also maintained at Rs.10 crores. As we have noticed above, this Court 
by order dated 10.01.2022 while issuing notice had stayed the auction 
scheduled on 17.01.2022.
23. Section-5 of the Code deals with the definition of various 
expressions used in the Code. As per section 5(18), ‘Liquidator’ means an 
insolvency professional appointed as a liquidator in accordance with the 
provisions of Chapter III or Chapter V of Part I of the Code, as the case 
may be. Chapter III deals with liquidation process, whereas Chapter V deals 
with voluntary liquidation of corporate persons. Section 34, which is under 
Chapter III, provides for appointment of Liquidator and the fee to be paid. 
Sub-section (1) of Section 34 says that where an adjudicating authority 
passes an order for liquidation of the corporate debtor under Section 33, the 
resolution professional appointed for the corporate insolvency resolution 
process shall, subject to submission of written consent, act as the Liquidator 
for the purposes of liquidation unless replaced by the adjudicating authority. 
As per sub-section (2), on the
appointment of a Liquidator under Section 34 
all powers of the board of directors, key managerial personnel and partners 
of the corporate debtor, as the case may be, shall cease to have eﬀ ect and 
shall be vested in the Liquidator. Sub-section (3) requires personnel of the 
corporate debtor to extend all assistance and cooperation to the Liquidator 
in managing the aﬀ airs of the corporate debtor. Sub-sections (4) to (7) deal 
with replacement of a resolution professional whereas sub-sections (8) and 
(9) deal with fees to be charged by the Liquidator. 
23.1. Powers and duties of Liquidator are provided in Section 35 of 
the Code. Sub-section (1) enumerates the various powers and duties that 
has to be performed and discharged by the Liquidator. Clause (f) says that 
the Liquidator has the power and duty to sell the immovable and movable 
properties and actionable claims of the corporate debtor in liquidation by 
public auction or private contract, with power to transfer such property to 
any person or body corporate, or to sell the same in parcels in such manner 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
884 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
as may be speciﬁ ed. As per the proviso, the Liquidator shall not sell the 
immovable and movable properties or actionable claims of the corporate 
debtor in liquidation to any person who is not eligible to be a resolution 
applicant. 
23.2.  As per Section 36, for the purpose of liquidation, the Liquidator 
shall form an estate of the assets to be called the liquidation estate in relation 
to the corporate debtor and shall hold the liquidation estate as a ﬁ duciary 
for the beneﬁ t of all the creditors. 
23.3. In addition to the above, there are various other powers and 
duties of the Liquidator. 
24. From a conjoint reading of the above provisions, it is evident 
that the Liquidator virtually steps into the shoes of the management of the 
corporate debtor and oversees the liquidation process. In this process, he 
holds the liquidation estate of the corporate debtor as a ﬁ duciary for the 
beneﬁ t of all the creditors. While overseeing the liquidation process, he has 
the mandate to sell all movable and immovable properties and actionable 
claims of the corporate debtor in liquidation by way of either public auction 
or by private contract, though he cannot sell such property or claims to any 
person who is not eligible to be a resolution applicant. 
25. While we are on the powers and duties of the Liquidator, it would 
be apposite to refer to certain provisions of the Regulations framed in 
exercise of the powers conferred by
Section 5 and other sections of the 
Code read with Section 240 of the Code as per which the Insolvency and 
Bankruptcy Board of India may make regulations to carry out provisions of 
the Code. Regulation 3 deals with eligibility for appointment as Liquidator. 
As per Regulation 3(1), an insolvency professional shall be eligible to be 
appointed as a Liquidator if he and every partner or director of the insolvency 
professional entity of which he is a partner or director is independent of the 
corporate debtor. Explanation below Regulation 3 (1) explains as to who 
are the persons considered independent of the corporate debtor. As per 
Explanation (b), a person shall be considered independent of the corporate 
debtor if he is not a related party of the corporate debtor. 
25.1. Regulation 5 says that the Liquidator shall prepare and submit 
various reports to the adjudicating authority (Tribunal) regarding the
885
liquidation process. If in this process the books of account of the corporate 
debtor are incomplete on the liquidation commencement date, the Liquidator 
under Regulation 6 shall have them completed and brought up to date. That 
apart, the Liquidator is required to maintain various registers and books in 
relation to the liquidation of the corporate debtor. In addition to that, as per 
Regulation 7, he may appoint a professional to assist him in discharging his 
duties, obligations and functions. However, those professionals should not 
be his relative or related party of the corporate debtor or has served as an 
auditor to the corporate debtor in the preceding ﬁ ve years. Under Regulation 
8, the Liquidator is required to engage in consultation with the stakeholders 
and the stakeholders consulted under Section 35 (2) of the Code shall extend 
all assistance and cooperation to the Liquidator to complete the liquidation 
of the corporate debtor. 
25.2. Regulation 32 empowers the Liquidator to sell the assets of 
the corporate debtor. Mode of sale is referred to in Regulation 33. As 
per Regulation 33(1), the Liquidator shall ordinarily sell the assets of the 
corporate debtor through an auction in the manner speciﬁ ed in Schedule I.
26. This brings us to Schedule I of the Regulations dealing with mode 
of sale. Para 1 lays down the steps to be taken for auction sale of an asset by 
the Liquidator. The steps to be taken are mentioned in paras 1(2) to 1(13). 
As per para
1(3), the Liquidator shall prepare terms and conditions of sale, 
including reserve price, earnest money deposit (EMD) as well as pre-bid 
qualiﬁ cations, if any. The second proviso clariﬁ es that EMD shall not exceed 
10 per cent of the reserve price, which as per para 1(4) shall be the value 
of the asset arrived at in accordance with Regulation 35. 
27. Reverting to Regulation 35, we may mention that as per sub-
Regulation (1) of the aforesaid provision, the Liquidator shall consider the 
average of the estimates of the values arrived under Regulation 35. As per 
sub-Regulation (2), in cases not covered under sub-Regulation (1) or where 
the Liquidator is of the opinion that fresh valuation is required under the 
circumstances, he shall within seven days of the liquidation commencement 
date, appoint two registered valuers to determine the realisable value of the 
assets or the businesses of the corporate debtor. The ﬁ rst proviso mentions 
certain persons who should not be appointed as registered valuers, such 
as, a relative of the Liquidator; a related party of the corporate debtor etc. 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
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[2023] 13 S.C.R.
Sub-Regulation (3) says that the registered valuers appointed under sub-
Regulation (2) shall independently submit to the Liquidator the estimates of 
realisable value of the assets or the businesses, as the case may be, computed 
in accordance with the Companies (Registered Valuers and Valuation) Rules, 
2017 after physical veriﬁ cation of the assets of the corporate debtor. Sub-
Regulation (4) provides that the average of the two estimates received under 
sub-Regulation (3) shall be taken as the value of the assets or businesses. 
28. Coming back to Schedule-I, we ﬁ nd that as per para 1(4A), where 
an auction fails at the reserve price, the Liquidator may reduce the price by 
up to 25% of such value to conduct subsequent auction. 
28.1. Paras 1(11), (11A), (12) and (13) of Schedule-I are relevant 
since much emphasis has been placed by learned counsel for the parties on 
these provisions. As per para 1(11), if it is required, Liquidator may conduct 
multiple rounds of auction to maximize the realization from the sale of the 
assets and to promote the best interest of the creditors. Para 1(11A) says that 
where the Liquidator rejects the highest bid in an auction process, he shall 
intimate the reasons for such rejection to the highest bidder and mention it in 
the next progress report. While learned senior counsel for the appellant has 
laid great emphasis on this provision on the basis of which he has assailed 
the unreasoned
cancellation of the bid of the appellant, learned senior 
counsel for the intervenor has pointed out that para 1(11A) was inserted in 
Schedule I vide notiﬁ cation dated 30.09.2021 with eﬀ ect from 30.09.2021. 
According to him, this provision is prospective and cannot be applied to 
auctions conducted prior to 30.09.2021, including the auction in question. 
Therefore, there was no requirement for the Liquidator to give reasons for 
cancellation of the bid of the appellant. 
29. We are afraid we cannot accept such a contention made on behalf 
of the intervenor. While it is true that para 1(11A) came to be inserted in 
Schedule 1 to the Regulations with eﬀ ect from 30.09.2021, it does not imply 
that an auction sale or the highest bid prior to the aforesaid date could be 
cancelled by the Liquidator exercising unfettered discretion and without 
furnishing any reason. It is trite law that furnishing of reasons is an important 
aspect rather a check on the arbitrary exercise of power. Furnishing of reasons 
presupposes application of mind to the relevant factors and consideration by 
the concerned authority before passing an order. Absence of reasons may be a
887
good reason to draw inference that the decision making process was arbitrary. 
Therefore, what para 1(11A) has done is to give statutory recognition to the 
requirement for furnishing reasons, if the Liquidator wishes to reject the bid 
of the highest bidder. Furnishing of reasons, which is an integral facet of the 
principles of natural justice, is embedded in a provision or action, whereby 
the highest bid is rejected by the Liquidator. Thus, what para 1(11A) has 
done is to give statutory recognition to this well-established principle. It 
has made explicit what was implicit. 
30. In S. N. Mukherjee versus Union of India2, this Court opined that 
the requirement to record reason can be regarded as one of the principles of 
natural justice which governs exercise of power by administrative authorities. 
The rules of natural justice are not embodied rules. The extent of their 
application depends upon the particular statutory framework whereunder 
jurisdiction has been conferred on the administrative authority. Except in 
cases where the requirement of recording reasons has been dispensed with 
expressly or by necessary implication, an administrative authority exercising 
judicial or quasi-judicial functions is required to record the reasons for its 
decision. This Court held as follows: -  
39. The object underlying the rules of natural justice “is to prevent 
miscarriage of justice” and secure “fair play in action”. As pointed out 
earlier the requirement about
recording of reasons for its decision by 
an administrative authority exercising quasi-judicial functions achieves 
this object by excluding chances of arbitrariness and ensuring a degree 
of fairness in the process of decision-making. Keeping in view the 
expanding horizon of the principles of natural justice, we are of the 
opinion, that the requirement to record reason can be regarded as one 
of the principles of natural justice which govern exercise of power by 
administrative authorities. The rules of natural justice are not embodied 
rules. The extent of their application depends upon the particular 
statutory framework whereunder jurisdiction has been conferred on 
the administrative authority. With regard to the exercise of a particular 
power by an administrative authority including exercise of judicial or 
quasi-judicial functions the legislature, while conferring the said power, 
2 
(1990) 4 SCC 594
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
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[2023] 13 S.C.R.
may feel that it would not be in the larger public interest that the reasons 
for the order passed by the administrative authority be recorded in the 
order and be communicated to the aggrieved party and it may dispense 
with such a requirement. It may do so by making an express provision 
to that eﬀ ect as those contained in the Administrative Procedure Act, 
1946 of U.S.A. and the Administrative Decisions (Judicial Review) 
Act, 1977 of Australia whereby the orders passed by certain speciﬁ ed 
authorities are excluded from the ambit of the enactment. Such an 
exclusion can also arise by necessary implication from the nature of 
the subject matter, the scheme and the provisions of the enactment. 
The public interest underlying such a provision would outweigh the 
salutary purpose served by the requirement to record the reasons. The 
said requirement cannot, therefore, be insisted upon in such a case.
40. For the reasons aforesaid, it must be concluded that except in 
cases where the requirement has been dispensed with expressly or by 
necessary implication, an administrative authority exercising judicial 
or quasi-judicial functions is required to record the reasons for its 
decision.
31. This Court in State of Orissa versus Dhaniram Luhar3 reiterated 
the importance of furnishing reasons in decision making, be it administrative, 
quasi-judicial or judicial. It was in that context that this Court opined that 
reason is the
heartbeat of every conclusion, and without the same it becomes 
lifeless. Reasons are live links between the mind of the decision-taker and 
the decision or conclusion arrived at. Reasons substitute subjectivity by 
objectivity. One of the salutary requirements of natural justice is spelling 
out reasons for an order made; in other words, a speaking out. This is what 
has been opined in paragraph Nos. 7 and 8: 
7. Reason is the heartbeat of every conclusion, and without the same 
it becomes lifeless. (See Raj Kishore Jha v. State of Bihar [(2003) 11 
SCC 519 : 2004 SCC (Cri) 212 : (2003) 7 Supreme 152] .)
8. Even in respect of administrative orders Lord Denning, M.R. 
in Breen v. Amalgamated Engg. Union [(1971) 1 All ER 1148 : (1971) 
3 
(2004) 5 SCC 568
889
2 QB 175 : (1971) 2 WLR 742 (CA)] observed: “The giving of reasons 
is one of the fundamentals of good administration.” In Alexander 
Machinery (Dudley) Ltd. v. Crabtree [1974 ICR 120 (NIRC)] it was 
observed: “Failure to give reasons amounts to denial of justice.” 
“Reasons are live links between the mind of the decision-taker to 
the controversy in question and the decision or conclusion arrived 
at.” Reasons substitute subjectivity by objectivity. The emphasis on 
recording reasons is that if the decision reveals the “inscrutable face 
of the sphinx”, it can, by its silence, render it virtually impossible for 
the courts to perform their appellate function or exercise the power 
of judicial review in adjudging the validity of the decision. Right to 
reason is an indispensable part of a sound judicial system; reasons at 
least suﬃ  cient to indicate an application of mind to the matter before 
court. Another rationale is that the aﬀ ected party can know why the 
decision has gone against him. One of the salutary requirements of 
natural justice is spelling out reasons for the order made; in other 
words, a speaking-out. The “inscrutable face of the sphinx” is ordinarily 
incongruous with a judicial or quasi-judicial performance.”
32. Again, in East Coast Railway versus Mahadev Appa Rao4, this 
Court observed that arbitrariness in the making of an order by an authority 
can manifest itself in diﬀ erent forms. Non-application of mind by the 
authority making the order is
only one of them. Application of mind is best 
demonstrated by disclosure of mind by the authority making the order and 
disclosure is best done by recording the reasons that led the authority to 
pass the order in question. Absence of reasons either in the order passed 
by the authority or in the record contemporaneously maintained is clearly 
suggestive of the order being arbitrary, hence legally unsustainable. The 
above observations of this Court ﬁ nd place in paragraph No.23 which is 
extracted hereinunder: 
23. Arbitrariness in the making of an order by an authority can manifest 
itself in diﬀ erent forms. Non-application of mind by the authority 
making the order is only one of them. Every order passed by a public 
authority must disclose due and proper application of mind by the 
4 
(2010) 7 SCC 678
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
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[2023] 13 S.C.R.
person making the order. This may be evident from the order itself 
or the record contemporaneously maintained. Application of mind is 
best demonstrated by disclosure of mind by the authority making the 
order. And disclosure is best done by recording the reasons that led the 
authority to pass the order in question. Absence of reasons either in 
the order passed by the authority or in the record contemporaneously 
maintained is clearly suggestive of the order being arbitrary hence 
legally unsustainable.
33. This position has been reiterated by this Court in Kranti Associates 
(P) Ltd. Versus Masood Ahmed Khan5, wherein this Court emphasized 
that an order passed by a quasi-judicial authority or even an administrative 
authority aﬀ ecting the rights of parties, must be a speaking order. In other 
words, the order must speak for itself. This Court held as follows: - 
12.The necessity of giving reason by a body or authority in support 
of its decision came up for consideration before this Court in several 
cases. Initially this Court recognised a sort of demarcation between 
administrative orders and quasi-judicial orders but with the passage of 
time the distinction between the two got blurred and thinned out and 
virtually reached a vanishing point in the judgment of this Court in A.K. 
Kraipak v. Union of India [(1969) 2 SCC 262 : AIR 1970 SC 150] .
13. In Keshav Mills Co. Ltd. v. Union of India [(1973) 1 SCC 380 : AIR 
1973 SC
389] this Court approvingly referred to the opinion of Lord 
Denning in R. v. Gaming Board for Great Britain, ex p Benaim [(1970) 
2 QB 417 : (1970) 2 WLR 1009 : (1970) 2 All ER 528 (CA)] and quoted 
him as saying “that heresy was scotched in Ridge v. Baldwin [1964 
AC 40 : (1963) 2 WLR 935 : (1963) 2 All ER 66 (HL)] ”.
14. The expression “speaking order” was first coined by Lord 
Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, 
while explaining the ambit of the writ of certiorari, referred to orders 
with errors on the face of the record and pointed out that an order with 
errors on its face, is a speaking order. (See pp. 1878-97, Vol. 4, Appeal 
Cases 30 at 40 of the Report).
5 
(2010) 9 SCC 496
891
15. This Court always opined that the face of an order passed by a 
quasi-judicial authority or even an administrative authority aﬀ ecting 
the rights of parties, must speak. It must not be like the “inscrutable 
face of a sphinx”.
34. Having discussed the above, we may again advert to the impugned 
e-mail dated 21.07.2021, as per which Liquidator informed the appellant that 
in terms of Clause 3(k) of the E-Auction Process Information Document he 
had cancelled the E-auction held on 20.07.2021. As we have already noted, 
Clause 3(k) of the E-Auction Process Information Document simply says 
that the Liquidator has absolute right to accept or reject any or all bids or 
adjourn/postpone/cancel the E-auction or withdraw any asset/ property 
or portion thereof from the E-auction at any stage without assigning any 
reason thereof. While the Liquidator has traced his authority to the aforesaid 
provision, we may mention that as per Clause 2(m), the information 
provided in the E-Auction Process Information Document should be read 
together with the provisions of the Code and the Regulations. In the event 
of a conﬂ ict between the E-Auction Process Information Document and the 
Code or the Regulations, the provisions of the Code or the Regulations, as 
the case may be, shall always prevail. That apart, Clause 3(i) clariﬁ es that 
the E-Auction Process Information Document is neither an agreement nor 
an oﬀ er by the Liquidator to the prospective bidders or any other person.
The objective of the E-Auction Process Information Document is to provide 
information to the interested party to enable it to oﬀ er its bid. As per Clause 
5(n) the bidder with the highest oﬀ er/bid does not get any right to demand 
acceptance of his bid. 
34.1. A conjoint reading of the aforesaid provisions would make it clear 
that while the highest bidder has no indefeasible right to demand acceptance 
of his bid, the Liquidator if he does not want to accept the bid of the highest 
bidder has to apply his mind to the relevant factors. Such application of 
mind must be visible or manifest in the rejection order itself. As this Court 
has emphasized the importance and necessity of furnishing reasons while 
taking a decision aﬀ ecting the rights of parties, it is incomprehensible that an 
administrative authority can take a decision without disclosing the reasons 
for taking such a decision. 
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
892 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
35. It follows therefore that though para 1(11A) has been inserted in 
Schedule I to the Regulations w.e.f. 30.9.20221, it only recognizes the need 
and necessity for giving reasons in the event of rejecting the highest bid. 
It is an acknowledgment of the fundamental principle. Thus, intimation of 
the reasons for rejection of the highest bid would also be the requirement 
prior to 30.09.2021.
36. In so far the present case is concerned, we have already noted the 
language employed by the Liquidator at the end of the bidding process. Vide 
the e-mail dated 21.07.2021 the appellant was informed that it had won the 
auction and that its winning order had been prepared. The language of this 
e-mail clearly indicates ﬁ nality of the decision making by the Liquidator. 
37. As per para 1(12) of Schedule-I, on the close of the auction the 
highest bidder shall be invited to provide balance sale consideration within 
90 days of the date of such demand. As per the ﬁ rst proviso, payments made 
after 30 days shall attract interest @ 12%. The second proviso says that the 
sale shall be cancelled if the payment is not received within 90 days. 
37.1 Para 1(13) says that on payment of the full amount the sale shall 
stand completed. The Liquidator shall execute the certiﬁ cate of sale or sale 
deed to transfer such assets and the assets shall be delivered to the successful 
bidder in the manner speciﬁ ed in the terms of sale. 
38. Therefore,
if we read the provisions of Schedule-I, more particularly 
paras 1(11) to (13) thereof, in a conjoint manner a view may reasonably 
be taken that ordinarily the highest bid may be accepted by the Liquidator 
unless there are statutory inﬁ rmities in the bidding or the bidding is collusive 
in nature or there is an element of fraud in the bidding process. 
39. In Valji Khimji and Company Versus Oﬃ  cial Liquidator of 
Hindustan Nitro Product (Gujarat) Limited and Others6, this Court 
deprecated entertaining objections after conﬁ rmation of sale. Entertaining 
of objections after the sale is conﬁ rmed should not ordinarily be allowed, 
except on very limited grounds like fraud. Otherwise, no auction-sale will 
ever be complete. In the facts of that case, this Court noted that it was an open 
auction after wide publicity. There was no allegation of fraud in the auction. 
6 
(2008) 9 SCC 299
893
Therefore, there was no justiﬁ cation to set aside the conﬁ rmation of sale. 
It was opined that if every conﬁ rmed sale can be set aside the result would 
be that no auction-sale will ever be completed because always somebody 
can come after the auction or its conﬁ rmation oﬀ ering a higher amount. 
40. K. Kumara Gupta Versus Sri Markendaya and Sri Omkareswara 
Swamy Temple and Ors.7, is a case relating to auctioning of land belonging 
to the Devasthanam. This Court opined that unless and until it was found 
that there was any material irregularity and/or illegality in holding the public 
auction and/or the auction sale was vitiated by any fraud or collusion it is 
not open to set aside the auction or sale in favour of the highest bidder on 
the basis of some representations made by a third party who did not even 
participate in the auction proceedings and did not make any oﬀ er. If there 
is repeated interference in the auction process, the object and purpose of 
holding public auction and the sanctity of public auction would be frustrated. 
This Court in paragraph 23 of the judgment held that unless there are 
allegations of fraud, collusion etc., the highest oﬀ er received in the public 
auction should be accepted as a fair value. Otherwise, there shall not be any 
sanctity of a public auction. 
41. It is interesting to note that insofar the present case is concerned, 
even after cancelling the highest bid of the appellant, in the subsequent 
sale notice dated
24.12.2021, Respondent No.2 i.e. the Liquidator had 
again ﬁ xed the reserve price of the subject property at Rs.10 crores which 
was the reserve price in the previous round of auction sale and which was 
also the bid value of the appellant. If this is the position, we fail to ﬁ nd any 
rationale or justiﬁ cation in rejecting the bid of the appellant and going for 
another round of auction at the same reserve price. 
42. Thus, mere expectation of the Liquidator that a still higher price 
may be obtained can be no good ground to cancel an otherwise valid auction 
and go for another round of auction. Such a cause of action would not only 
lead to incurring of avoidable expenses but also erode credibility of the 
auction process itself. That apart, post auction it is not open to the Liquidator 
to act on third party communication and cancel an auction, unless it is found 
that fraud or collusion had vitiated the auction. The necessary corollary that 
7 
(2022) 5 SCC 710
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
894 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
follows therefrom is that there can be no absolute or unfettered discretion 
on the part of the Liquidator to cancel an auction which is otherwise valid. 
As it is in an administrative framework governed by the rule of law there 
can be no absolute or unfettered discretion of the Liquidator. Further, upon 
a thorough analysis of all the provisions concerning the Liquidator it is 
evident that the Liquidator is vested with a host of duties, functions and 
powers to oversee the liquidation process in which he is not to act in any 
adversarial manner while ensuring that the auction process is carried out 
in accordance with law and to the beneﬁ t of all the stakeholders. Merely 
because the Liquidator has the discretion of carrying out multiple auction it 
does not necessarily imply that he would abandon or cancel a valid auction 
fetching a reasonable price and opt for another round of auction process with 
the expectation of a better price. Tribunal had rightly held that there were 
no objective materials before the Liquidator to cancel the auction process 
and to opt for another round of auction.
43. Learned senior counsel for the intervenor argued that Shri Vijay 
Kumar Ghidia who is the director and principal shareholder of the appellant 
was also one of the promotor director and principal shareholder of the 
corporate debtor. Therefore, he is a ‘related party’ of the corporate debtor 
and as such is not eligible; rather
debarred from participating in the auction 
of the subject property of the corporate debtor. However, it was pointed out 
by learned senior counsel for the appellant that Shri Vijay Kumar Ghidia is 
no longer connected with the corporate debtor having retired from the said 
company way back in the year 2011. 
44. At this stage, we may advert to Section 5(24) of the Code which 
deﬁ nes the expression ‘related party’ in relation to a corporate debtor. Section 
5(24) reads as follows:- 
5. Deﬁ nitions – In this part, unless the context other requires, - 
(24) “related party”, in relation to a corporate debtor, means—
(a) a director or partner of the corporate debtor or a relative of a 
director or partner of the corporate debtor;
(b) a key managerial personnel of the corporate debtor or a 
relative of a key managerial personnel of the corporate debtor;
895
(c) a limited liability partnership or a partnership ﬁ rm in which 
a director, partner, or manager of the corporate debtor or his 
relative is a partner;
(d) a private company in which a director, partner or manager 
of the corporate debtor is a director and holds along with his 
relatives, more than two per cent of its share capital;
(e) a public company in which a director, partner or manager of 
the corporate debtor is a director and holds along with relatives, 
more than two per cent of its paid-up share capital;
(f) anybody corporate whose board of directors, managing 
director or manager, in the ordinary course of business, acts on 
the advice, directions or instructions of a director, partner or 
manager of the corporate debtor;
(g) any limited liability partnership or a partnership ﬁ rm whose 
partners or employees in the ordinary course of business, acts 
on the advice, directions or instructions of a director, partner or 
manager of the corporate debtor;
(h) any person on whose advice, directions or instructions, a 
director, partner or manager of the corporate debtor is accustomed 
to act;
(i) a body corporate which is a holding, subsidiary or an associate 
company of the corporate debtor, or a subsidiary of a holding 
company to which the corporate debtor is a subsidiary;
(j) any person who controls more than twenty per cent of voting 
rights in the corporate debtor on account of ownership or a voting 
agreement;
(k) any person in whom the corporate debtor
controls more than 
twenty per cent of voting rights on account of ownership or a 
voting agreement;
(l) any person who can control the composition of the board 
of directors or corresponding governing body of the corporate 
debtor;
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
896 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
(m) any person who is associated with the corporate debtor on 
account of—
(i) participation in policy-making processes of the corporate 
debtor; or
(ii) having more than two directors in common between 
the corporate debtor and such person; or
(iii) interchange of managerial personnel between the 
corporate debtor and such person; or
(iv) provision of essential technical information to, or from, 
the corporate debtor; 
44.1  Clause (a) of Section 5(24) says that a director or partner of 
the corporate debtor or a relative of a director or partner of the corporate 
debtor would be a related party. Likewise, as per Clause (e) of Section 
5(24), ‘related party’ in relation to a corporate debtor would mean a private 
or public company in which a director, partner or manager of the corporate 
debtor is a director and holds along with relatives more than two percent of 
its share capital or paid-up share capital, as the case may be. 
45. Similarly, Section 5(24A) deﬁ nes ‘related party’ in relation to an 
individual which is as follows: - 
5. Deﬁ nitions – In this Part, unless the context otherwise requires,- 
(24A)  “related party”, in relation to an individual, means—
(a) a person who is a relative of the individual or a relative of the 
spouse of the individual;
(b) a partner of a limited liability partnership, or a limited liability 
partnership or a partnership ﬁ rm, in which the individual is a partner;
(c) a person who is a
trustee of a trust in which the beneﬁ ciary of the 
trust includes the individual, or the terms of the trust confers a power 
on the trustee which may be exercised for the beneﬁ t of the individual;
(d) a private company in which the individual is a director and holds 
along with his relatives, more than two per cent. of its share capital;
897
(e) a public company in which the individual is a director and holds 
along with relatives, more than two per cent. of its paid-up share capital;
(f) a body corporate whose board of directors, managing director 
or manager, in the ordinary course of business, acts on the advice, 
directions or instructions of the individual;
(g) a limited liability partnership or a partnership ﬁ rm whose partners 
or employees in the ordinary course of business, act on the advice, 
directions or instructions of the individual;
(h) a person on whose advice, directions or instructions, the individual 
is accustomed to act;
(i) a company, where the individual or the individual along with its 
related party, own more than ﬁ fty per cent. of the share capital of the 
company or controls the appointment of the board of directors of the 
company.
Explanation.—For the purposes of this clause,—
(a) “relative”, with reference to any person, means anyone who is 
related to another, in the following manner, namely—
(i) members of a Hindu Undivided Family,
(ii) husband,
(iii) wife,
(iv) father,
(v) mother,
(vi) son,
(vii) daughter,
(viii) son’s daughter and son,
(ix) daughter’s daughter and son,
(x) grandson’s daughter and son,
(xi) granddaughter’s daughter and son,
(xii) brother,
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
898 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
(xiii) sister,
(xiv) brother’s son and daughter,
(xv) sister’s son and daughter,
(xvi) father’s father and mother,
(xvii) mother’s father and mother,
(xviii) father’s brother and sister,
(xix) mother’s brother and sister, and
(b) wherever the relation is that of a son, daughter, sister or brother, 
their spouses shall also be included;]
45.1. From the above, it is evident that a person who is a relative of the 
individual or a relative of the spouse of the individual would be a ‘related 
party’ in relation to that individual. That apart, a private company or a public 
company in which the individual is a director and holds along with relatives 
more than two percent of its share capital or paid up share capital, as the 
case may be, would be a ‘related party’ in relation to an individual. Further, 
as per the explanation, both maternal and paternal uncles would be covered 
within the deﬁ nition of ‘related party’. 
46. Section 29A of the Code mentions persons not eligible to be a 
resolution applicant. Section 29A reads as follows: - 
29-A. Persons not eligible to be resolution applicant.—A person 
shall not be eligible to submit a resolution plan, if such person, or any 
other person acting jointly or in concert with such person,—
(a) is an undischarged insolvent;
(b) is a wilful defaulter in accordance with the guidelines of the Reserve 
Bank of India issued under the Banking Regulation Act, 1949 (10 of 
1949);
(c)  [at the time
of submission of the resolution plan has an account,] 
or an account of a corporate debtor under the management or control 
of such person or of whom such person is a promoter, classiﬁ ed as 
non-performing asset in accordance with the guidelines of the Reserve 
Bank of India issued under the Banking Regulation Act, 1949 (10 of 
1949)  [or the guidelines of a ﬁ nancial sector regulator issued under
899
any other law for the time being in force,] and at least a period of 
one year has lapsed from the date of such classiﬁ cation till the date 
of commencement of the corporate insolvency resolution process of 
the corporate debtor:
Provided that the person shall be eligible to submit a resolution plan 
if such person makes payment of all overdue amounts with interest 
thereon and charges relating to non-performing asset accounts before 
submission of resolution plan:
 [Provided further that nothing in this clause shall apply to a resolution 
applicant where such applicant is a ﬁ nancial entity and is not a related 
party to the corporate debtor.
Explanation I.—For the purposes of this proviso, the expression 
“related party” shall not include a ﬁ nancial entity, regulated by a 
ﬁ nancial sector regulator, if it is a ﬁ nancial creditor of the corporate 
debtor and is a related party of the corporate debtor solely on account 
of conversion or substitution of debt into equity shares or instruments 
convertible into equity shares  [or completion of such transactions 
as may be prescribed,] prior to the insolvency commencement date.
Explanation II.—For the purposes of this clause, where a resolution 
applicant has an account, or an account of a corporate debtor under 
the management or control of such person or of whom such person is 
a promoter, classiﬁ ed as non-performing asset and such account was 
acquired pursuant to a prior resolution plan approved under this Code,
then, the provisions of this clause shall not apply to such resolution 
applicant for a period of three years from the date of approval of such 
resolution plan by the Adjudicating Authority under this Code;]
 [(d) has been convicted for any oﬀ ence punishable with imprisonment—
(i) for two years or more under any Act speciﬁ ed under the Twelfth 
Schedule; or
(ii) for seven years or more under any other law for the time being 
in force:
Provided that this clause shall not apply to a person after the expiry of 
a period of two years from the date of his release from imprisonment:
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
900 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
Provided further that this clause shall not apply in relation to a 
connected person referred to in clause (iii) of Explanation I;]
(e) is disqualiﬁ ed to act as a director under the Companies Act, 2013 
(18 of 2013):
 [Provided that this clause shall not apply in relation to a connected 
person referred to in clause (iii) of Explanation I;]
(f) is prohibited by the Securities and Exchange Board of India from 
trading in securities or accessing the securities markets;
(g) has been a promoter or in the management or control of a corporate 
debtor in which a preferential transaction, undervalued transaction, 
extortionate credit transaction or fraudulent transaction has taken place 
and in respect of which an order has been made by the Adjudicating 
Authority under this Code:
 [Provided that this clause shall not apply if a preferential transaction, 
undervalued transaction, extortionate credit transaction or fraudulent 
transaction has taken place prior to the acquisition of the corporate 
debtor by the resolution applicant pursuant to a resolution plan 
approved under this Code or pursuant to a scheme or plan approved by 
a ﬁ nancial sector regulator or a court, and such resolution applicant has 
not otherwise contributed to the preferential transaction, undervalued 
transaction, extortionate credit transaction or fraudulent transaction;]
(h) has executed  [a guarantee] in favour of a creditor in respect of a 
corporate debtor
against which an application for insolvency resolution 
made by such creditor has been admitted under this Code  [and such 
guarantee has been invoked by the creditor and remains unpaid in 
full or part];
(i)  [is] subject to any disability, corresponding to clauses (a) to (h), 
under any law in a jurisdiction outside India; or
(j) has a connected person not eligible under clauses (a) to (i).
Explanation [I].—For the purposes of this clause, the expression 
“connected person” means—
901
(i) any person who is the promoter or in the management or control 
of the resolution applicant; or
(ii) any person who shall be the promoter or in management or control 
of the business of the corporate debtor during the implementation of 
the resolution plan; or
(iii) the holding company, subsidiary company, associate company or 
related party of a person referred to in clauses (i) and (ii).
* 
* 
* 
* 
* 
*
46.1. Thus, as per Section 29A(g), a person shall not be eligible to 
submit a resolution plan if such person or any other person acting jointly or 
in concert with such person has been a promoter or in the management or 
control of a corporate debtor in which a preferential transaction, undervalued 
transaction, extortionate credit transaction or fraudulent transaction has taken 
place and in respect of which an order has been made by the adjudicating 
authority. Clause (j) says that a person shall not be eligible to submit a 
resolution plan if such person or any other person acting jointly or in concert 
with such person has a connected person not eligible under Clauses (a) to 
(i). As per Explanation (i), the expression ‘connected person’ means-(i) 
any person who is the promoter or in the management or control of the 
resolution applicant; or (ii) any person who shall be the promoter or in the 
management or control of the business of the corporate debtor during the 
implementation of the resolution plan; etc.
47. The expression ‘related party’ appearing in
Sections 5(24) and 
(24A) suﬀ ering ineligibility under Section 29A has received considerable 
attention of this Court. In Swiss Ribbons Private Limited and Another 
Versus Union of India and Others8, a constitutional challenge was made 
to Section 29A(j) of the Code read with the deﬁ nition of ‘related party’ as 
deﬁ ned under Sections 5(24) and 5(24A). While repelling the challenge, 
this Court held as follows:- 
109. We are of the view that persons who act jointly or in concert 
with others are connected with the business activity of the resolution 
8 
(2019) 4 SCC 17
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
902 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
applicant. Similarly, all the categories of persons mentioned in 
Section 5(24-A) show that such persons must be “connected” with the 
resolution applicant within the meaning of Section 29-A(j). This being 
the case, the said categories of persons who are collectively mentioned 
under the caption “relative” obviously need to have a connection 
with the business activity of the resolution applicant. In the absence 
of showing that such person is “connected” with the business of the 
activity of the resolution applicant, such person cannot possibly be 
disqualiﬁ ed under Section 29-A(j). All the categories in Section 29-
A(j) deal with persons, natural as well as artiﬁ cial, who are connected 
with the business activity of the resolution applicant. The expression 
“related party”, therefore, and “relative” contained in the deﬁ nition 
sections must be read noscitur a sociis with the categories of persons 
mentioned in Explanation I, and so read, would include only persons 
who are connected with the business activity of the resolution applicant.
110. An argument was also made that the expression “connected 
person” in Explanation I, clause (ii) to Section 29-A(j) cannot 
possibly refer to a person who may be in management or control of 
the business of the corporate debtor in future. This would be arbitrary 
as the explanation would then apply to an indeterminate person. This 
contention also needs to be repelled as Explanation I
seeks to make it 
clear that if a person is otherwise covered as a “connected person”, this 
provision would also cover a person who is in management or control 
of the business of the corporate debtor during the implementation of 
a resolution plan. Therefore, any such person is not indeterminate at 
all, but is a person who is in the saddle of the business of the corporate 
debtor either at an anterior point of time or even during implementation 
of the resolution plan. This disposes of all the contentions raising 
questions as to the constitutional validity of Section 29-A(j).
47.1. After a careful analysis, this Court opined that the expressions 
‘related party’ and ‘relative’ contained in the deﬁ nition sections must be read 
noscitur a sociis with the categories of person mentioned in Explanation 
I. So read, it would include only persons who are connected with the 
business activity of the resolution applicant. This Court further clariﬁ ed 
that the expression ‘connected person’ would also cover a person who is in

903
management or control of the business of the corporate debtor during the 
implementation of a resolution plan. 
48. In Phoenix ARC Private Limited versus Spade Financial Services 
Limited9, this Court noted that the expression ‘related party’ is deﬁ ned in 
Section 5(24) in relation to a corporate debtor and Section 5(24A) provides 
a corresponding deﬁ nition in relation to an individual. Thereafter, it has been 
observed as under:-
88. An issue of interpretation in relation to the ﬁ rst proviso of Section 
21(2) is whether the disqualiﬁ cation under the proviso would attach 
to a ﬁ nancial creditor only in praesenti, or if the disqualiﬁ cation also 
extends to those ﬁ nancial creditors who were related to the corporate 
debtor at the time of acquiring the debt.
48.1. Referring to its earlier decision in Arcelor Mittal (India) (P) 
Ltd. V. Satish Kumar Gupta10, where the issue was whether ineligibility 
of the resolution applicant under Section 29 A(c) of the Code is attached 
to an applicant at the date of commencement of the corporate insolvency 
resolution process or at the time when the resolution plan is submitted by the 
resolution applicant. It was clariﬁ ed that the opening words of Section 29(A) 
stating “a person shall not be eligible to submit a resolution plan…..” clearly 
indicates that the stage of ineligibility attaches when the resolution plan is 
submitted by the resolution applicant; thus the disqualiﬁ cation applies in 
praesenti. This Court referred to Section 21(2) of the Code, more particularly 
to the second proviso thereto which deals with the Committee of Creditors 
and the ineligibility of a related party in the consideration and voting on a 
resolution plan by the said committee and held as follows: 
101. However, if such an interpretation is given to the ﬁ rst proviso of 
Section 21(2), all ﬁ nancial creditors would stand excluded if they were 
a “related party” of the
corporate debtor at the time when the ﬁ nancial 
debt was created. This may arguably lead to absurd conclusions for 
entities which have legitimately taken over the debt of related parties, 
or where the related party entity had stopped being a “related party” 
long ago.
9 
(2021) 3 SCC 475
10 (2019) 2 SCC 1
EVA AGRO FEEDS PRIVATE LIMITED v. PUNJAB NATIONAL 
BANK AND ANR. [UJJAL BHUYAN, J.]
904 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
49.  Arun Kumar Jagatramka Versus Jindal Steel and Power Limited 
and Another11, also deals with Section 29A of the Code. In that case, this 
Court observed that the fundamental postulate of the Code is that a corporate 
debtor has to be protected from its management and corporate debt. Hence 
it would be anomalous if a compromise or arrangement can be entertained 
from a person who is responsible for the state of aﬀ airs of the corporate 
debtor. Referring to Arcelor Mittal (India) (P) Ltd. (supra), this Court 
observed that the said decision adverted to Section 29A of the Code as a 
typical instance of a see-through provision so that one is able to arrive at 
persons who are actually in ‘control’ whether jointly or in concert with other 
persons. It was thereafter that this Court held that Section 29A is a crucial 
link in ensuring that the objects of the Code are not defeated by allowing 
‘ineligible persons’ responsible for running a company (corporate debtor) 
aground, to return in the new avatar of a resolution applicant. 
50. From the above, it is clearly manifest that the disqualiﬁ cation 
sought to be attached to the appellant is without any substance as the related 
party had ceased to be in the helm of aﬀ airs of the corporate debtor more 
than a decade ago. He was not in charge of the company or an inﬂ uential 
member of the company i.e., the corporate debtor when the appellant had 
made its bid pursuant to the auction
sale notice. 
51. Thus having regard to the aforesaid discussion, we have no 
hesitation in coming to the conclusion that Appellate Tribunal was not 
justified in setting aside the order of the Tribunal dated 12.08.2021. 
Consequently, we set aside the order dated 30.11.2021 passed by the 
Appellate Tribunal and restore the order dated 12.08.2021. The appeal is 
accordingly allowed. However, there shall be no order as to costs. 
Headnotes prepared by:  
Appeal allowed.
Divya Pandey
11 (2021) 7 SCC 474