LAW FINDER

Submitted By: Priyanka Sud

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Melkar TTI Biofuels Limited v. Mr. Dharit Kishorbhai Shah, (NCLT)(Mumbai Bench-I) : Law Finder
Doc Id # 2429043
NATIONAL COMPANY LAW TRIBUNAL
(Mumbai Bench-I)
Before:-Shri Prabhat Kumar Justice, Member (Technical) and Shri V.G. Bisht, Member (Judicial).
I.A. 1390 of 2022. D/d. 05.12.2023.
Melkar TTI Biofuels Limited - Applicant
Versus
Mr. Dharit Kishorbhai Shah The Liquidator - Respondent
C.P.(IB) No. 3610/MB of 2019.
Punjab National Bank - Petitioner
Versus
Dhawal Pratap Singh Mohite Patil Agro Industries Limited - Respondent
For the Applicant : Mr. B. Gopalakrishnan, Advocate a/w Mr. Ashish Dalal, Advocate.
For the Respondent : Mr. Rohan Agarwal, Advocate a/w Mr. Amey Hadwale, Advocate, Ms. Geeta
Lundwani, Advocate.
Insolvency & Bankruptcy Code, 2016.
Cases Referred :-
National Highways Authority of India v. Ganga Enterprises, (2003) 7 SCC 410
ORDER
Shri Prabhat Kumar Justice, Member (Technical). - This IA 1390/2022 is filed by M/s Melker TTI
Biofuels Limited ("Applicant") in the Liquidation Process of M/s Dhavalpratapsinh Mohitepatil Agro
Industries Limited ("Corporate Debtor") seeking directions to Mr. Dharit Kishorebhai Shah, the
Liquidator of the Corporate Debtor ("Respondent") to refund the Earnest Money deposit amounting
to Rs. 1,54,21,002/- (Rupees One Crore Fifty-Four Lakhs Twenty-One Thousand and Two Only) along
with interest @ 24% per annum for the unreasonable delay caused by the Liquidator in refunding
the said amount to the Applicant.
2. The liquidation in this case commenced on 29.07.2021 vide Order of this Tribunal in terms of
provisions of the Insolvency & Bankruptcy Code, 2016 ("Code"). The Liquidator issued a revised
tender document dated 13.01.2022 inviting prospective bidders to participate in an e-auction that
the Liquidator was going to conduct in terms of Regulation 32 of The Insolvency and Bankruptcy
Board of India (Liquidation Process) Regulations, 2016 at a later date i.e. on 25.01.2022. The
Liquidator intended to either dispose off the "company as a whole" as a going concern or "Distillery

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Submitted By: Priyanka Sud
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Business of the Corporate Debtor" as a going concern as per the said revised tender document. The
e-auction held on 25.01.2022 failed and e-auctions were again conducted by the Liquidator on
03.02.2022, 04.03.2022, 14.03.2022 and 30.04.2022. As per the terms of the revised tender document
dated 13.01.2022, in case the auction failed, the EMD was to be refunded by the Liquidator after 15
days of the auction date.
3. The Applicant submitted the requisite Bid Application Form on 25.01.2022 and also made the
necessary payment for "Earnest Money Deposit" ("EMD") of Rs. 1,54,21,002.00 (Rupees One Crore Fifty
Four Lakhs twenty One Thousand and Two Only) as sought by the Liquidator on 25.01.2022.
4. It is the case of the Applicant that, prior to the date of the e-auction, the Respondent Liquidator
had led the Applicant to believe that that even though the period of 90 days for sale of the
Corporate Debtor as a going concern or sale of business of the Corporate Debtor as a going concern
had elapsed, this Tribunal had allowed the extension of the time period through an order of this
Tribunal even though the Order for the same was not shared with the Applicant. However, a
contradictory claim was made in the revised tender document dated 13.01.2022 as issued by the
Respondent.
4.1. It is alleged that the Respondent failed to mention in the revised tender document and
suppressed the fact that the Order for extension was already reserved by this Tribunal on
03.01.2022 even though the Applicant was informed vide an ernail dated 25.01.2022 that this
Tribunal had dictated the order and granted an extension of 90 days. This fact is stated to have
been communicated to the Applicant in private communication between the Applicant and the
Respondent.
4.2. Accordingly, this dual approach of the Liquidator kept the Applicant in the dark till the very
last day and hence the Applicant had no other option but to seek refund of the EMD and withdraw
from participating in the e-auction dated 25.01.2022.
4.3. More than 2 months have elapsed since the date of e-auction but the Liquidator has still not
refunded the EMD amount of Rs. 1,54,21,002.00 (Rupees One Crore Fifty Four Lakhs twenty One
Thousand and Two Only) which was paid by the Applicant and the payment of which was duly
acknowledged by the Liquidator Respondent on 25.01.2022.
5. The Respondent has filed the reply stating that the Application is not maintainable in law and
the Applicant under the garb of present Application is seeking and attempting to travel beyond the
terms of e- auction. It is further stated that, in the third Stakeholder's Consultative Committee held
on 6.12.2.21, it was decided to sell the Corproate Debtor as Going Concern. Pursuant to this, the
Liquidator sought permission of this Tribunal vide application no. 2949/2022, and the said was
allowed vide order dated 3.1.2022, also extending the time for further ninety days to sell the
Corporate Debtor as going concern.
5.1. The Respondent had sent documents along with the annexures which were to be signed by the
applicant, and the applicant submitted the Bid Application Form, affidavit & undertaking,
declaration along with EMD confirming the terms of the tender document sent by the Respondent.
Pursuant to this, the Respondent conducted the auction on 25.1.2022 wherein the applicant failed to
participate in the e-auction despite of depositing the EMD and therefore the auction could not be
concluded.
5.2. Since, the applicant failed to participate in the auction and therefore in view of clause 22
"Forfeiture of Earnest Money Deposit From the E-Auction Applicant" of revised tender document, the

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Submitted By: Priyanka Sud
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Respondent has forfeited the EMD deposited by the Applicant.

5.3. It is further claimed that the Respondent through an email dated 25.1.2022 had clarified the
query of the applicant and informed the Applicant that this Tribunal has approved the extension of
90 days from 3.1.2022 to sell the Corporate Debtor as going concern, however, the order dated
3.1.2022 is not uploaded on the Tribunal's website. Accordingly, the Respondent has denied that he
had created any confusion or have made any contradictory statements.
6. We have heard the learned Counsel and perused the material available on record.
6.1. Clause 22 "Forfeiture of Earnest Money Deposit From the E- Auction Applicant" of revised tender
document reads as under -
"22. It is to be noted that the Earnest Money furnished can be forfeited at anytime, upon the
occurrence of any of the following events :
1. If there is a breach of any of the conditions under this E-Auction Process Information
Document by the Bidder or in case Bidder is found to have made any misrepresentation; or
2. If Bidder is found to be ineligible to submit the bid as per the conditions set out in Section
29A of the OBC (as amended from time to time) or is found to have made a false or misleading
declaration of eligibility as per the conditions set out in Section 29A of the IBC (as amended
from time to time); or
3. If the Bidder is identified as the Successful Bidder and it fails to accept the Letter of
Intent/intimation of confirmation of sale to the successful bidder issued by the Liquidator; or
4. If the successful bidder fails to make the complete payment as per the terms of the Letter of
Intent issued by the Liquidator, or
5. Bidder who have submitted documents and paid EMD and if he is either not availing Login
credential or after availing Login Credential is not participating in E-Auction."
6.2. The Applicant had also furnished a declaration agreeing to forfeiture of EMD in case of failure
to fulfil any/all of the terms and conditions of the auction and offer letter.
6.3. We find that the Applicant has based its case merely on the proposition that Order extending
period of 90 days for conclusion of sale of Corporate Debtor as going concern was not communicated
to him as the same was not found uploaded on this Tribunal's web-site. It is not disputed that the
contents of this Order, as communicated to the parties present on 3.1.2022 were duly communicated
to the Applicant by the Respondent. Nonetheless, the events of inviting the E-Auction Bids, and
submission of Bid documents took place after 3.1.2022 and the fact that the Liquidator, being an
officer appointed by this Tribunal to conduct the liquidation process, in itself confirms that what
was communicated by the Liquidator in relation to extension of 90 days was true because in the
absence of such oral pronouncement of Order by this Tribunal, the Respondent could not have
proceeded with the publication of bid documents. Clause 22 of the Tender Documents vests the right
to forfeit EMD in case where either the log is not obtained or having obtained, the bidder does not
participate.
6.4. In the case of National Highways Authority of India v. Ganga Enterprises, (2003) 7 SCC 410,
the Hon'ble Apex Court has explained this proposition in the following words -

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Submitted By: Priyanka Sud
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"The Indian Contract Act merely provides that a person can withdraw his offer before its
acceptance. The withdrawal of an offer, before it is accepted, is a completely different aspect
from forfeiture of earnest/security money which has been given for a particular purpose. A
person may have a right to withdraw his offer but if he has made his offer on a condition that
some earnest money will be forfeited for not entering into contract or if some act is not
performed, then even though he may have a right to withdraw his offer, he has no right to
claim that the earnest/security be returned to him".
6.5. It is undisputed proposition that the EMD condition is generally stipulated to ensure that the
prospective bidders do not back out from the process in between thereby wasting time and delaying
the process further. The Liquidator had unequivocally communicated to the Applicant that the Sale
as a Going Concern was in accordance with the process of Tender documents and the Code, hence
the Applicant can not be allowed to step back on the ill-founded ground of absence of Order of this
Tribunal extending the period of 90 days to conclude the sale. Hence, the Applicant has to suffer
the consequences for such withdrawal as provided in the Revised Tender Documents.
6.6. In view of the foregoing discussion, we have no hesitation to hold that the Respondent had a
right to forfeit the EMD on failure specified in clause 22(5) and has rightly invoked his right to
forfeit the EMD deposited by the Applicant.
7. In view of the above, IA 1390/2022 is disposed of as dismissed.
.

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