2019 (10) TMI 279 - Tri - Insolvency and Bankruptcy

Forfeiture of entire bid amount amount - e-auction - failure of the Applicant to honour the commitment - HELD THAT - The Clause 12 of the Tender document has already been extracted, which clearly provides that the defaulting bidder shall have no right to claim any amount deposited by him/her and shall have no claim over the property . The Applicant has accepted all the terms and conditions of the Tender document consciously after reading and understanding the same, and he has not sought any clarification from the Liquidator as was requested by the Liquidator vide intimation letter dated 26th October, 2018 under the head Important Note - Therefore, the Liquidator has rightly forfeited the entire amount deposited by the Applicant which is completely in accordance with the terms and conditions of the Tender document, acceptance thereof and the conditions contained in the intimation letter dated October 26, 2018 sent by the Liquidator to the Applicant. Application dismissed.

Summary

Issues:
1. Forfeiture of bid amount by the Liquidator.
2. Interpretation of terms and conditions of the Tender document.
3. Compliance with payment terms in e-auction process.

Analysis:
1. Forfeiture of Bid Amount: The Applicant participated in an e-auction for M/s. Nag Yang Shoes Private Limited. Despite multiple extensions, the Applicant failed to make full payment by the specified dates. The Liquidator, in line with Clause 12 of the Sale Notice, forfeited the entire bid amount of ?1,30,25,000. The Tribunal upheld the forfeiture, emphasizing the clause stating that the defaulting bidder has no right to claim any deposited amount.

2. Interpretation of Terms and Conditions: The Applicant argued that only the EMD amount should have been forfeited, with the balance refunded. However, the Tribunal noted that the Applicant had accepted the terms and conditions of the Tender document unconditionally. The document clearly stated that failure to fulfill the terms would result in EMD forfeiture and potential legal action for specific performance.

3. Compliance with Payment Terms: The Liquidator's intimation letter to the Applicant reiterated the conditional nature of the bid success, subject to timely payment. The Applicant did not seek clarification and failed to meet payment deadlines, resulting in automatic withdrawal of the bid. The Tribunal found that the Liquidator acted correctly in forfeiting the entire amount based on the terms agreed upon.

In conclusion, the Tribunal dismissed the Applicant's claim, ruling that the forfeiture of the bid amount was justified under the terms and conditions accepted by the Applicant. The judgment highlights the importance of adhering to contractual obligations in e-auction processes to maximize asset value and uphold the principles of the Insolvency & Bankruptcy Code, 2016.