The Supreme Court bench comprising Justices B.V. Nagarathna and Ujjal Bhuyan was hearing an appeal on Wednesday and held that the administrative and quasi-judicial authorities, such as a Liquidator in an insolvency process, must provide transparent and well-reasoned decisions, recording objective grounds for actions affecting parties' rights, and the requirement to give reasons for rejecting bids applied prospectively and retrospectively.
In the present judgment related to Application (I.A. No.14220 of 2022), the Supreme Court allowed intervention in a case involving an appeal under Section 62 of The Insolvency and Bankruptcy Code, 2016. The appeal was against an order passed by the National Company Law Appellate Tribunal. The order had allowed Punjab National Bank (Respondent No. 1) to appeal against an earlier order by the National Company Law Tribunal, Kolkata Bench, related to the corporate insolvency resolution process of M/s. Amrit Feeds Limited.
The case began with an insolvency application filed against M/s. Amrit Feeds Limited and the NCLT admitted the application, initiating the corporate insolvency resolution process. Subsequently, the Liquidator scheduled an auction for the corporate debtor's assets.
The appellant, Eva Agro Feeds Private Limited, entered the picture by submitting a bid, matching the reserve price, and winning the auction. However, the Liquidator cancelled the auction, leading to legal disputes.
Punjab National Bank (Respondent No. 1) appealed the NCLT’s decision, and the Appellate Tribunal sided with them, setting aside the earlier order and ordering a fresh auction.
The Supreme Court heard arguments from all parties, including an intervenor, Mr. Harish Bagla, who raised concerns about the relationship between the appellant and the corporate debtor. The Court considered various legal provisions and precedents.
In its judgment, the Supreme Court emphasized the need for transparent and well-reasoned decisions by administrative and quasi-judicial authorities. It discussed the powers and duties of the Liquidator in the insolvency process, highlighting the importance of recording reasons for their decisions.
The Court clarified that the requirement to provide reasons for rejecting the highest bid applied both prospectively and retrospectively and emphasized the importance of objective grounds for leaving bids. It also addressed the issue of a 'related party' to the corporate debtor and eligibility under the Insolvency and Bankruptcy Code.
Ultimately, the Supreme Court allowed the appeal, finding that the cancellation of the auction lacked proper reasoning, and the appellant was eligible to participate in the auction. The Court's judgment provided valuable insights into legal provisions and principles of natural justice.