NCLT Upholds E-Auction Validity Despite Technical Glitch Claims

Tribunal Dismisses Application Alleging Technical Failures in Auction Process for Waseem Ahmad Khan's Assets

In a significant ruling, the National Company Law Tribunal (NCLT), New Delhi Principal Bench, dismissed an application by M/s Marinaindia Traexim Private Limited seeking to set aside an e-auction process due to alleged technical glitches. The e-auction, conducted on May 1, 2025, was for the sale of assets belonging to Mr. Waseem Ahmad Khan as part of a bankruptcy process initiated by the State Bank of India.

The applicant claimed that technical issues prevented fair participation in the auction, resulting in the inability to place higher bids. However, the tribunal, presided over by Justice Ramalingam Sudhakar and Shri Ravindra Chaturvedi, found that the applicant actively participated and placed several bids even after the alleged glitches occurred.

Despite the applicant's assertion of technical failures, the tribunal noted that the applicant had continued to place bids up until the final moments of the auction. The NCLT emphasized that e-auctions should not be set aside lightly unless substantial evidence of fraud or procedural irregularities is presented. The tribunal dismissed the application as meritless, upholding the integrity of the auction process.

The ruling also referenced previous Supreme Court judgments, reinforcing the principle that auctions should not be overturned without compelling reasons such as fraud, collusion, or grave irregularities affecting the core of the process. The tribunal's decision underscores the importance of maintaining the sanctity of auction proceedings to ensure transparency and fairness.

Bottom Line:

Insolvency and Bankruptcy Code - E-auction process cannot be set aside lightly unless there are substantial grounds such as fraud, collusion, or procedural irregularities that go to the root of the auction process.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 60(5), Rule 11 of NCLT Rules, Section 53 of Insolvency and Bankruptcy Code

State Bank of India v. Waseem Ahmad Khan, (NCLT)(New Delhi Principal Bench) : Law Finder Doc Id # 2817223