{"id":4751,"date":"2025-04-30T14:06:31","date_gmt":"2025-04-30T08:36:31","guid":{"rendered":"https:\/\/lawjurist.com\/?p=4751"},"modified":"2025-04-30T14:11:26","modified_gmt":"2025-04-30T08:41:26","slug":"eva-agro-feeds-ltd-vs-punjab-national-bank","status":"publish","type":"post","link":"https:\/\/lawjurist.com\/index.php\/2025\/04\/30\/eva-agro-feeds-ltd-vs-punjab-national-bank\/","title":{"rendered":"Eva Agro Feeds ltd Vs Punjab National Bank"},"content":{"rendered":"\t\t
\n\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\n

Author: Aishwarya Mudgadkar 7 th Sem, MP Law College<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

\n\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t

Facts\u00a0<\/b><\/p>\n

The legal battle named Eva Agro Feeds Pvt. Ltd. vs Punjab National Bank (Civil Appeal No.\u00a0 7906 of 2021) mainly arises from the auction of assets of M\/s Amrit Feeds Limited which was\u00a0 in the process of liquidation under the provisions of the Insolvency and Bankruptcy Code, 2016\u00a0 (IBC) and in the cou… The corporate debtor was put through the process of liquidation on\u00a0 February 19, 2021 following a positive outcome of a Corporate Insolvency Resolution Process\u00a0 (CIRP) that was commenced in October 2019.\u00a0<\/span><\/p>\n

Background of Parties\u00a0<\/b><\/p>\n

    \n
  1. EvaAgro Feeds Pvt. Ltd.: <\/b>The appellant in this case, Eva Agro Feeds, is a company\u00a0 that engages in producing and selling animal feeds. Whatever the reason, Eva Agro\u00a0 Feeds participated in the auction of assets during the insolvent process of M\/s Amrit\u00a0 Feeds Limited.\u00a0\u00a0<\/span><\/li>\n
  2. Punjab National Bank (PNB): <\/b>The respondent, PNB is a financial creditor holding\u00a0 one of the most senior ranks among the members in the Committee of Creditors in the\u00a0 case of M\/s Amrit Feeds Limited. Being one of the constituents holding a major claim\u00a0 against the debtor, PNB had a vested interest in the liquidation proceedings so as to\u00a0 ensure that the recovery in the given liquidation maximized the realisable value.\u00a0\u00a0<\/span><\/li>\n
  3. M\/s Amrit Feeds Limited: <\/b>This corporate debtor also underwent a Corporate\u00a0 Insolvency Resolution Process (CIRP) that proved unsuccessful in the year 2019,\u00a0 October which resulted to its liquefaction on 19th February 2021.\u00a0<\/span><\/li>\n<\/ol>\n

    Events Leading to Dispute:\u00a0<\/b><\/p>\n

      \n
    1. Eva Agro Feeds took part in an auction conducted electronically on July 20, 2021, and\u00a0 placed a bid alongside an earnest money deposit (EMD) of \u20b91Crore.\u00a0<\/span><\/li>\n
    2. The appellant then got a reply that the auction was won.<\/span><\/li>\n
    3. Upon that however, on July 21, 2021, the liquidator cancelled the auction stating Clause\u00a0 3 (k) of the E-Auction Process Information Document which reconfirmed that there\u00a0 would another auction held.\u00a0\u00a0<\/span><\/li>\n
    4. An agitation was made by Eva Agro Feeds to the National Company Law Tribunal,\u00a0 after the annulment, seeking the reinstatement of the auction, which the NCLT obliged\u00a0 temporarily.\u00a0<\/span><\/li>\n<\/ol>\n

      Lower Court Proceedings:\u00a0<\/b><\/p>\n

      The NCLT also directed that separate communication be made by the Liquidator to Eva Agro\u00a0 Feeds regarding the remaining sale consideration deposit.\u00a0<\/span><\/p>\n

      Yet, that as s financial creditor appealed the decision of the NCLT to the National Company\u00a0 Law Appellate Tribunal, which on November 30 2021 modified the Nautical Appeal Tribunal\u00a0 single judge order and directed the holding of a fresh auction.\u00a0<\/span><\/p>\n

      Important Info:\u00a0<\/b><\/p>\n

      The decision by the Supreme Court of India on whether any auction can be cancelled by the\u00a0 liquidator if at all law permits, does not support the argument that such auction can be cancelled\u00a0 simply based on wishful thinking on the part of some parties who feel that those left in the bid\u00a0 may come up with some higher amounts.\u00a0<\/span><\/p>\n

      Issues\u00a0<\/b><\/p>\n

      The key legal issues that were deliberated upon by the Supreme Court included:\u00a0<\/span><\/p>\n

        \n
      1. Incorrect Reasoning for Auction Cancellation: <\/b>Whether the liquidator’s step to\u00a0 cancel the auction was done for the right reasons as per IBC and the rules made there\u00a0 under.\u00a0<\/span><\/li>\n
      2. Power of Liquidators<\/b>: The level of power liquidators have while conducting auctions\u00a0 and the level at which they are required to give justifiable reasons for such actions as\u00a0 cancellation.\u00a0<\/span><\/li>\n
      3. Section 29A Disqualification: <\/b>If it was false that Eva Agro Feeds was barred from\u00a0 participating in the tender in view of past associations with the corporate debtor.<\/span><\/li>\n<\/ol>\n

        Law\u00a0<\/b><\/p>\n

        The informative discussions in the case revolved around:\u00a0<\/span><\/p>\n

          \n
        1. Insolvency and Bankruptcy Code 2016 (IBC): <\/b>which deals with bankruptcy in India. 2. <\/span>IBBI (Liquidation Process) Regulations 2016: <\/b>lays down the rules for liquidating a\u00a0 company.\u00a0<\/span><\/li>\n
        2. Legal rules on natural justice and those requiring give reasoned decisions under all\u00a0 administrative processes.\u00a0<\/span><\/li>\n<\/ol>\n

          Petitioner Arguments\u00a0<\/b><\/p>\n

          Eva Agro Feeds advanced the argument that:\u00a0<\/span><\/p>\n

            \n
          1. The liquidator had no cause to terminate an auction that was already legally binding. 2. The mere hope or expectation of a better price is not sufficient to disregard a bid that\u00a0 has already been accepted.\u00a0<\/span><\/li>\n
          2. The actions taken by the liquidator compromised the integrity of the auction. <\/span>Respondent Arguments\u00a0<\/b><\/li>\n<\/ol>\n

            Punjab National Bank submitted that:\u00a0<\/span><\/p>\n

              \n
            1. The liquidator is entitled to a considerable degree of discretion with regard to auctions,\u00a0 and may cancel such auctions even where there is reason to believe that a suitable price\u00a0 would not be realized upon sale.\u00a0<\/span><\/li>\n
            2. The possibility of better prices made them cancel what they called a non-competitive\u00a0 sale.\u00a0<\/span><\/li>\n<\/ol>\n

              Analysis\u00a0\u00a0<\/b><\/p>\n

              The Supreme Court refrained from indulging in the discussion of the merits of the claim and\u00a0 instead focused on many issues civil procedure<\/span><\/p>\n

                \n
              1. Discretionary Powers of Liquidators\u00a0<\/b><\/li>\n<\/ol>\n

                The Court noted that, like any other person acting on behalf of a company in corporate\u00a0 restructuring, that is, liquidators under IBC are also vested with discretion to some\u00a0 extent but those discretions cannot be said to be on an absolute scale or on a wild scale,\u00a0 the factors themselves are expected to be in framework where there are tenets of\u00a0 transparency and fairness in relation to the stakeholders\u2019 dealings:\u00a0<\/span><\/p>\n

                  \n
                1. Limits on Discretion<\/b>: The Court pointed out that there are statutory provisions aimed\u00a0 at safeguarding the interest of the stakeholders and such policy must be adhered to\u00a0 within the context of the exercise of discretion.\u00a0<\/span><\/li>\n
                2. Balancing Interests: <\/b>Liquidators usually have a duty to creditors but must also\u00a0 consider the fairness to bidders in the event of a sale through auction or any other form\u00a0 of asset realisation.\u00a0<\/span><\/li>\n<\/ol>\n

                  Requirement of Reasoning\u00a0<\/b><\/p>\n

                  The Court also contained what may be regarded as one of the most important aspects which is\u00a0 the clear reasoning provided by liquidators when as decision makers, they have to make\u00a0 decisions which impact the stakeholders.\u00a0<\/span><\/p>\n

                    \n
                  1. Principles of Natural Justice: <\/b>The Court restated that the natural injustice principles\u00a0 entail giving reasons for a particular course of action by administrative decision-makers\u00a0 whom that action goes against.\u00a0<\/span><\/li>\n
                  2. Effect on Stakeholders: <\/b>In not providing a clear explanation for cancelling a bid that\u00a0 was previously accepted, the liquidators expose themselves to the risk of mistrust by\u00a0 both creditors and bidders, which is crucial to the efficient administration of the\u00a0 liquidation.\u00a0<\/span><\/li>\n
                  3. Interpretation of Section 29A\u00a0<\/b><\/li>\n<\/ol>\n

                    The discussion, however, cannot be exhausted without examining the attitude of the\u00a0 Supreme Court towards the eligibility requirements of the bidders as provided in\u00a0 Section 29A:\u00a0<\/span><\/p>\n

                      \n
                    1. Contextual Analysis: <\/b>It endeavoured to ascertain whether past connections with M\/s\u00a0 Amrit Feeds may inhibit Eva Agro Feeds from engaging in the tendering process.<\/span><\/li>\n
                    2. Time Factor Consideration<\/b>: In the end, it observed that quite a long period had passed\u00a0 since anyone held a directorship.\u00a0<\/span><\/li>\n<\/ol>\n

                      Legal Framework Implications\u00a0<\/b><\/p>\n

                      The discussion of the case included how this case is in relation to the other insolvency cases\u00a0 and legal structures governing them:\u00a0<\/span><\/p>\n

                        \n
                      1. Augmenting Regulatory Control<\/b>– In compliance with the decision, all segments of\u00a0 parties in an insolvency process are expected to comply with the relevant law and\u00a0 ensure that the provisions of the IBC are observed.\u00a0<\/span><\/li>\n
                      2. Possible Reforms in Legislation<\/b>: It can also lead to the legislative order to amend the\u00a0 laws on the conduct of auctions in the course of insolvency procedures that which may\u00a0 lead amendments to the existing laws aimed at clarifying the limits of the discretion of\u00a0 the liquidators.\u00a0<\/span><\/li>\n<\/ol>\n

                        Wider Economic Apprehension\u00a0<\/b><\/p>\n

                        In the last instance, this case addresses wider economic issues that should be taken into\u00a0 consideration in the course of any bankruptcy proceedings.\u00a0<\/span><\/p>\n

                          \n
                        1. Market Circuit: <\/b>An open and above-board auction process enhances market circuit\u00a0 discouraging walkouts of bidders during the liquidation sales.\u00a0<\/span><\/li>\n
                        2. Effective Asset Recovery: <\/b>Adhering to the principles of equity at the auctions would\u00a0 lead to more effective asset recovery, ensuring the interests of creditors and respect for\u00a0 the economy even in the challenged industries.\u00a0<\/span><\/li>\n<\/ol>\n

                          Conclusion\u00a0<\/b><\/p>\n

                          The Supreme Court’s decision dated September 6, 2023, confirms the previous ruling of the\u00a0 NCLT thereby siding with Eva Agro Feeds Pvt. Ltd. and overturning the ruling made by\u00a0 NCLAT. The Court laid down a few important points:\u00a0<\/span><\/p>\n

                          A liquidator must act in good faith and provide proper justification for the cancellation of\u00a0 auctions if any.<\/span><\/p>\n

                          Material impossibility of greater bids expected in the future does not warrant the cancellation\u00a0 of an already accepted bid.\u00a0<\/span><\/p>\n

                          The order enhanced the standards of conduct in insolvency proceedings whereby bidders are\u00a0 protected while taking part in liquidation sales.\u00a0<\/span><\/p>\n

                          Market and Auctions in Insolvency-Emphasizing principles of justice, equity, and the rule of\u00a0 law in administrative action affecting the rights of interested parties. This historic ruling will\u00a0 serve as a reference point in addressing future cases that will touch on issues of auctioning off\u00a0 assets in the context of insolvency, transparent and fairness and respect that due process brings\u00a0 in any action affecting the rights and interests of the parties involved. Laying down reasonable\u00a0 limits with respect to the discretionary powers exercised by the liquidators as well as upholding\u00a0 the tenets of natural justice, the decision goes a long way in ensuring that the insolvency regime\u00a0 in India is more balanced.\u00a0<\/span><\/p>\n

                          References\u00a0<\/b><\/p>\n

                            \n
                          1. The Law Tree\u00a0<\/span><\/li>\n<\/ol>\n

                            https:\/\/thelawtree.akmllp.com\/apex-rulings\/eva-agro-feeds-pvt-ltd-vs-punjab-national bank-and-anr\/\u00a0<\/span><\/p>\n

                              \n
                            1. Supreme Court Judgment\u00a0<\/span><\/li>\n<\/ol>\n

                              https:\/\/main.sci.gov.in\/supremecourt\/2021\/30901\/30901_2021_15_1502_46762_Judg ement_06-Sep-2023.pdf<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

                              Author: Aishwarya Mudgadkar 7 th Sem, MP Law College Facts\u00a0 The legal battle named Eva Agro Feeds Pvt. Ltd. vs Punjab National Bank (Civil Appeal No.\u00a0 7906 of 2021) mainly arises from the auction of assets of M\/s Amrit Feeds Limited which was\u00a0 in the process of liquidation under the provisions of the Insolvency and […]<\/p>\n","protected":false},"author":1,"featured_media":4055,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[181],"tags":[],"_links":{"self":[{"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/posts\/4751"}],"collection":[{"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/comments?post=4751"}],"version-history":[{"count":4,"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/posts\/4751\/revisions"}],"predecessor-version":[{"id":4755,"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/posts\/4751\/revisions\/4755"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/media\/4055"}],"wp:attachment":[{"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/media?parent=4751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/categories?post=4751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lawjurist.com\/index.php\/wp-json\/wp\/v2\/tags?post=4751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}