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M/s Shri Karshni Alloys Private Limited vs. Ramakrishnan Sadasivan

Not available · 2025 INSC 1411Decided 10 Dec 2025
Not available
Justice Sanjay Kumar · Justice Alok Aradhe

Background

During the liquidation of M/s Surana Industries Limited, the liquidator agreed to sell its Raichur plant to Shri Karshni Alloys as a going concern for about Rs. 105.21 crore, with the buyer paying a 10% commitment advance. After the NCLT approved the sale and granted the buyer extended time to pay the balance, expressly warning that missing the deadline would forfeit the entire amount paid, the buyer still failed to pay on time, having contributed only about Rs. 37.80 crore in total. The liquidator then forfeited that amount and resold the plant to another buyer at a higher price; the appellant's challenges before the NCLT, NCLAT (2:1 split decision), and a separately filed Madras High Court writ petition (which concealed that an NCLAT appeal was already pending) all failed.

Decision Breakdown

The Supreme Court held that the sale was a private sale under Regulation 33(2)(d) of the Liquidation Regulations (requiring NCLT approval), not a Regulation 33(2)(c) failed-auction sale, so the buyer could not invoke contract-law arguments like Section 74 of the Indian Contract Act on "penalty" and unjust enrichment. The NCLT had validly exercised its power under Rule 15 of the NCLT Rules to impose a forfeiture condition when extending time, and since the appellant had accepted and acted on that order, by making further payments after it, it could not later "approbate and reprobate" by challenging the same order. The Court also noted the appellant's lack of bona fides in concealing its pending NCLAT appeal while separately pursuing a writ petition on the same issue. Since the eventual higher resale price did not erase the loss already suffered by creditors through delay, the appeals were dismissed with parties bearing their own costs.

Lesson Learnt

A party that accepts and acts upon a court/tribunal order (such as by making payments under it) cannot later turn around and challenge that very order, and in time-bound insolvency processes, forfeiture conditions attached to payment extensions will be strictly enforced against a defaulting purchaser, regardless of the ultimate resale value.

Official source (sci.gov.in)View Judgment (PDF)

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