Quick answer: In M/s ASJ Finsolutions Pvt. Ltd. v. Vikram Bajaj, Civil Appeal No. 13023 of 2025 (2026 INSC 1062), decided on 28 September 2026, a Supreme Court Bench of Justice J. B. Pardiwala and Justice K. Vinod Chandran held that a successful bidder who failed to pay the balance price for a parcel of land sold in a liquidation under the Insolvency and Bankruptcy Code, 2016 could not recover its Rs. 6.39 crore deposit. The e-auction notice made forfeiture of the entire amount paid a consequence of default, and the bidder had paid “with open eyes”. The judgment is marked non-reportable.
1. Introduction
Buyers at liquidation auctions of land meet “as is where is” sales, thin documentary support, pending suits and strict payment timelines. When the buyer stumbles, the question that matters most is how much of the money already paid it gets back.
The Supreme Court answered that question firmly on 28 September 2026. The appellant, a successful bidder for Lot No. 5 (a land parcel in Village Nangal Khurd, Tehsil Sonepat, Haryana), had deposited Rs. 6.39 crore towards a bid of Rs. 25.56 crore. It did not pay the balance of Rs. 19.17 crore within the 30-day or the extended 90-day window. The National Company Law Tribunal (NCLT) ordered a refund on the footing that the bidder had passed the so-called “Triple Test”. The National Company Law Appellate Tribunal (NCLAT) reversed that order, and the Supreme Court dismissed the bidder’s appeal.
The decision is short and non-reportable, but it addresses three recurring points: whether a forfeiture clause in an auction notice is enforceable where the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 do not expressly provide for forfeiture; whether forfeiture can reach part-payments of the price and not just the earnest money deposit (EMD); and how much a bidder can rely on a late request for title documents.
The article sets out the facts and reasoning, analyses what the judgment leaves open, and ends with practical points.
2. Case Summary and Background
2.1 The auction
A corporate debtor entered liquidation after no resolution plan was filed. The suspended director’s appeal against the liquidation order failed before the NCLAT. The liquidator, who is the respondent in the Supreme Court, put several properties of the corporate debtor to e-auction under a notice dated 25 October 2021.
Lot No. 5 measured “68K, 17M” (as the judgment records it) in the Sonepat village. Its reserve price was Rs. 25.56 crore. The auction notice carried a specific note: a civil suit was pending concerning the sale deed for a portion of the land (recorded as “6M”), and the liquidator was applying for custody of that portion. The sale was on an “as is where is” basis. The appellant bid at the reserve price and won on 15 November 2021.
2.2 The deposits and the deadlines
The auction notice required an EMD, which was Rs. 2.55 crore, being 10 per cent of the reserve price. The liquidator then asked the successful bidder to deposit 25 per cent of the bid, Rs. 6.39 crore, by 16 November 2021. That sum comprised the Rs. 2.55 crore EMD and Rs. 3.84 crore towards the balance consideration. The bidder paid it without protest.
The balance was due within 30 days of the auction, that is, by 14 December 2021. The notice also allowed payment within 90 days, until 14 February 2022, if the bidder paid interest at 12 per cent a year. On 15 December 2021, one day after the 30-day period lapsed, the bidder e-mailed the liquidator saying it would pay the balance of Rs. 19.17 crore, with interest, by 14 February 2022.
2.3 The complications
A third party, M/s Agarwal Trading Company, had obtained an order in the Punjab and Haryana High Court. Its writ petition was rejected, but the High Court directed it to approach the NCLT at Chandigarh and directed that the liquidator should not execute a sale deed because the company had been given time until 14 February 2022. The company filed an application before the NCLT on 11 February 2022 and withdrew it on 22 September 2022.
The bidder, on its own account, asked for the prior title deeds on 11 February 2022, by a company application that the NCLT rejected on 31 March 2023. Its appeal was dismissed on 21 April 2023, and it challenged that dismissal in a writ petition before the Punjab and Haryana High Court. While that petition was pending, the liquidator re-auctioned the property and sold it for Rs. 31.10 crore, which was Rs. 5.54 crore more than the appellant’s bid. The High Court later refused the prayer for prior deeds and left the bidder at liberty to pursue remedies in accordance with law.
The bidder used that liberty to apply again to the NCLT, this time for annulment of the forfeiture of its EMD and a refund. The NCLT allowed the application, applying the Triple Test. The NCLAT reversed. The bidder then appealed to the Supreme Court.
2.4 The contentions
For the bidder, Senior Counsel Ms. Meenakshi Arora argued that Schedule I of the Liquidation Process Regulations contains no stipulation for forfeiture and caps the EMD at 10 per cent; that other bidders had been granted extensions beyond 90 days; and that Authorised Officer, Central Bank of India v. Shanmugavelu, (2024) 6 SCC 641, upheld forfeiture only because of a statutory imprimatur under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), which is absent here. In the alternative, forfeiture could not exceed 10 per cent of the reserve price.
For the liquidator, counsel Mr. Abhishek Anand argued that the bidder knew of the dispute over the sale deed and bid with open eyes; that forfeiture was an express term of the notice; and that the bidder’s earlier request for prior deeds had been rejected, with a finding of default, up to the High Court. He added that a bidder who had paid and then met difficulty in obtaining possession or title would have had a remedy of refund with interest.
2.5 The holding
The Supreme Court dismissed the appeal and upheld the NCLAT. Its reasoning has five strands:
- Forfeiture follows from the contract. The bidder deposited the EMD and a portion of the balance price, which the Court read as “an undertaking to pay the balance amounts” within 30 or 90 days with interest. Failure to do so brings in forfeiture, which the Court called “automatic” (paragraph 11).
- The Regulations’ silence did not matter. The Court acknowledged that Schedule I caps the EMD at 10 per cent and does not expressly provide for forfeiture. That argument “falls flat” because the auction notice specifically made forfeiture an inevitable consequence of non-payment (paragraph 12).
- The late request for deeds was no excuse. The sale was “as is where is”, and the notice itself flagged the missing deed for part of the land. A bidder who did not seek verification of title before bidding or depositing could not use that omission to resile from paying (paragraph 12).
- The Triple Test did not rescue the bidder on these facts. The Court rejected each limb of the NCLT’s analysis (paragraphs 13 to 17, discussed below).
- The cap and the clause were reconciled. The EMD proper was 10 per cent; the rest was paid voluntarily towards the price, and the clause covered “the entire amount paid by the applicant/bidder including the Earnest Money Deposit”. The Court saw no reason to order a refund (paragraphs 19 to 22).
3. Legal Analysis
3.1 The source of the forfeiture power
The most consequential move in the judgment is its choice of legal source. The bidder argued from the Regulations: Schedule I does not mention forfeiture, so none could be ordered. The Court answered from the auction notice. It treated the notice as the contract of sale between the liquidator and the bidder, and it treated the bidder’s participation, with payment of a quarter of its bid without demur, as acceptance of every term.
That is orthodox contract reasoning, and it is persuasive in the setting of a liquidation. The Regulations prescribe the framework of the auction, including a ceiling on the EMD, but they leave the detailed terms to the notice. A reading that denied the liquidator the ability to enforce a payment-default clause would invite speculative bidding. A bidder could hold a reserve-price bid open at no cost, then walk away if the market weakened.
The Court also dealt with Shanmugavelu, though only by implication. The bidder had used it to say that forfeiture needs statutory backing. The Court did not discuss that decision or distinguish it expressly. It relied instead on the notice, and it recorded the liquidator’s reliance on two NCLAT decisions, Westcoast Infraprojects Private Limited v. Mr. Ram Chandra Dallaram Choudhary (Company Appeal (AT) (Ins) No. 1258 of 2022) and Potens Transmission & Power Pvt. Ltd. v. Apex Buildsys Ltd. (In Liquidation) (Company Appeal (AT) (Ins) No. 1543 of 2023). The judgment states that this Court affirmed both in Civil Appeal Nos. 4087 of 2023 and 4116 of 2022 respectively, and that Westcoast Infraprojects upheld forfeiture of the EMD and any other deposit under an e-auction notice clause. The reader is therefore left with the working rule that a clear forfeiture clause in a liquidation e-auction notice is enforceable without a separate statutory basis, though the reasoning on Shanmugavelu is not spelled out.
3.2 Reaching the part-payments
The harder question is whether the 10 per cent cap on the EMD should limit what can be forfeited. The Court distinguished between the EMD, which was Rs. 2.55 crore and complied with the cap, and the further Rs. 3.84 crore that the liquidator called for within a day of the auction. It said the bidder paid the latter “voluntarily”, and that the clause allowed forfeiture of everything paid.
This is where the analysis becomes less comfortable. A cap on the EMD exists to stop liquidators from locking up bidders’ capital as security. If the liquidator can demand a further 15 per cent at once, and the notice makes it forfeitable, the forfeitable security is 25 per cent, not 10, and the cap protects little. The Court did not consider whether that undermines the cap’s purpose. It treated the payment as voluntary because it was made without protest.
The judgment also does not refer to the law on compensation for breach of contract, in particular Section 74 of the Indian Contract Act, 1872, or ask whether the forfeited sum was a reasonable pre-estimate of loss. That silence is notable because the re-auction fetched Rs. 5.54 crore more than the appellant’s bid. The Court dealt with the point in one move: the higher price, it said, came only because of “the inherent value of the property” and was not a set-off against the expenses incurred (paragraph 16). The judgment does not say what those expenses were. I read this as a finding that the premium belongs to the estate, not as a holding that forfeiture needs no justification by loss. Whether the Contract Act principles apply to forfeiture of 25 per cent of the price, where the resale price was higher and expenses are unproved, remains open.
3.3 The Triple Test
The NCLT had applied a three-part test, which the Court describes as having been “propounded by this Court”. Under it, a forfeiture could be set aside if the bidder (i) acted with a hidden agenda to rig the auction, (ii) turned out not to be a genuine bidder with adequate financial capacity, or (iii) was prevented by extraneous reasons from paying the balance price. The judgment does not name the decisions that set it out, and this article does not supply them.
The NCLT thought the bidder passed all three limbs. The Supreme Court rejected that on each:
- Hidden agenda. The Court noted that a fresh auction had produced a higher price, and that the higher value reflected the inherent worth of the property. It did not treat the bidder’s default as evidence of a design to rig the process, but nor did it let the bidder rely on the first limb.
- Financial capacity. Here the Court set a clear evidentiary standard. Proof of capacity “is not in the repeated communications agreeing to pay the money”, but in materials substantiating it, not “mere assertions made”. The bidder had sent an e-mail promising payment by the 90th day, and had later offered to pay after losing before the NCLAT. Neither was enough without documents showing funds.
- Extraneous reasons. The Court dismissed the Agarwal Trading Company episode as “an afterthought”. That company had merely filed an application and withdrawn it later. The bidder knew of the cloud on the deeds when it e-mailed on 15 December 2021, and had raised no query about title during the bid process.
Paragraph 16 says that, given the forfeiture clause, “there is no application of the Triple Test, on facts herein, to absolve the appellant”. That wording is ambiguous. It may mean the Test has no role where a specific clause provides for forfeiture, or it may mean the Test was applied and failed on the facts. The surrounding paragraphs, which examine each limb, support the second reading, and that is the reading this article adopts. On that reading the Triple Test survives as a possible defence, but a bidder invoking it must produce evidence of capacity and show that its reason for not paying was real and not self-created.
3.4 Title diligence and “as is where is”
The Court gave practical weight to the “as is where is” basis and the explicit note on the deeds. The bidder asked for prior title deeds on 11 February 2022, three days before its extended deadline, long after bidding. The Court held that this was “not permissible at that distance of time”. A bidder who wanted verification should have sought it before bidding or paying the EMD.
The reasoning fits the time-bound character of liquidation, which the NCLAT had stressed: a request that reopens title after the bid is accepted threatens that discipline. But the reasoning has a corollary which the Court did not examine. A liquidator selling property with a known gap in title documents has a corresponding duty to disclose the gap clearly and to make available what documents it holds in time for bidders to inspect them. Here the notice did flag the pending civil suit and the missing deed for the portion of the land, and the Court relied on that disclosure. The decision is therefore a warning to bidders, but it also implies that disclosure in the notice is what justifies holding them to the bargain.
3.5 Discrimination and procedural points
The bidder argued that other purchasers had received extensions beyond 90 days. The Court rejected this as raised “too late in the day”: the bidder could have taken the point when it first went to the NCLT, and the relevant orders came only with its written submissions, which the Court declined to examine. A comparative-treatment argument needs a record placed before the Tribunal in the first round.
3.6 Weight of the decision
The judgment is marked non-reportable. It is a short two-judge decision on facts and announces no new test. It applies settled propositions: a forfeiture clause in an auction notice binds a bidder who participates without objection, and the Triple Test is a narrow exception requiring proof. Practitioners may cite it for those propositions but should expect opposing counsel to stress its non-reportable and fact-specific character, particularly on the 25 per cent forfeiture, where the reasoning is thinnest.
4. Practical Significance
For bidders.
- Verify title before you bid, not after. If the notice says documents are missing or a suit is pending, ask for what exists in writing and decide on the facts available. A late request for deeds will not excuse non-payment.
- Treat every deposit as potentially forfeitable. A payment above the 10 per cent EMD ceiling is not protected by that ceiling if the notice allows forfeiture of everything paid.
- Keep proof of funds ready for each deadline. An e-mail undertaking to pay, even with interest, is not evidence of capacity. Sanction letters, bank statements or committed facilities are.
- If an extraneous event threatens payment, seek relief from the Tribunal before the deadline, not after forfeiture.
- If other bidders received extensions, collect those orders at the outset and put them on the record at first instance.
For liquidators.
- State the forfeiture clause clearly, including whether it reaches the EMD alone or every sum paid. The Court enforced the clause as written.
- Disclose known title problems in the notice itself, as this liquidator did. The disclosure carried much of the weight in the Court’s reasoning.
- Be consistent on extensions, and record the re-auction result and any re-sale expenses. The Court did not require proof of loss here, but a record of costs will help if a future bench revisits the question.
For advisers. When assessing a refund claim, first check whether the notice contains a forfeiture clause and what it covers. If it does, the realistic arguments are narrow: a title problem the notice concealed, conduct by the liquidator, or an event that genuinely prevented payment and is documented. A claim resting on the Regulations’ silence or the size of the deposit is answered against the bidder by this judgment.
5. Conclusion
ASJ Finsolutions is a decision about contractual discipline in insolvency auctions. The Court treated the e-auction notice as the operative contract and enforced its forfeiture clause against a bidder who knew the terms, paid a quarter of its bid, raised title questions late and could not show the means to pay. It held that the Regulations’ silence on forfeiture was not fatal, reconciled the 10 per cent EMD ceiling with forfeiture of a larger sum by calling the additional payment voluntary, and demanded real evidence of financial capacity under the Triple Test.
Questions remain. The judgment does not explain how forfeiture of 25 per cent of the price squares with a ceiling meant to limit security to 10 per cent, says nothing on compensation principles where the resale price exceeded the bid, and does not engage with Shanmugavelu beyond recording the argument. Those points may be tested where the notice is less explicit or the title defect was not disclosed.
Until then the message to bidders is practical: do the title work before the bid, read the forfeiture clause as meaning what it says, and have the money ready on the due date.
Authorities and Legislation
- M/s ASJ Finsolutions Pvt. Ltd. v. Vikram Bajaj, Civil Appeal No. 13023 of 2025, 2026 INSC 1062, Supreme Court of India, judgment of 28 September 2026 (J. B. Pardiwala and K. Vinod Chandran, JJ.; non-reportable), accessed 3 October 2026 — https://indiankanoon.org/doc/111923869/
- Authorised Officer, Central Bank of India v. Shanmugavelu, (2024) 6 SCC 641 (cited in the judgment as argued by the appellant; not discussed by the Court)
- Westcoast Infraprojects Private Limited v. Mr. Ram Chandra Dallaram Choudhary, Company Appeal (AT) (Ins) No. 1258 of 2022 (NCLAT; cited in the judgment as relied on by the respondent and recorded as affirmed in Civil Appeal No. 4087 of 2023)
- Potens Transmission & Power Pvt. Ltd. v. Apex Buildsys Ltd. (In Liquidation), Company Appeal (AT) (Ins) No. 1543 of 2023 (NCLAT; cited in the judgment as relied on by the respondent and recorded as affirmed in Civil Appeal No. 4116 of 2022)
- Insolvency and Bankruptcy Code, 2016
- Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, Schedule I
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (mentioned in the judgment through the argument on Shanmugavelu)
- Indian Contract Act, 1872, Section 74 (referred to in this article only as context; the judgment does not mention it)
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.