# In the matter of ESS DEE Aluminium Limited IA(IBC)800(KB)2022 In CP(IB)1284(KB)2019

> NCLT judgment dated 2023-01-17. Citation: TCN-2023-NCLT-05023. The case involves an application regarding the forfeiture of earnest money deposited by Lucky…

- **Court:** NCLT
- **Order date:** 17 Jan 2023
- **Citation:** TCN-2023-NCLT-05023
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/ess-dee-aluminium-limited-iaibc800kb2022-in-cpib1284kb2019-735529ce

## Summary

### Background

The case involves an application regarding the forfeiture of earnest money deposited by Lucky Holdings Pvt. Ltd. (the applicant) in an e-auction for the sale of the corporate debtor, ESS DEE Aluminium Limited, which was under liquidation. The liquidator sought to forfeit the EMD after Lucky Holdings was unable to pay the first installment due to an intervening application filed by Trailblazer Edusol Private Limited challenging the e-auction. The applicant argued against the forfeiture, citing the absence of a concluded contract and the liquidator's undertaking not to proceed with the sale during the pendency of the challenge.

## Facts

On 14/02/2020, the application filed by the financial creditor under section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted and Corporate Insolvency Resolution Process in respect of the corporate debtor commenced. On 08/10/2021, the Adjudicating Authority ordered the liquidation of the corporate debtor and appointed the respondent as the Liquidator. On 16/03/2022, a newspaper publication announced the sale of ESS DEE Aluminium Limited's assets, scheduled for 07/04/2022, but this was later cancelled. A subsequent sale notice was published on 05/04/2022 for an e-auction on 16/04/2022. Lucky Holdings Private Limited submitted an EMD of Rs. 2 crores for the e-auction. On 16/04/2022, the liquidator informed bidders of an incorrect bid, rescheduling the auction

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## Issues and analysis

### Issue 1: Whether the liquidator is entitled to forfeit the EMD (Earnest Money Deposit) submitted by the …

**Ratio:** The forfeiture of earnest money is permissible only if there is a breach of contract and

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**Reasoning:** The court relied on precedents such as "Fateh Chand vs. Bal Kishan Das" and

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**Interpretation:** The legal principle is interpreted to mean that the right to forfeit earnest

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**Application:** In this case, the liquidator did not demonstrate any loss suffered due to the

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## Parties

- **Judges:** BIDISHA BA…; Balraj…
- **Appellants:** Lucky Holdings…
- **Respondents:** Ess Dee Aluminium…; Deepika Bhurga…

## Timeline

- **2020-02-14 — CIRP Commen…**: Application filed by financial creditor under section 7 of IBC admitted; Corporate…
- **2021-10-08 — Liquidation…**: Adjudicating Authority ordered liquidation of the corporate debtor; Respondent appointed…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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