Pankaj Srivastava Vs Dinesh Pulipati (Karnataka High Court)
Karnataka High Court held that in terms of auction memorandum, liquidator appointed under the Insolvency and Bankruptcy Code, 2016, was empowered to forfeit the Earnest Money Deposit [EMD] and Interest free Refundable Participation Deposit Money [PDM] deposited for participating in the auction.
Facts- The appellant has filed the present appeal impugning an order dated 12.12.2024. Respondent No.1 [writ petitioner] had filed the said petition impugning a letter dated 09.02.2024 issued by the appellant – Liquidator of M/s.Samrudhi Realty Limited – communicating his decision to disqualify the writ petitioner as a successful bidder; cancel the Letter of Intent; forfeit the Earnest Money Deposit; and Interest Free Refundable Participation Deposit Money. The Single Judge allowed the writ petition and directed the Liquidator to refund an amount of Rs. 70,00,000/- to the writ petitioner albeit without interest, within a period of four weeks from the receipt of the certified copy of the order. The Single Judge permitted forfeiture of the balance amount of Rs.3,70,000/- by the Liquidator.
The only question to be addressed is whether the Liquidator appointed under the Insolvency and Bankruptcy Code, 2016, is empowered to forfeit the EMD deposited by the writ petitioner for participating in the auction.
