The National Company Law Tribunal (NCLT), Mumbai Bench, has ruled that a contractor who stayed silent throughout the corporate insolvency resolution process (CIRP) and liquidation cannot later seek restitution or compensation for machinery auctioned during liquidation. Dismissing two applications filed by Ahluwalia Contracts (India) Ltd., the Tribunal held that the contractor never informed the liquidator about the alleged machinery before the auction and therefore could not claim relief after the sale was completed.
The ruling was delivered by a Bench comprising Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar while deciding interlocutory applications under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, in the liquidation of Guruashish Construction Pvt. Ltd.
The dispute stemmed from a Slum Rehabilitation Authority (SRA) project, where Guruashish Construction had entered into a tripartite joint development agreement with MHADA and a cooperative housing society. Between 2010 and 2013, Guruashish issued five work orders to Ahluwalia Contracts for civil and finishing works across multiple sectors. In executing these works, the contractor deployed its machinery and equipment at the project site.
In April 2017, MHADA terminated the joint development agreement due to non-performance. Guruashish Construction was admitted into CIRP on July 24, 2017, and subsequently went into liquidation on September 4, 2020. During this period, Ahluwalia Contracts removed certain machinery from Sector R-9 in April 2022 after obtaining access from MHADA. However, the contractor did not inform MHADA or the liquidator whether any machinery remained at other parts of the site.
The contractor later claimed that when its representatives sought access in November 2023, they discovered that the remaining machinery had already been auctioned during liquidation. Alleging that the liquidator had no authority to auction third-party assets, Ahluwalia Contracts sought restitution of the auction proceeds and compensation for its alleged losses.
The liquidator opposed the plea, stating that the contractor never filed any claim during CIRP or liquidation, never submitted inventories or ownership proof, and never objected to the auction despite public notices. It was also pointed out that the machinery auctioned belonged to Petron Engineering Construction Ltd. (PECL), another contractor with receivables from the corporate debtor, and that the sale was conducted after due verification as part of the liquidation process.
MHADA also opposed the applications, asserting that the contractor had already removed its machinery in 2022 and raised no further claims at that time. MHADA clarified that it merely facilitated access when requested and had no role in identifying or auctioning assets during liquidation.
After reviewing the record, the Tribunal noted that following the removal of machinery from Sector R-9, the contractor neither pursued the matter with MHADA nor approached the liquidator to assert ownership over any remaining machinery. The Tribunal observed that Ahluwalia Contracts remained completely inactive until after the auction had been concluded.
Relying on the appellate decision in Reliance Realty Ltd. v. Anup Kumar (Liquidator), the Bench reiterated that liquidation proceedings cannot be disrupted by parties who fail to raise ownership claims during CIRP or liquidation without justification. Applying this principle, the Tribunal held that silence and inaction amounted to acquiescence. It recorded that the contractor never informed the liquidator about any machinery lying at the MHADA site before the auction and found no merit in the plea for restitution or recovery of auctioned assets.
The Tribunal further held that no relief could be granted against MHADA under Section 60(5) of the IBC, as the contractor’s claim did not arise out of the insolvency of the corporate debtor. It noted that the contractor was never restrained by the resolution professional, the liquidator, or the Tribunal from removing its machinery and had acted independently in corresponding with MHADA.
In view of these findings, the NCLT dismissed both applications, holding that belated and unsupported claims cannot be entertained after completion of auction in liquidation proceedings.
