Pranav B Prem

The National Company Law Tribunal (NCLT), Mumbai Bench, has held that a contractor who remained silent throughout the corporate insolvency resolution process (CIRP) and liquidation proceedings cannot later seek restitution or compensation for machinery that was auctioned during liquidation. Dismissing the applications filed by Ahluwalia Contracts (India) Ltd., the Tribunal held that the contractor never informed the liquidator about the alleged machinery prior to the auction and, therefore, could not claim any relief after the sale had been completed.

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The Bench comprising Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar passed the ruling while considering two interlocutory applications filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, in the liquidation proceedings of Guruashish Construction Pvt. Ltd.

The dispute arose from a Slum Rehabilitation Authority (SRA) project, for which Guruashish Construction had entered into a tripartite joint development agreement with MHADA and a cooperative society. Between 2010 and 2013, Guruashish issued five work orders to Ahluwalia Contracts for execution of civil and finishing works across multiple sectors of the project. In the course of executing these works, the contractor deployed its construction machinery and equipment at the project site.

In April 2017, MHADA terminated the joint development agreement for non-performance. Thereafter, Guruashish Construction was admitted into CIRP on July 24, 2017, and subsequently into liquidation on September 4, 2020. During this period, the contractor removed certain machinery from Sector R-9 after obtaining access from MHADA. However, after such removal, Ahluwalia Contracts did not inform either MHADA or the liquidator whether any machinery remained at other parts of the site.

The contractor later claimed that when its representatives sought further access to the site in November 2023, they discovered that the remaining machinery had already been auctioned during liquidation. Contending that the liquidator had no authority to auction third-party assets, Ahluwalia Contracts sought restitution of the auction proceeds and compensation for alleged losses.

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Opposing the plea, the liquidator submitted that the contractor never filed any claim during CIRP or liquidation, never provided inventories or proof of ownership, and never objected to the auction process despite public notices being issued. It was pointed out that the machinery auctioned belonged to Petron Engineering Construction Ltd. (PECL), another contractor that owed receivables to the corporate debtor, and that the auction was carried out after due verification as part of the liquidation process.

MHADA also opposed the applications, contending that the contractor had already removed its machinery in 2022 and that no further claims were raised at that stage. It was submitted that MHADA merely facilitated access as required and had no role in the identification or auction of assets during liquidation.

After examining the record, the Tribunal noted that following the removal of machinery from Sector R-9 in April 2022, the contractor neither pursued the matter with MHADA nor approached the liquidator to assert ownership over any remaining machinery. The Tribunal observed that the contractor had remained completely inactive until after the auction had taken place.

The Bench relied on the appellate ruling in Reliance Realty Ltd. v. Anup Kumar (Liquidator), wherein it was held that liquidation proceedings should not be disrupted by parties who, without any cogent reason, never raised ownership claims during CIRP or liquidation. Applying the same principle, the Tribunal held that silence and inaction during the insolvency process amounted to acquiescence.

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“The Applicant prior to auction of the said assets never informed the Liquidator about its machinery or equipment lying at the MHADA site where it was rendering construction services to the Corporate Debtor prior to termination of JDA,” the Tribunal observed, adding that no merit was found in the prayer seeking restitution or recovery of machinery already auctioned. 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 that it had independently corresponded with MHADA. In view of these findings, the NCLT dismissed both applications filed by Ahluwalia Contracts, holding that belated and unsupported claims cannot be entertained after completion of auction in liquidation proceedings.

Appearance

For Applicants: Khaitan Legal Associates

For Respondents : Advocate Jaya Joil-Bagwe for MHADA; Adv. Darryl Pereira for Respondent 2

Cause Title: Ahluwalia Contracts (India) Ltd. v. Maharashtra Housing and Area Development Authority & Anr.

Case No: IA 2259 of 2024 & IA 1041 of 2025 in CP (I&BP)/1061(MB)/2017

Coram: Judicial Member Sushil Mahadeorao Kochey, Technical Member Prabhat Kumar