Bombay high court allows third round of Auction of 65% shareholding in kakade construction company, permits decree holder to offer its 35% alongside

Bombay High Court Approves Third Auction Round for 65% Shares in Kakade Construction, Allowing Decree Holder to Offer Additional 35%.

Case Name: Vistra ITCL (India) Ltd. and Anr. v. Sanjay Dattatreya Kakade and Ors.

Coram: Justice Rajesh S. Patil

Citation: (2026) ibclaw.in 6038 HC

Case No.: Commercial Execution Application (Lodging) No. 1599 of 2018

Decided on: 06 October 2026

The High Court of Bombay has allowed an Interim Application filed by the decree holder in execution of a Consent Award, thereby permitting the third round of auction of the 65% shareholding in Kakade Construction Company Pvt. Ltd. (KCCPL) held by Respondent Nos. 1 and 2, and permitting the decree holder to offer its own 35% shareholding to the successful bidder, so that offers may be invited for the entire 100% shareholding.

The Court held that the objections raised by the Judgment Debtors could not help them, since the consent terms, the undertakings given under them and the Supreme Court proceedings arising from them had already settled the position.

Background

A Shareholders’ Agreement dated 30 January 2007 was executed between the Kakades and the applicants, pursuant to which Rs. 75 crores was invested in KCCPL through equity shares and Class ‘A’ redeemable optional convertible cumulative preference shares. Disputes arose in 2011 and were referred to an Arbitral Tribunal of three retired Supreme Court Judges. The parties settled and a Consent Award was passed on 14 July 2014, under which the applicants accepted a reduced claim of Rs. 178 crores with interest from 30 September 2014, payable in tranches. Only the first payment of Rs. 10 crores was made, and the decree holder approached the High Court in execution.

During execution, fresh Consent Terms were signed on 22 February 2018. The Respondents confirmed the Consent Award, withdrew their challenges to it and undertook to pay in tranches. The Court Receiver was appointed over lands at Village Hingwane. It was agreed that on default the concessions would stand revoked and the Respondents would be jointly and severally liable for the entire balance. The Respondents also undertook not to obstruct the Court Receiver or the execution of the Consent Award.

The Respondents then approached the Supreme Court. The Special Leave Petition of KCCPL was withdrawn on 7 October 2025. The petition of Respondent Nos. 1 and 2 was heard on merits and dismissed on 24 February 2026. The Supreme Court recorded that the petitioners were unable to pay the principal amount of Rs. 178 crores and had themselves suggested that the Receiver sell the assets and pay the recovered amount. The Receiver was left to proceed in accordance with law.

The Court Receiver twice attempted to auction the attached properties, but no bidders came forward. The Receiver then filed Report No. 378 of 2023 seeking directions, following which the present Interim Application was filed.

Prayers

The decree holder sought directions for including the terms of sale in the public notice for the third round of auction, permission to voluntarily offer its 35% shareholding in KCCPL with the 65% held by the Kakades and invite offers for 100%, and leave to participate in the third round under Order XXI Rule 72 of the Code of Civil Procedure, 1908.

Objections and Findings

Senior Counsel for KCCPL raised objections on the ground of violation of FEMA regulations when the Consent Terms were filed. The Court noted that this argument was also raised before the Supreme Court in SLP No. 29597 of 2025 and was rejected. Though KCCPL raised a similar issue in its own SLP No. 14245 of 2025, it chose to withdraw it. The Court held that the Respondents could not raise the same issue again.

It was also submitted for the decree holder that a Criminal PIL filed by project affected people had been rejected by a Division Bench on 12 March 2026, and that intervenors therefore could not object in the present application.

The Respondents relied on four decisions. In Dilip B. Jiwrajka v. Union of India, the Supreme Court held that the purpose of the interim moratorium is to restrain the initiation or continuation of legal proceedings against the debt. The Court found that this ratio did not apply, as the decree holder’s argument was restricted only to Respondent No. 3. Sant Lal Gupta v. Modern Cooperative Group Housing Society Ltd. dealt with the duty of courts to record reasons, and the Court held that it did not support the Respondents. In Jamia Hamdard v. Asad Mueed, a Division Bench of the Delhi High Court held that an executing court cannot go beyond an order under Section 17 of the Arbitration Act by directing a person who was not a party to the arbitration. The Court noted that the facts there were different. Jotun India Pvt. Ltd. v. PSL Ltd. concerned the distinction between the Companies Act and the IBC and the jurisdiction of the Company Court to stay proceedings before the NCLT. The Court held that it was decided on its own facts and was not applicable here, since the Court was dealing only with Respondent No. 3.

Decision

The Court observed that a Consent Award was passed in arbitration, the Judgment Debtors defaulted, fresh Consent Terms with undertakings were entered into in execution, and those undertakings were violated. The order recording the Consent Terms was challenged before the Supreme Court, which rejected the SLP of Respondent Nos. 1 and 2 on merits, while KCCPL withdrew its own. Holding that the Interim Application needed to be allowed, the Court allowed it in terms of prayer clauses.