The State of Punjab and Anr. Vs Ferrous Alloy Forgings Pvt. Ltd. and Ors. - As long as the sale certificate remains as it is, it is not compulsorily registrable. It is only when the auction purchaser uses the certificate for some other purpose that the requirement of payment of stamp duty, etc. would arise.

 SCI (2024.11.19) in The State of Punjab and Anr. Vs Ferrous Alloy Forgings Pvt. Ltd. and Ors..[(2024) ibclaw.in 313 SC, Civil Appeal No. 12527 of 2024 (Arising Out of SLP(C) No. 23347 of 2014)] held that;

• The mandate of law that flows from a combined reading of Sections 17(2) (xii) and 89(4) of the Registration Act respectively is that the auction purchaser is entitled to receive the original sale certificate and a copy of the same is required to be forwarded to the Sub- Registrar for the purpose of filing in Book 1 as per the Registration Act.

• The Court further observed that once a direction is issued for the duly validated certificate to be issued to the auction purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration Act, it has the same effect as registration and requirement of any further action is obviated.

• However, a perusal of Articles 18 and 23 respectively of the first schedule to the Stamp Act respectively makes it clear that when the auction purchaser presents the original sale certificate for registration, it would attract stamp duty in accordance with the said Articles.

• As long as the sale certificate remains as it is, it is not compulsorily registrable. It is only when the auction purchaser uses the certificate for some other purpose that the requirement of payment of stamp duty, etc. would arise.

• This Court clarified that this rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion and if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.

Excerpts of the Order;

# 1. Leave granted.

# 2. This appeal arises from the judgment and order dated 28-11-2013 passed by the High Court of Punjab and Haryana in C.W.P. No.11055/2001 wherein the Writ Petition filed by the Respondent No.1 herein was allowed and the Respondent No.2 herein was directed to handover the original sale certificate to the Respondent No.1 and send a copy of the same to the Sub-Registrar under Section 89(4) of the Indian Registration Act, 1908 (in short, “the Act, 1908”). The High Court also held that the Respondent No.1 was entitled to a refund of the stamp duty deposited by it in pursuance of the order passed by the Company Judge of the High Court.

# 3. The facts giving rise to the appeal may be summarized as under.

# 4. The Company by the name M/s Punjab United Forge Limited was ordered to be wound up by the Company Judge of the High Court under the provisions of the Companies Act, 1956 (for short, “the Act, 1956”) and permission was granted to the Industrial Finance Corporation of India (IFCI) to sell the properties mortgaged with it and also the properties hypothecated with Andhra Bank. Consequently, the IFCI invited tenders for the immovable and movable assets to be put to auction wherein M/s Ferrous Alloy Forging Pvt. Limited, a sister concern of the Respondent No.1 herein, offered the highest bid and as a result the auction sale was confirmed, first by the official liquidator and later by the High Court in favour of M/s Ferrous Alloy Forging Pvt. Limited. It appears from the materials on record that thereafter the Respondent No.1 moved an application requesting for execution of the conveyance deed in its favour on the ground that the entire sale consideration was paid by it and also the Board of Directors and Chairman were the same for both the Respondent No.1 and its sister concern. The request was declined by the Company Judge of the High Court. However, the Respondent No.1 filed an appeal against the same before a Division Bench of the High Court which came to be allowed vide order dated 22.10.1997.

# 5. The materials on record further reveal that the Respondent No.1 herein filed an application under Order XXI Rule 94 of the Code of Civil Procedure, 1908 (for short, the “CPC”) for the issuance of sale certificate in its capacity as the successful auction purchaser for both the movable and immovable properties. The application came to be disposed of by the Company Judge of the High Court vide order dated 13-4-1999 taking the view that the Respondent No.1 was liable to pay the stamp duty on the immovable properties which had been put to auction which would include land, building and permanently affixed machinery thereto. It further directed that although the immovable properties which were put to auction were to be included in the certificate of transfer, their value would be excluded for the purpose of computation of stamp duty. The High Court directed the Respondent No.1 to file an affidavit to this effect and pay the requisite stamp duty.

# 6. In pursuance of the order referred to above passed by the High Court, the Respondent No.1 submitted an additional affidavit of the movable assets purchased by the auction purchaser at Rs.54.67 lakhs. However, when the matter was taken up by the Registrar, he took the view that stamp duty had to be paid on Rs. 2.25 crore which was the valuation of the immovable properties as offered in the tender. The Respondent No.1 was, accordingly, directed to pay stamp duty on Rs.2.25 crore for the sale certificate to be issued in its favour.

# 7. The directions issued by the Registrar were challenged by the Respondent No.1 by way of a Writ Petition for being in derogation of Section 17 (2)(xii) of the Registration Act read with Rule XXI Order 94 of CPC. The Division Bench of the High Court formulated the following question of law for its consideration.

“Whether a sale certificate issued in pursuance to a Court’s auction is required to be stamped”

# 8. In other words, according to the High Court, the controversy revolved around the interplay of the Registration and Stamp Acts, i.e., although a sale certificate is undoubtedly not compulsorily registrable yet is it mandatory for the auction purchaser to deposit the stamp duty for the sale certificate to be issued to it in view of the provisions of the Stamp Act.

# 9. The Writ Petition came to be allowed by way of the impugned order wherein the High Court took the view that there was no occasion for fixation of stamp duty at the time of issuance of the sale certificate and the Registry of the High Court was only required to issue the sale certificate and send a copy of the same to the Sub-Registrar in accordance with the mandate contained in Section 89(4) of the Registration Act. The High Court further observed that whether the certificate is to be stamped or not would be the responsibility of the successful auction purchaser.

# 10. The appellant herein also raised an objection before the High Court that as the Respondent No.1 had not challenged the order of the Company Judge dated 13-4-1999, the same had attained finality and the directions of the Registrar being in consonance with the said order, the same could not have been challenged by way of a writ petition. The High Court rejected the said objection and held that in view of the limited ambit of the controversy, it thought fit to consider them in the writ proceedings.

# 11. In view of the above, the High Court directed that the original sale certificate be handed over to the Respondent No.1 and a copy of the same be sent to the Sub-Registrar under Section 89(4) of the Registration Act. It further directed that the stamp duty deposited by the Respondent No.1 be refunded within a period of one month.

# 12. Aggrieved by the aforesaid, the State of Punjab is in appeal before us.

# 13. The short question that falls for our consideration in this appeal is whether it is mandatory for the successful auction purchaser to deposit the stamp duty for the sale certificate to be issued to it in view of the provisions of the Stamp Act and the Registration Act.

# 14. This Court in Municipal Corporation of Delhi v. Pramod Kumar Gupta reported in AIR 1991 SC 401, after examining the relevant provisions of Order XXI of the Code of Civil Procedure, observed that the title to the property put on auction sale passes under the law when the sale is held. The owners and certain other interested persons are afforded opportunity under the CPC to assail the sale and make a prayer for setting aside the sale on certain enumerated grounds. However, once such objections are disposed of without disturbing the sale, the sale stands confirmed under Order XXI Rule 92 of the CPC. Thereafter, the sale certificate is issued under Order XXI Rule 94. The Court observed that this chronology of events made it clear that the transfer becomes final when an order under Rule 92 of Order XXI is made and the issuance of a sale certificate under Rule 94 is only a formal declaration of the effect of such confirmation. Such issuance of certificate does not create or extinguish any title and thus would not attract any stamp duty which is applicable qua an instrument of sale of immovable property.

# 15. In Smt. Shanti Devi L. Singh v. Tax Recovery Officer and Others reported in AIR 1991 SC 1880, this Court observed that since the certificate of sale is not a compulsorily registrable document in lieu of Section 17(2)(xii) of the Registration Act, the transfer of title in favour of the auction purchaser would not be vitiated on account of non-registration of the sale certificate.

# 16. In B. Arvind Kumar v. Govt. Of India and Others reported in (2007) 5 SCC 745, this Court observed that when a property is sold by public auction in pursuance of an order of the court and the bid is accepted and the sale is confirmed by the court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well settled that when an auction-purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the court is contemplated or required. Although in the said case, the sale certificate was registered yet this Court proceeded to observe that a sale certificate issued by a court or an officer authorized by the court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a civil or revenue officer does not fall under the category of non-testamentary documents which require registration under sub-section (b) and (c) of Section 17(1) of the said Act.

# 17. The position of law is thus settled that a sale certificate issued to the purchaser in pursuance of the confirmation of an auction sale is merely evidence of such title and does not require registration under Section 17(1) of the Registration Act. It is not the issuance of the sale certificate which transfers the title in favour of the auction purchaser. The title is transferred upon successful completion of the sale and its confirmation by the competent authority after all the objections against the sale have been disposed of.

# 18. Recently, a three-Judge Bench of this Court in M/s Esjaypee Impex Private Limited v. The Asst. General Manager and Authorized Officer Canara Bank reported in (2021) 11 SCC 537 observed that the mandate of law that flows from a combined reading of Sections 17(2) (xii) and 89(4) of the Registration Act respectively is that the auction purchaser is entitled to receive the original sale certificate and a copy of the same is required to be forwarded to the Sub- Registrar for the purpose of filing in Book 1 as per the Registration Act.

# 19. In Inspector General of Registration and Another v. G. Madhurambal and Another reported in 2022 SCC Online SC 2079, a two-Judge Bench of this Court observed that the consistent position of law is that a certificate of sale cannot be regarded as a conveyance subject to stamp duty. The Court further observed that once a direction is issued for the duly validated certificate to be issued to the auction purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration Act, it has the same effect as registration and requirement of any further action is obviated.

# 20. The position of law discussed above makes it clear that sale certificate issued by the authorised officer is not compulsorily registrable. Mere filing under Section 89(4) of the Registration Act itself is sufficient when a copy of the sale certificate is forwarded by the authorised officer to the registering authority. However, a perusal of Articles 18 and 23 respectively of the first schedule to the Stamp Act respectively makes it clear that when the auction purchaser presents the original sale certificate for registration, it would attract stamp duty in accordance with the said Articles. As long as the sale certificate remains as it is, it is not compulsorily registrable. It is only when the auction purchaser uses the certificate for some other purpose that the requirement of payment of stamp duty, etc. would arise.

# 21. We also do not find any force in the contention of the appellant that the High Court should not have exercised its writ jurisdiction under Article 226 as Respondent no. 1 had an alternate efficacious remedy of filing an appeal against the order of the Company Judge in pursuance of which directions came to be passed by the Registrar. This Court in Radha Krishan Industries v. State of H.P. reported in (2021) 6 SCC 771 observed that an alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law. It was held that when a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. However, this Court clarified that this rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion and if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.

# 22. In view of the aforesaid, the appeal fails and is hereby dismissed.

# 23. Pending application(s), if any, shall also stand disposed of.

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Mr. Ravikant Modi Vs Mr. Anshul Gupta Liquidator. - The Hon’ble Supreme Court in ‘Ghanshyam Mishra & Sons Pvt. Ltd.’ Vs. ‘Edelweiss Asset Reconstruction Company Ltd. & Ors.’, Civil Appeal No. 8129 of 2019 and in ‘CoC of Essar Steel India Ltd.’ Vs. ‘Satish Gupta & Ors.’ (2020) 8 SCC 531 has laid down the proposition that the purchaser of the Company even in the Liquidation stage cannot be burdened with past liabilities when it is not mentioned in the ‘Sale Notice’.

 NCLT Mumbai-V (2024.11.21) in Mr. Ravikant Modi Vs Mr. Anshul Gupta Liquidator.[(2024) ibclaw.in 1056 NCLT,  IA NO. 929 OF 2024 IN C P (IB) NO. 1088/MB/2020 ] held that;

• The crux of the ‘sale as a going concern’ is that the equity shareholding of the Corporate Debtor is extinguished and the acquirer takes over the undertaking with the assets, licenses, entitlements etc. The undertaking includes the business of the Corporate Debtor, assets, properties and rights etc. excluding the liabilities.

• The Corporate Debtor survives, only the ownership is transferred by the Liquidator to the purchaser. All the rights, titles and interest in the Corporate Debtor including the legal entity is transferred to the purchaser. After the sale as a ‘going concern’, the purchaser will be carrying on the business of the Corporate Debtor.

• However, as far as the ‘going concern’ sale in liquidation is concerned, there is a clear difference that only assets are transferred and the liabilities of the Corporate Debtor have to be settled in accordance with Section 53 of the Code and hence the purchaser of this asset takes over the assets without any encumbrance or charge and free from the action of the Creditors

• The assets with the attendant, claims, limitations, licenses, permits or business authorizations, remains in the Company. Only the ownership of the Company is acquired by the successful bidder from the Liquidator.

• “during liquidation, all the statutory liabilities do not automatically get extinguished. The Court clarified that when a corporate debtor is in liquidation, statutory dues like employee claims, taxes, and other dues are paid as per the waterfall mechanism provided in Section 53 of the IBC. This means that liquidation does not imply a clean slate, and all dues and claims are to be settled as per the specific priority laid down in the Code.”

• “unlike in a resolution plan where a "clean slate" is provided to the new management to revive the business, liquidation involves the sale of assets to satisfy creditors as per the statutory priority order. Therefore, the "clean slate" concept is not applicable in liquidation, where statutory dues and creditors' claims need to be settled according to the provisions of the IBC”

• The Hon’ble Supreme Court in ‘Ghanshyam Mishra & Sons Pvt. Ltd.’ Vs. ‘Edelweiss Asset Reconstruction Company Ltd. & Ors.’, Civil Appeal No. 8129 of 2019 and in ‘CoC of Essar Steel India Ltd.’ Vs. ‘Satish Gupta & Ors.’ (2020) 8 SCC 531 has laid down the proposition that the purchaser of the Company even in the Liquidation stage cannot be burdened with past liabilities when it is not mentioned in the ‘Sale Notice’.

Excerpts of the Order;

# 1. The above application I.A. No. 929 of 2024 is filed by Mr. Ravikant Modi (A Successful Bidder of the Corporate Debtor (hereinafter referred to as the “Applicant”) seeking direction against Mr. Anshul Gupta (Liquidator of the Corporate Debtor) (hereinafter referred to as the “Respondent”) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 And Rule 11 of NCLT Rules, 2016 (hereinafter called as “the Code”), praying for following reliefs: 

• a. That this Hon'ble Tribunal confirms that Applicant as ‘Successful bidder” for the assets of the Corporate Debtor sold-as ‘going concern’ in accordance with the regulations emanated under the liquidation regulation. 

• b. That this Hon'ble Tribunal be pleased to grant several reliefs and concessions as enumerated in ‘Annexure G' attached in the present application.

• c. That this Hon'ble Tribunal be pleased to direct the appropriate statutory l authorities to act, entertain and allow appropriate application based on the orders of this Tribunal for the purpose of availing the reliefs, rights and benefits accruable from the security and financial assets as purchased by the Applicant under the e-auction sale process. 

• d. Any reliefs or direction in terms of prayer clause (a) to (c)as set above, in the interest of the liquidation proceedings of the Corporate Debtor. 

• e. Any other prayer as deemed fit by the Tribunal in the interest of justice. 2. The

# 2. Present Application is preferred by the Applicant for seeking various concessions and reliefs in relation to the assets sold as going concern Corporate Debtor. 

FACTS OF THE CASE (IN BRIEF): 

# 3. The Company Petition No. 1088 of 2020 was filed to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor i.e. Topsgrup Services and Solutions Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor was admitted to CIRP vide an order dated 19.02.2021 wherein Mr. Rajendra Karanmal Bhuta was appointed as IRP. The IRP made a public announcement in Form-A which was published on February 23, 2021, through two newspapers, namely the "Free Press Journal" and "Navakal." This announcement invited creditors to submit their claims by March 10, 2021. 

# 4. During the first Committee of Creditors (CoC) meeting held on 05.04.2021, the Insolvency Resolution Professional (IRP) informed the CoC that his authorization had expired due to reaching the age limit. The CoC decided to nominate a new Resolution Professional (RP) while the IRP continued his duties until the appointment of the new RP. 

# 5. During the third CoC meeting held on 15.05.2021, the CoC approved the Respondent as the new RP, Mr. Anshul Gupta. This appointment was later confirmed by the tribunal vide order dated 27.07.2021. 

# 6. In the absence of approved Resolution Plan the Respondent filed an Application under section 33 of the of the IB Code 2016 and the same was allowed by the Hon’ble Tribunal vide order dated 21.09.2022 and appointed Mr. Anshul Gupta as the Liquidator. 

# 7. The Liquidator published an e-auction sale notice on September 25, 2023, announcing the sale process of the Corporate Debtor. Certain assets were excluded from the sale. The notice specified that the sale was conducted on an 'As Is, Where Is’, basis. The auction date was set for October 27, 2023, with a deadline for bid submissions and Expression of Interest (EOI) on October 10, 2023.The interested bidders were required to submit an Expression of Interest memorandum along with bid documents. 

# 8. The Applicant states that according to the e-auction sale notice, the reserve price for the Corporate Debtor, excluding certain assets, was set at Rs 367.62 Lakhs (Rupees Three Crores Sixty-Seven Lakhs Sixty-Two Thousand only). Bid incremental value, meaning the minimum amount by which bids must increase, was fixed at Rs 5,00,000 (Rupees Five Lakhs only). Additionally, the Earnest Money Deposit (EMD) was set at 10% of the reserve price. 

# 9. The Applicant submitted that pursuant to the knowledge of the e-auction sale process of the Corporate Debtor and based on the information disclosed in the sale information document, the Applicant had submitted Expression of Interest along with all the relevant undertakings, declarations, and affidavits as required and mentioned in information documents and participated in an e-auction sale process for the Corporate Debtor. 

# 10.The Applicant was declared the successful bidder in an e-auction sale process by the Liquidator. This declaration was confirmed via a Letter of Intent dated October 30, 2023, wherein the terms were unconditionally accepted by the Applicant. Following this, the Applicant fulfilled their financial obligations by paying the aggregate sale consideration along with interest on delayed payment to the Liquidator. Subsequently, the Liquidator issued a Sale Certificate dated February 01, 2024, officially recognizing the Applicant as the successful purchaser. 

# 11.The Applicant seeks critical reliefs from the Tribunal to revive the business operations of the Corporate Debtor. These reliefs, detailed in 'Annexure G,' are deemed essential for transitioning the entity from insolvency to an actively operational state, following the purchase of assets and liabilities under a 'Sale as Going Concern' arrangement. Key requests include provisions for trademark usage, the ability to review and terminate contracts based on viability, and the transfer of assets free from encumbrances. Additionally, the Applicant seeks legal immunity from prior wrongdoings, the formation of a new board of directors, and ancillary reliefs to rejuvenate business prospects and settle liabilities pre-liquidation. 

# 12. The Applicant has prayed for the following reliefs and Concession: 

1. Reliefs for use of the Intellectual Property Rights and all other rights ancillary to it, including the rights to use, transfer, sell, secure and use as a security as its own. The said rights to include the existing, past and future intellectual property rights including but not limited to the brand name, the trademark and other rights attached thereto of the Corporate Debtor. 

2. Direction for right to continue the operations of business including right to review, revise, enhance, amend, alter, abandon, amalgamate, windup and terminate any existing contracts without any need for a special power to do so. 

3. Direction for right, title and interest in whole and every part(assets)of the CD (except the certain assets not offered as part of sale of CD as going concern) to vest in the CD free from all security interest, encumbrances, disputes, attachments, claims and counter claims including right to continue the ongoing litigations for the benefit of the corporate debtor. 

4. Directions for granting immunity to the Successful bidder from every existing as well as contingent liability that may arise with respect to any of the existing subsidiaries of the Corporate Debtor qua the Corporate Debtor. 

5. Direction for granting immunity to the CD from inquiries / investigation/prosecutions or any other proceedings whether civil or criminal for any. offences prior to sale of CD as going concern 

6. Direction to the effect that in case of sale of CD assets by lenders, no Capital Gain Tax or any other tax on the CD. 

7. Direction to enable the Liquidator to continue using the bank account with Axis Bank, “Topsgrup Services and Solutions Limited under Liquidation” for settlement of claims and demands in terms of section and making provisions for future claims and maintaining it till the closure of the Liquidation Process. 

8. Directions to the effect that the due & outstanding claims of the CD against third parties shall be recoverable in accordance with their respective terms 

9. Successful Bidder be exempted from ineligibility under section 29A from submitting bids in future for acquisition of any other Corporate Debtor. This exemption is sought as any of the subsidiaries may be Non-Performing Asset (NPA) which may in turn render the Successful bidder ineligible under section29A. 

10. A direction be issued for permitting infusion by way of securities or instrument of the Corporate Debtor and/or borrow in lieu of the ‘Liquidation Sale Amount’ from the Successful Bidder or any of its nominee which shall be subject to the compliance with Section 29A of IBC and accordingly the term “Successful Bidder” shall include all such nominees. Further, a direction be issued that the Acquisition Structure and contours mentioned be approved by the Adjudicating Authority. A direction may also be issued that the Successful Bidder / Corporate Debtor shall not be required to make ‘any separate application before the Adjudicating Authority under the provisions of applicable Laws and that the approval of Application by the Adjudicating Authority shall be treated as if the necessary approvals have been obtained under the Companies Act, 2013. 

11.The existing pre-liquidation shareholding (including equity shares and preference share capital of the CD) shall stand cancelled, extinguished and permanently discharged in entirely. A direction be issued to RoC, NSDL and, CDSL or any other ~authorities to recognize such extinguishment of pre-liquidation shareholding. 

12. A direction be issued to the Registrar of Companies, Mumbai to change the status of the company to “Active” on the MCA website.. 

13. A direction be issued, that from the Effective Date, the Board of Directors of the Corporate Debtor be re-constituted and the individuals proposed by the Successful Bidder be permitted to act as the Directors of the Corporate Debtor duly appointed under the provisions of the Companies Act,2013 and direct the Registrar of Companies, to do all such acts, deeds and things that are necessary to appoint the said individuals as directors of the Corporate Debtor and the existing board of directors of the Corporate Debtor shall be removed. It is undertaken that the individuals proposed to act as Directors of the Corporate Debtor shall not be disqualified in terms of Section29A of the Code. 

14. All the non-compliances under the Companies Act including but not limiting to violation of section 185, 186 of the Companies Act and all such other noncompliance’s under any other law shall be deemed to be regularized and all penalties payable in relation to the non-compliances stand waived off pursuant to this approval by Hon’ble NCLT. 

15. All accounts of the Corporate Debtor shall stand regularized and their asset classification shall be “standard” for the purposes of all RBI Applicable Laws upon payment of last and final instalment and upon issuance of the certificate of Sale by the Liquidator. The records/score of Banks/CIBIL should accordingly be upgraded to reflect such reclassification of account of the Corporate Debtor from NPA to N Standard. 

16. A direction be issued that the Successful Bidder / Corporate Debtor shall have a right to review and terminate any contract, which in the opinion of the successful bidder, is prejudicial to the interest of the Company, that was entered into by the Corporate Debtor prior to the Effective Date. 

17. That necessary exemption be provided to the Corporate Debtor from adding the words “and reduced” in its name, as required under the provisions of Companies Act, 2013. 

18. A direction be issued to the Ministry of Corporate Affairs, Registrar of Companies, Mumbai and other statutory and regulatory authorities that, immediately, upon payment of the full Liquidation Sale Amount, the charges registered with them in respect the encumbrances over the assets of the Corporate Debtor( to the extent asset sold to the Applicant/ Successful Bidder) shall be deemed to be satisfied upon the Effective Date and that the order passed by Adjudicating Authority shall be sufficient proof for satisfaction of all charges and encumbrances already existing unsecured assets of the Corporate Debtor in the records of MCA, ‘ROC and other statutory and regulatory authorities upon completion of sale and the creditors shall be directed to provide requisite support in relation thereto. 

19. A direction be issued that as the sale of Corporate Debtor as Going Concern is akin to implementation of resolution plan under the corporate insolvency resolution process all attendant benefits, privileges and exemptions under various laws, including under the taxation law, shall be applicable to the Corporate Debtor upon sale to the Successful Bidder, including but not limited to benefit of any tax holiday, exemption, deduction, carry forward of losses of any prior years and set-off against the income of any financial year as available to the Corporate Debtor, even in an eventuality where the Corporate Debtor does not remain listed in future, more so in view of compliance of the provisions of Section 78(2)(c) of the Income Tax Act, 1961, which apply mutatis mutandis to sale of the corporate debtor under going concern under liquidation. 

20. The requirement of obtaining a no objection certificate, if any, under section 281 of ‘the Income-tax Act, 1961 and provisions of taking over its predecessor’s tax liability under section 170 of the Income Tax Act, 1961 shall not be applicable. 

21. A direction be issued that upon recasting of the financial statements (Profit and Loss Account and the Balance Sheet) of the Corporate Debtor pursuant to, (i), write back all the liabilities of the Corporate Debtor, including creditors, term loans, working capital loans, tax liabilities, other statutory liabilities such as Provident Fund, ESIC, Profession Tax, GST, Service Tax, Income Tax, TDS, etc. which are not payable and reflecting the total liabilities at the amount of the consideration (as reduced by the amount of insolvency resolution process costs and the liquidation costs) determined in the auction; and (ii) write down of the assets which are not recoverable (debtors, inventories and loans. And advances, etc.) to their realization value; the Successful Bidder or the Corporate Debtor shall not be liable for any claim, liability or penalties that may arise pursuant to such recasting of the financial statements. 

22. A direction be issued and the Applicant / Liquidator be empowered to issue directions to the banks to change the operating signatories bank accounts of the Corporate Debtor on or after Effective Date, other than the Liquidation Bank Account held by ~the Liquidator, also direction for remove lien (if any) for smooth transition of the corporate debtor to the successful bidder. 

23. All Creditors of the Corporate Debtor to withdraw all legal proceedings commenced against the Corporate Debtor in relation to Claims including but not limited to under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Recovery of Debts Due to Banks and Financial Institutions Act, ~ 1993 or any other legal proceedings with any authority upon discharge of their debt. 

24. Direction be issued that on the effective date, any and all Claims (including but not limited to employee related liability such as salary, wages, PF,ESIC, gratuity claims) or demands made by or liabilities or obligations owed or payable to (including any demand for any losses or damages, principal, interest, compound interest, penal : interest, liquidated damages and other charges already accrued/ accruing or in connection with any Claim) any actual or potential claimants of the Corporate Debtor or in connection with any debt of the Corporate Debtor, whether admitted or not, due or contingent, asserted or unassisted, crystallized or uncrystallized, known or unknown, disputed or undisputed, present or future, whether or not set out in the balance sheet of the Corporate Debtor or the profit and loss account statements of the Corporate Debtor, in relation to any period prior to the Effective Date or arising on account of the acquisition of control or shares.by the Successful Bidder over the Corporate Debtor pursuant to this auction, will be written off in full and shall be deemed to be permanently extinguished by virtue of section 53 of the Insolvency and Bankruptcy Code and the Corporate Debtor or the Successful Bidder shall at no point – of time be, directly or indirectly, held responsible or liable in relation thereto. 

25. A direction be issued that on the effective date and pursuant to section 53 of the Insolvency and Bankruptcy Code, 2016, the successful bidder and/or the corporate debtor shall not be responsible for claim, damage, penalty, attachment, etc. if any imposed under Assessment proceedings and/or appeal proceedings and/or any proceedings before any-court of law including but not restricted to execution of any judgment or decree of any court arising out of any events / defaults / noncompliance/ nonpayment of any liability and any failure of such nature or any action /inaction of the erstwhile management carried out or due before the effective date including the right of the guarantors towards subrogation. The commitment of the Successful Bidder, for all the liabilities standing on the effective date, is restricted to bid amount of Rs. 367.62 lakhs. Any liability ‘as on the effective date whether provided for or not provided for, shall stand irrevocably settled and extinguished in perpetuity. All Claims (whether contingent or crystallized, known or unknown) of Governmental Authorities in relation to all Taxes, all deductions and all withholding Taxes on any payment, as required under Applicable Law and pertaining to the period prior to the Effective Date * shall stand extinguished on the Effective Date. 

26. In case certain business permits and/or licenses (including but not limited to PSARA License) of the Corporate Debtor have lapsed, expired, suspended, cancelled, revoked or terminated or the Corporate Debtor has non-compliances in relation thereto. Accordingly, all Governmental Authorities that have issued or granted or renewed such business permits to provide reasonable time period after the NCLT Approval Date in order for the Successful Bidder to assess the status of these business permits and/or licenses and ensure that the Corporate Debtor is compliant with the terms of such business permits and Applicable Law without initiating any investigations, actions or proceedings in relation to such non-compliances and to permit the Successful Bidder to continue to operate the business of the Corporate Debtor as carried out prior to the Insolvency Commencement Date 

27.Upon approval of this application, all investments, statutory rights, licenses, lease agreements, agreements, registrations or any similar approval by whatever name “called and fundamental for running the business ongoing concern shall be in complete force and valid. 

28.The Governmental Authority shall renew all consents, licenses, permits, and no objections notwithstanding that such consents, licenses, permits and no-objections may have lapsed, or there may be any amounts outstanding or owed to the Governmental Authority whether by way of fees, penalty or otherwise and not withstanding any outstanding non-compliance. 

29.The Corporate Debtor shall be granted a period of 12 months from the 'NCLT Approval Date to comply with the statutory obligations without suffering any adverse implications including any revocation of licenses or levy of penalties or any other fees or cost. 

30.The CD/ Successful bidder shall have the liberty to approach the NCLT to address any difficulties faced with respect to implementation of the CD as a going concern. 

# 13.Hence this Application. 

FINDINGS: 

# 14.We have heard both the Counsels for the parties and have gone through their pleadings and documents. 

# 15. Upon careful examination of the submissions and the provisions of the relevant regulations, this Tribunal finds that the Applicant has duly adhered to the procedural requirements laid down in the liquidation regulations. It is observed that the Applicant participated in the bidding process in accordance with the prescribed procedures and emerged as the successful bidder for the assets of the Corporate Debtor. 

# 16. The Applicant has satisfied the requisite conditions by remitting the aggregate sale consideration along with accrued interest to the Liquidator. The Sale Certificate issued by the Liquidator, dated February 01, 2024, corroborates the Applicant's assertion of being recognized as the successful Bidder. The Bench hereby acknowledges and affirms the Applicant's status as the successful Bidder in accordance with the terms and conditions outlined in the bidding process. The Sale Certificate issued by the Liquidator serves as conclusive evidence of the Applicant's successful bid. 

# 17. Regulation 32 of the Liquidation Process Regulations provides for the realization of assets and the same is extracted below: 

• “[Sale of Assets, etc. The Liquidator may sell) 

• a. an asset on a standalone basis; 

• b. the assets in a slump sale; 

• c. a set of assets collectively; 

• d. the assets in parcels; 

• e. the corporate debtor as a going concern; or 

• f. the business(s) of the corporate debtor as a going concern: 

• Provided that where an asset is subject to security interest, it shall not be sold under any of the clauses (a) to (f) unless the security interest therein has been relinquished to the liquidation estate.]” 

# 18 .While the Liquidation Process Regulations recognize “going concern sale” as one of the methods of sale, however, there is no definition as such for ‘going concern’ either in the Code or in the Regulations and also there is no provision in the ‘Code’ or any of the regulations with respect to the relief and concessions to be granted to a Successful Bidder in Liquidation. 

# 19. It is thus incumbent upon us to rely upon the law settled by the Hon’ble NCLAT relevant or to refer the report of the “Insolvency Law Committee” dated 26/03/2018 Para 8.1 of the Report, wherein the committee examined the term “going concern” states as under: 

• “The phrase ‘as a going concern’ imply that the Corporate Debtor would be functional as it would have been prior to the initiation of CIRP, other than the restrictions put by the Code.” 

# 20. The crux of the ‘sale as a going concern’ is that the equity shareholding of the Corporate Debtor is extinguished and the acquirer takes over the undertaking with the assets, licenses, entitlements etc. The undertaking includes the business of the Corporate Debtor, assets, properties and rights etc. excluding the liabilities.The Corporate Debtor survives, only the ownership is transferred by the Liquidator to the purchaser. All the rights, titles and interest in the Corporate Debtor including the legal entity is transferred to the purchaser. After the sale as a ‘going concern’, the purchaser will be carrying on the business of the Corporate Debtor. 

# 21.In the normal parlance “going concern” sale is transfer of assets along with the liabilities. However, as far as the ‘going concern’ sale in liquidation is concerned, there is a clear difference that only assets are transferred and the liabilities of the Corporate Debtor have to be settled in accordance with Section 53 of the Code and hence the purchaser of this asset takes over the assets without any encumbrance or charge and free from the action of the Creditors.In the case of sale as a ‘going concern’ the Corporate Debtor will not be dissolved in terms of Section 54 of the Code. The assets with the attendant, claims, limitations, licenses, permits or business authorizations, remains in the Company. Only the ownership of the Company is acquired by the successful bidder from the Liquidator. 

# 22. As a consequence, to the above discussions and on perusal of the pleadings and submissions made by the Ld. Counsel for the applicants and having been satisfied with the need for smooth transfer of assets of the Corporate Debtor sold as a going concern to applicant as successful auction purchaser, following order is passed keeping in view the provisions of Section 60(5) of the Code r/w Rule 11 of NCLT Rules, 2016: 

• i. The reliefs sought in prayer clauses (a) the Hon'ble Tribunal hereby confirms the Applicant as the 'Successful Bidder' for the assets of the Corporate Debtor sold as a ‘going concern’, in conformity with the regulations promulgated under the liquidation framework. 

• ii. As regards to the point of Jurisdiction of Statutory Authorities for Granting Specific Reliefs and Concessions to the Successful Bidder, the Hon’ble Supreme Court in Anuj Jain Interim Resolution Professional for Jaypee Infratech Ltd. vs. Axis Bank Ltd. & Ors., [(2020) 8 SCC 401], clarified that “while the liquidation process can relieve the successful bidder from certain liabilities, any additional reliefs or specific concessions must be requested from the relevant statutory or regulatory authorities by the bidder. The court underscored that these authorities have the discretion to grant or deny such requests based on their statutory powers”. 

• iii. With regard to the important point in liquidation concerning the 'clean slate' principle, this Bench relies on the observations made by the Hon'ble Supreme Court in the matter of Sunil Kumar Jain v. Sundaresh Bhatt, Liquidator of ABG Shipyard [(2022) SCC OnLine SC 306] The Hon’ble Supreme Court held that “during liquidation, all the statutory liabilities do not automatically get extinguished. The Court clarified that when a corporate debtor is in liquidation, statutory dues like employee claims, taxes, and other dues are paid as per the waterfall mechanism provided in Section 53 of the IBC. This means that liquidation does not imply a clean slate, and all dues and claims are to be settled as per the specific priority laid down in the Code.” 

• iv. Also in the matter of Jai Balaji Industries Limited v. State Bank of India & Ors. (NCLAT Judgment, 2021): The National Company Law Appellate Tribunal (NCLAT) stated that, “unlike in a resolution plan where a "clean slate" is provided to the new management to revive the business, liquidation involves the sale of assets to satisfy creditors as per the statutory priority order. Therefore, the "clean slate" concept is not applicable in liquidation, where statutory dues and creditors' claims need to be settled according to the provisions of the IBC”. 

• v. It is further held that Successful Bidder retains the right to approach the relevant statutory authorities for the grant of reliefs and concessions as permissible under the law. This principle is upheld by the Hon’ble National Company Law Appellate Tribunal (NCLAT) in Worldfa Exports Pvt. Ltd. vs. Vivek Raheja and Anr., (2023) ibclaw.in 01 NCLAT, held that “the SRA should file the necessary applications before the appropriate forum or authority to avail the reliefs and concessions…….” 

# 23. As regards Prayer ‘b’(i.e. That this Hon'ble Tribunal be pleased to grant several reliefs and concessions as enumerated in ‘Annexure G' attached in the present application), The Hon’ble NCLAT in the matter of M/s Shiv Shakti Inter Globe Exports Pvt. Ltd. vs. M/s KTC Foods Private Limited, Company Appeal (AT) (Ins.) No. 650 of 2020 had considered an appeal filed against an Order of Adjudicating Authority denying extinguishment of the remaining unpaid liabilities of the Corporate Debtor after distribution of the proceeds of the sale of Corporate Debtor as a going concern as per the order of priority provided in Section 53 of the IBC. The Hon’ble NCLAT has held as under: 

• “21. … , we hold that it is a settled law that when the sale proceeds of a ‘Corporate Debtor’ are duly distributed in the Order of priority and in the manner prescribed under Section 53 of the Code, claims of any other Creditor cannot be entertained contrary to the provisions entailed under Section 53; subsequent to the distribution of sale proceeds under Section 53 no other entity including any Government entity can claim any past unpaid or outstanding dues against the Appellant who has purchased the ‘Corporate Debtor Company’ as a ‘going concern’….. The Hon’ble Supreme Court in ‘Ghanshyam Mishra & Sons Pvt. Ltd.’ Vs. ‘Edelweiss Asset Reconstruction Company Ltd. & Ors.’, Civil Appeal No. 8129 of 2019 and in ‘CoC of Essar Steel India Ltd.’ Vs. ‘Satish Gupta & Ors.’ (2020) 8 SCC 531 has laid down the proposition that the purchaser of the Company even in the Liquidation stage cannot be burdened with past liabilities when it is not mentioned in the ‘Sale Notice’.” 

# 24.Upon the acquisition of assets through the liquidation process or the approval of a Resolution Plan, the Successful Bidder or Successful Resolution Applicant (SRA) is not automatically entitled to all desired reliefs and concessions. Instead, such reliefs must be sought from the concerned statutory authorities, which possess the jurisdiction to grant or deny the same. 

# 25.In view of the above stated observations of the Hon’ble Supreme Court and also of Hon’ble NCLAT, we deal with several reliefs and concessions as enumerated in ‘Annexure G', attached in the present Application as under: 

• a) The reliefs sought in prayer clauses (1), (2), (5), (7), (9), (23), (25) are allowed and shall be dealt with as per the provisions of IBC and applicable laws. 

• b) The reliefs sought in prayer clause (3) Stands already allowed in terms of clause 7 of the sales Certificate dated 01.02.2024. 

• c) The reliefs sought in prayer clause (4) stands uncalled as the petition does not disclose the existence of any subsidiary of the Corporate Debtor. 

• d) The reliefs sought in prayer clauses (6), (19), (20), (21), shall be dealt by the relevant Authorities independently subject to their statutory provisions. 

• e) The reliefs sought in prayer clause (8) stands declined, in terms of Section 33(5) of the IBC. 

• f) The reliefs sought in prayer clause (10) stands declined. 

• g) The reliefs sought in prayer clauses (11), (12), (13), (14), (17), (18) shall be dealt by the requisite Authority independently subject to their statutory provisions. 

• h) The reliefs sought in prayer clauses (15), (22) shall be dealt by the requisite Authority independently subject to their requirements. 

• i) The reliefs sought in prayer clauses (16) stands declined in terms of settled law by the Hon’ble Supreme Court in “Gujrat Urja Vikas Nigam Limited v/s Mr. Amit Gupta & Ors” “The Court noted that the primary objective of the IBC is the resolution and revival of the corporate debtor, rather than its liquidation. Therefore, contracts that are essential for the business's survival should not be terminated merely due to the initiation of insolvency proceedings.” 

• j) The reliefs sought in prayer clauses (24) (26), (27), (28), shall be dealt by the requisite Authority independently subject to their statutory provisions. 

• k) The reliefs sought in prayer clause (29) is granted in view of the fact that the Sale Certificate is dated 01.02.2024, and a period of 3 months from the date of this order is granted to comply with the statutory obligations. 

• l) The reliefs sought in prayer clauses (30) is allowed in exceptional circumstances and will be decided on merits. 

# 26. It is further clarified that the Successful Bidder may approach the concerned authorities for specific reliefs, if needed. The concerned authorities will assess the concessions sought in terms of their respective statutory provisions or any other relevant orders/notifications in accordance with Laws and procedures. This is in terms of the mandate of the Hon’ble Supreme Court in Anuj Jain Interim Resolution Professional For Jaypee Infratech Limited vs. Axis Bank Limited Etc.

• “(Para 26) The argument of lenders, that holding the transactions in question as preferential would result in impacting large number of transactions undertaken by the bankers/financial institutions, of financing in the ordinary course of their business; and the consequences may be devastating and irreversible on the economy, has only been noted to be rejected.” 

# 27. The Liquidator is directed to provide all support and Assistance to the Applicant for the smooth functioning of the Corporate Debtor to complete the acquisition strangely. No relief has been sought against the Liquidator but the Liquidator has been arrayed as Respondent by the Applicant. 

# 28. The Liquidator and also Applicant shall be at liberty to take all the steps required to make accounting entries for the smooth transmission and clearing the balance sheet. 

# 29. The Liquidator is directed to ensure completion of pending filings with the Registrar of Companies, Income Tax Authorities and any other Government / Statutory Authorities. 

# 30. In terms of the above, IA No.929 of 2024 filed by the Applicants stands disposed of accordingly. 

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