Rajabhau Shinde Vs. S.M. Electric Works and Ors - the Adjudicating Authority exercised statutory powers under Section 35 of the IBC read with its inherent powers under Rule 11 of the NCLT Rules, 2016 for extending the time to deposit the balance sale consideration on sufficient cause being shown, i.e., in view of the countrywide lockdown due to the Covid19 pandemic. This latitude that was given in the aforesaid extraordinary circumstances to meet the ends of justice, cannot be faulted.”

 NCLAT (2025.03.18) In Rajabhau Shinde Vs. S.M. Electric Works and Ors. [(2025) ibclaw.in 193 NCLAT, Company Appeal (AT) (Insolvency) No. 826 of 2024 & I.A. No. 2989 of 2024 and Company Appeal (AT) (Insolvency) No. 1655 of 2024] held that;

• The aforesaid Rule is not to be read in isolation but in conjunction with Section 35 of the IBC that deals with the powers and duties of the Liquidator and states that the Liquidator shall have the powers and duties specified in clauses (a) to (o) of sub-section 1 including the power to sell an immovable/movable property of the Corporate Debtor in liquation by public auction/private sale as per clause (f), subject to the directions of the NCLT.

• Section 35(1) itself enunciated that the powers and duties which are entrusted to the Liquidator are “subject to the directions of the Adjudicating Authority”. The Liquidator, in other words, exercises functions which have been made amenable to the jurisdiction of NCLT, acting as the Adjudicating Authority…..”.

• In the facts of the present case, the Adjudicating Authority exercised statutory powers under Section 35 of the IBC read with its inherent powers under Rule 11 of the NCLT Rules, 2016 for extending the time to deposit the balance sale consideration on sufficient cause being shown, i.e., in view of the countrywide lockdown due to the Covid19 pandemic. This latitude that was given in the aforesaid extraordinary circumstances to meet the ends of justice, cannot be faulted.”

Excerpts of the Order;

These two appeals have been filed by the same Appellants, a Suspended Director of the Corporate Debtor challenging the order dated 27.02.2024 and order dated 15.07.2024 passed by the Adjudicating Authority (National Company Law Tribunal) Court Room No.1, Mumbai Bench in IA No.722 of 2024 and IA No.1693 of 2024 respectively.

# 2. Brief facts of the case giving rise to these two appeals are as follows:-

2.1. The CIRP against the Corporate Debtor- Trans Fab Power India Pvt. Ltd. commenced vide order dated 30.08.2019. Appellant, Suspended Director of the Corporate Debtor submitted a Resolution Plan in the CIRP of the Corporate Debtor which came to be approved by the Adjudicating Authority vide order dated 25.03.2021. Appellant (Resolution Applicant) failed to execute the plan. CoC decided to liquidate the Corporate Debtor. On an application filed by the Resolution Professional, an order dated 28.06.2023 was passed by the Adjudicating Authority directing for liquidation of the corporate debtor. Liquidator issued an e-auction notice dated 01.09.2023 for sale of corporate debtor as a going concern. The Respondent No.1- ‘S.M. Electric Works’ participated in auction held on 27.10.2023 and was declared as a successful bidder for the bid value of Rs.6,05,91,998/-. On 30.10.2023, a letter of intent was issued by the liquidator in favour of successful bidder. The successful bidder had paid an amount of 25% of the total bid amount on 25.01.2024. 28.01.2024 was the last date for making the remaining payment of 75%. Successful bidder having not paid the balance amount, the request made by the successful bidder to extend the time came for consideration before the 6th CoC meeting held on 29.01.2024. Stakeholders’ Consultation Committee (SCC) observed that the request for extension of timeline for the payment cannot be considered since there is no provision in the Liquidation Process Regulations authorising the liquidator or the SCC to extend the timeline. The liquidator after expiry of 90 days’ period returned the sale consideration already paid to the successful bidder and issued a sale notice for re-auction on 05.02.2024. Successful bidder filed an application IA No.722 of 2024 praying for extension of time in making payment of balance sale consideration. The Adjudicating Authority vide impugned order dated 27.02.2024 directed the liquidator to accept post dated cheques payable on or before expiry of 60 days from the last date along with the interest. Aggrieved by the order dated 27.02.2024, this appeal has been filed by Rajabhau Shinde.

2.2. After the order dated 27.02.2024, total consideration along with interest was paid by the successful bidder. The liquidator has filed an IA No.1693 of 2024 praying for approval of the sale of the corporate debtor in favour of S.M Electric Works. Liquidator also prayed for certain reliefs and concessions in favour of successful bidder. The application filed by the liquidator being IA No.1693 of 2024 came to be heard and disposed of by order dated 15.07.2024. Adjudicating Authority approved the sale in favour of S.M Electric Works and has also granted certain reliefs and concessions as noticed in paragraph 5. Aggrieved by the order dated 15.07.2024, Company Appeal (AT) (Insolvency) No.1655 of 2024 was filed by the suspended director.

# 3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel along with Shri Prakhar Tandon, Learned Counsel for the Appellant. We have also heard Counsel appearing for the liquidator as well as successful bidder.

# 4. Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant submits that the successful bidder has not been able to make the payment of the entire sale consideration within 90 days’ time which was allowed by Liquidation Regulations 2016 Schedule 1 Clause 1(12). The sale was rightly cancelled by the liquidator. The provision of Clause 1(12) of Schedule 1 is a mandatory provision and there was no jurisdiction of the liquidator or SCC to extend the time. Adjudicating Authority committed error in passing the order dated 27.02.2024 granting 60 days’ further time to the successful bidder to make the balance payment which order is not in accordance with the Liquidation Regulations 2016 and deserves to be set aside. Counsel for the Appellant has relied on the judgment of this Tribunal in “Potens Transmissions & Power Pvt. Ltd. vs. Gian Chand Narang- Company Appeal (AT) (Ins.) No.532 of 2022” decided on 12.05.2022 as well as the judgment of the Hon’ble Supreme Court in “Civil Appeal Nos.9059-9061 of 2022- “V.S. Palanivel vs. P. Sriram, CS, Liquidator, Etc.”. Counsel for the Appellant submits that when the sale itself was liable to be cancelled and has rightly been cancelled by the liquidator, there is no question of approval of sale by the Adjudicating Authority by subsequent order dated 15.07.2024, hence, the said order also deserves to be set aside.

# 5. Counsel for the successful bidder opposing the submissions of the Appellant submits that the Appellant who is Suspended Director of the Corporate Debtor have no right to challenge the orders passed by the Adjudicating Authority dated 27.02.2024 and 15.07.2024. Appellant has not even participated in the e-auction nor has submitted any bid, hence, they have no locus to challenge the orders. It is further submitted that the Appellant has submitted a Resolution Plan in the CIRP of the Corporate Debtor which Resolution Plan could not be implemented, hence, the liquidation order was passed. Appellant’s only interest is to create hurdle in the resolution of the Corporate Debtor. The successful bidder has paid the entire amount. Adjudicating Authority vide order dated 27.02.2024 has directed for balance payment with interest of 10% on the delayed period to compensate the SCC. No prejudice has been caused to the SCC. SCC has accepted the amount paid within definite period and distribution to the stakeholders and thereafter the application was filed for approval of the sale which has also been allowed. Appellant has filed Appeal challenging the liquidation order which appeal also came to be dismissed by this Tribunal.

# 6. Counsel for the liquidator submits that the liquidator has conducted the proceeding in accordance with the Liquidation Regulations 2016 and when successful bidder could not make the balance payment within 90 days, liquidator has intimated cancelling the sale and has issued notice for re-auction. In view of the order passed by the Adjudicating Authority dated 27.02.2024, liquidator accepted the balance payment consideration which was paid along with interest and thereafter application was filed for approval of the sale which has also been allowed on 15.07.2024.

# 7. We have considered the submissions of the counsel for the parties and perused the record.

# 8. E-auction was held in accordance with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016. Schedule 1 of the Liquidation Regulations 2016 provides for ‘Mode of Sale’. Regulation 12 provides for time during which balance sale consideration has to be paid. Clause 12 of Appendix 1 is as follows:-

• “(12) [On the close of the auction, the highest bidder shall be invited to provide balance sale consideration within ninety days or such period as mentioned in the auction notice under clause 3, of the date of such demand:

• Provided that payments made after thirty days shall attract interest at the rate of twelve per cent.:

• Provided further that the sale shall be cancelled if the payment is not received within the period provided under this clause.]”

# 9. Counsel for the Appellant submitted that it is no more res integra that the provisions of clause 12 are mandatory and there is no jurisdiction in the liquidator or SCC to extend the period and in the present case, liquidator has rightly cancelled the sale after successful bidder failed to make the payment. Reliance has been placed on judgment of this Tribunal in “Potens Transmissions & Power Pvt. Ltd. vs. Gian Chand Narang” (supra) where it was held that the provisions of clause 12 are mandatory. In the above case, an application was filed by auction purchaser where appellant had made various prayers. Liquidator also filed an application seeking permission to cancel the sale. Facts have been noticed in paragraphs 2 and 3 of the judgment which are as follows:-

• “2. This Appeal has been filed against the Order dated 25th April, 2022 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi, Principal Bench) in I.A. No. 3153 of 2021, I.A. No. 5255 of 2021 and I.A. No. 4317 of 2021. The Appellant is the Auction Purchaser whose bid was accepted on 03rd June, 2021 in E-Auction. The earnest money of 7.3 crores was deposited on 31st May, 2021 and Bid of 73.01 Crores was submitted and he was declared to be Successful Bidder. Liquidator asked the Appellant to deposit the sale consideration by 10th June, 2021 and further balance by 3rd July, 2021. Appellant deposited Rs. 10,95,25,000/- on 10th and 11th June, 2021. The term sheet was executed between the parties for sale of Corporate Debtor as a going concern on 15th June, 2021 in which 3rd July, 2021 date was fixed as timeline for payment of balance amount of Rs. 54,75,75,000/- whereas after 3rd July, 2021 payment of the balance amount of Rs. 54,75,75,000/- with interest at the rate of 12% on or before 1st September, 2021. Appellant did not deposit the balance amount and I.A. No. 3153 of 2021 was filed by the Appellant wherein prayers contained ‘a’ to ‘z’. It shall be sufficient to notice only prayer ‘a’ out of ‘a’ to ‘z’ which is as follows:

• “(a) allow the Applicant to pay/adjust the Sale consideration in the following matter (i) INR 50 Crore/- by way of investment into the equity shares of the Corporate Debtor; and (ii) the balance amount of INR 23 Crore/- in the form of Optionally Convertible Debentures;”

• 3. The Appellant having not made the payment by 1st September, 2021, which was the timeline when 90 days was expiring, the Liquidator filed an Application I.A. No. 5255 of 2021 wherein making following prayers:

• “a). Allow the present application and permit the Liquidator i.e. the Applicant to cancel the sale of Corporate Debtor as a going concern in view of the failure of Respondent to make payment in terms of 2nd proviso to Clause 1(12) under Schedule I of the Liquidation Process Regulations, 2016; and

• b). Consequentially, grant further time to the Applicant to conduct a fresh E-Auction in the matter of the Corporate Debtor as a going concern, which is in the interest of the Stakeholders and for maximization of value of assets of the Corporate Debtor under Regulation 32A of the Liquidation Process Regulations, 2016;

• c). Pass any other or such further order(s) as may be deem fit and necessary in the facts and circumstances of the case;”

# 10. Adjudicating Authority in the above case has allowed the application filed by the liquidator and cancelled the sale on account of failure by the auction purchaser to deposit the amount.

# 11. The above case is a case where Adjudicating Authority has rejected the application of successful bidder and allowed the application of liquidator permitting him to cancel the sale. This Tribunal in the above case has held that the provision of Clause 12 Schedule 1 is mandatory. No exception can be taken to the law as declared by this Tribunal in the above case.

# 12. Counsel for the Appellant has also relied on the judgment of the Hon’ble Supreme Court in “V.S. Palanivel vs. P. Sriram, CS, Liquidator, Etc.”. The above was a case which was filed by shareholder/ managing director of the corporate debtor challenging the order of the NCLT against which three appeals filed by the appellant were dismissed. In the above case also, successful bidder could not pay the amount within 90 days and an application was filed by the successful bidder for extension of time which application was allowed by order dated 05.05.2020 against which Company Appeal (AT) (CH) (Ins.) No.343 of 2021 was filed which was dismissed. In the facts of the above case, the Hon’ble Supreme Court had occasion to consider the Schedule 1 of the Liquidation Regulations 2016 and has held that the provision of Rule 12 of Appendix 1 has to be treated as mandatory. Counsel for the Appellant has relied on paragraph 35.11 of the judgment of the Hon’ble Supreme Court which is as follows:-

• “35.11 In view of the analysis undertaken above, Rule 12 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator. To that extent, there is substance in the submission made on behalf of the appellant that since the second proviso under Rule 12 contemplates a consequence of cancellation of the auction on nonpayment of the balance sale consideration within 90 days, the Liquidator was not empowered to extend the timeline.”

# 13. There can be no dispute to the proposition laid down by the Hon’ble Supreme Court in the above case. Clause 12 of Schedule 1 is mandatory and non-compliance leads to cancellation of the sale. It was also held by the Hon’ble Supreme Court that the liquidator was not empowered to extend the timeline.

# 14. The present is a case where it is not the liquidator who has extended the time to deposit the balance consideration rather in the present case, it was the Adjudicating Authority who has allowed the application filed by successful bidder for extending the time for payment of balance sale consideration. Adjudicating Authority in the impugned order in paragraph 7 directed as follows:-

• “7) Accordingly, we direct the Liquidator to accept the post-dated cheques payable on or before Expiry of Sixty (60) days from the last date along with the interest. Current E-auction process shall be remained stayed and may be proceeded with in case the applicant herein fails to deposit the cheques and also to honor the cheques issued by him, without any further recourse to this Tribunal.”

# 15. The present is a case in pursuance of the order dated 28.02.2024, successful bidder has made the balance payment and an application IA No.1693 of 2024 was filed by the liquidator seeking permission of the Adjudicating Authority for approval of the sale. The prayers made in IA No.1693 of 2024 have been quoted in paragraph 2 of the order dated 15.07.2024 which is as follows:-

• “2) The present Interlocutory Application has been filed by the Applicant, praying for the following reliefs:

• a) That this Honorable Tribunal may be pleased to approve the sale of the Corporate Debtor as a going concern to the successful bidder viz. S.M. Electric Works.

• b) That this Honorable Tribunal may be pleased to issue following directions with respect to the sale of the Corporate Debtor as a going concern:

• i. Writing-off the entire existing shareholding of the Corporate Debtor and issuance of fresh equity shares to the successful bidder.

• ii. Continuation of the authority, powers and obligations of the Liquidator to complete the liquidation proceedings and also control and operate the liquidation account.

• iii. Payments to the stakeholders in accordance with Section 53 of the Code;

• iv. Protection of the successful bidder from all claims, liabilities. etc. pertaining to the period prior to liquidation commencement date of the Corporate Debtor.

• v. The Registrar of Companies shall change the status of the Corporate Debtor from ‘In Liquidation’ to ‘Active’.”

# 16. The liquidator, thus, approached the Adjudicating Authority for approval of the sale after receiving the entire amount and prayed for certain reliefs and concessions.

# 17. The Hon’ble Supreme Court in “V.S. Palanivel vs. P. Sriram, CS, Liquidator, Etc.” (supra) itself had occasion to consider the power of the Adjudicating Authority in reference to extension of time for deposit of the balance consideration. It is useful to extract paragraphs 35.15 and 35.16 of the judgment of the Hon’ble Supreme Court which is as follows:-

• “35.15 The aforesaid Rule is not to be read in isolation but in conjunction with Section 35 of the IBC that deals with the powers and duties of the Liquidator and states that the Liquidator shall have the powers and duties specified in clauses (a) to (o) of sub-section 1 including the power to sell an immovable/movable property of the Corporate Debtor in liquation by public auction/private sale as per clause (f), subject to the directions of the NCLT. Pertinently, it has been observed in Arun Kumar Jagatramka v. Jindal Steel and Power Limited54 that “the Liquidator exercises several functions which are quasi-judicial in nature and character. Section 35(1) itself enunciated that the powers and duties which are entrusted to the Liquidator are “subject to the directions of the Adjudicating Authority”. The Liquidator, in other words, exercises functions which have been made amenable to the jurisdiction of NCLT, acting as the Adjudicating Authority…..”.

• 35.16 In the facts of the present case, the Adjudicating Authority exercised statutory powers under Section 35 of the IBC read with its inherent powers under Rule 11 of the NCLT Rules, 2016 for extending the time to deposit the balance sale consideration on sufficient cause being shown, i.e., in view of the countrywide lockdown due to the Covid19 pandemic. This latitude that was given in the aforesaid extraordinary circumstances to meet the ends of justice, cannot be faulted.”

# 18. The Hon’ble Supreme Court held that the Adjudicating Authority exercised statutory powers under Section 35 read with Rule 11 of the NCLT Rules for extending the time. Thus, Hon’ble Supreme Court itself did not find any fault in the order of the Adjudicating Authority extending the time of payment after expiry of time of payment prescribed. As noticed above, an application filed by successful bidder/ successful auction purchaser for extension of time was allowed by the Adjudicating Authority on 05.05.2020 which was challenged by the Appellant in Company Appeal (AT) (Ins.) No.343 of 2021 which came to be dismissed on 16.09.2022. The Hon’ble Supreme Court did not interfere with the order passed by this Tribunal dismissing the appeal of the appellant affirming the order extending the time by the Adjudicating Authority. The law laid down by the Hon’ble Supreme Court in paragraphs 35.15 and 35.16 as noted above, clearly comes to the aid of the successful bidder in the present case. Adjudicating Authority having extended the time for deposit of the amount which deposit was made and thereafter application was filed for approval of the sale which has also been granted by the Adjudicating Authority.

# 19. In these appeals by suspended director, we do not find any ground to interfere with the impugned orders.

# 20. Both the appeals are dismissed.

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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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