The main legal point established in the judgment is that the sale of a corporate debtor as a going concern in liquidation does not automatically transfer all pre-CIRP liabilities to the auction purchaser. The distribution of assets and liabilities in a going concern sale should follow the order of priority as stipulated in Section 53 of the Insolvency and Bankruptcy Code.

JUDGMENT

Sabyasachi Bhattacharyya, J. - The petitioner acquired the respondent no.3 as a going concern in a liquidation sale under the Insolvency and Bankruptcy Code, 2016 (IBC).

The respondent no.1-Electricity Distribution Company, being an operational creditor, filed its claim with the Resolution Professional as well as the Liquidator and a portion of the claim was admitted. However, when the petitioner, being the auction purchaser of the corporate debtor, applied for new electricity connection, the same was refused by the respondent no.1-Distribution Licensee, demanding past outstanding dues against respondent no.3.

2. In such context, the petitioner refers to certain dates.

3. On October 22, 2019, the respondent no.3 was admitted under Corporate Insolvency Process (CIRP) vide an order of the NCLT, Kolkata Bench.

4. On January 5, 2021, on the failure of a resolution plan to materialize, the NCLT passed an order admitting the respondent no.3-Company into liquidation. The claim of respondent no.1 in respect of dues was admitted by the Resolution Professional during the CIRP on June 23, 2020 as well as by the Liquidator, at the stage of liquidation, on January 3, 2022.

5. Vide order dated January 4, 2022, the NCLT granted certain reliefs and concessions in favour of the petitioner in respect of the respondent no.3 so that the business could be carried on smoothly by the petitioner as a successful bidder.

6. However, the respondent no.1 issued a Demand Notice on January 27, 2022 for the alleged outstanding dues to the tune of Rs. 26,87,37,466/- for starting the procedure of new connection.

7. On March 15, 2022, balance confirmation was issued by respondent no.1 to the petitioner to admit outstanding of Rs. 26,87,37,466/- for the Haldia Plant and Rs. 14,10,91,244.63 p. for the Bishnupur Plant.

8. It is submitted on behalf of the petitioners that the IBC is a complete code in itself, as held in Embassy Property Development Pvt. Ltd. Vs. State of Karnataka and others, reported at (2020) 13 SCC 308. The petitioners cite Innoventive Industries Ltd. Vs. ICICI Bank, reported at (2018) 1 SCC 407 in support of the proposition that the IBC is an exhaustive code on the subject matter of insolvency in relation to corporate entities and others. It is contended that Section 53 of the IBC has a non-obstante clause and lays down the method by which the proceeds from the sale of the liquidation assets of a corporate creditor in liquidation will be distributed among various stakeholders. The claim of the respondent no.1, it is argued, was admitted both in the CIRP and in liquidation and it was supposed to be paid, as an operational creditor, as per Section 53(1)(f) of the IBC.

9. If the liabilities are shifted to the buyer of the going concern, it is argued, then the various claimants who have a claim on the liquidation estate would have two claims, one on the liquidation estate and another claim on the buyer of the going concern, which cannot be permissible in law.

10. It is submitted that if electricity dues are permitted to be realized from the auction purchaser, then the electricity company, which is an operational creditor, will be given the status of a special creditor who will rank higher than all other creditors mentioned in Section 53 of the IBC, including the workmen and secured financial creditors.

11. Section 30(b) of the IBC requires that the payment of debts of the operational creditors shall not be less than (i) the amount to be paid to the creditors in the event of liquidation of the corporate debtor under Section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in Section 53(1) of the IBC. Regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 was amended vide notification dated March 27, 2018 with effect from April 1, 2018, inserting the clause 'sell the co