Past liabilities of a corporate debtor cannot be imposed on the auction purchaser when seeking a new connection, based on the clean slate principle under insolvency law.

JUDGMENT

Per: Justice Rakesh Kumar Jain:

This appeal is directed against the order dated 01.12.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench) by which application bearing I.A. No. 962 of 2022 filed in CP (IB) No. 160/Chd/Pb/2018 by the Appellant under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) has been dismissed.

2. Brief facts of this case are that Gian Chand & Sons Pvt. Ltd. (Corporate Debtor) was admitted to liquidation on 05.08.2019 and Respondent No. 2 was appointed as the Liquidator.

3. Respondent No. 2 invited claims pending against the Corporate Debtor. Respondent No. 1 submitted its claim of Rs. 34,59,859/-, outstanding electricity dues relating to account no. 3002810493 for its building property located at Bajra Road Village Bajra, Rahon Road, Ludhiana.

4. Respondent No. 2 admitted the claim of Rs. 34,59,859/-. Respondent No. 2 made public announcement for sale of assets of the Corporate Debtor by way of auction on 03.02.2022 and auction took place on 18.02.2022 through the e-auction platform of M/s C1 India Pvt. Ltd. The Appellant was the highest bidder for the Land measuring 5747.50 sq. yards at Bajra Road Village Bajra Rahon Road, Ludhiana alongwith building. Accordingly, the said property was sold to the Appellant and on payment of the entire sale consideration of Rs. 4,30,00,000/-, the sale certificate was issued by Respondent No. 2 to the Appellant on 22.03.2022. The property in question had an electricity connection bearing Account No. 3002810493 with Respondent No. 1 which was disconnected due to the non-payment of electricity dues.

5. The Appellant after purchasing the property, made a representation to Respondent No. 1 on 02.04.2022 for releasing the electricity connection and requested Respondent No. 1 to settle all its pending dues with Respondent No. 2. The Appellant sent an application dated 12.05.2022 for release of fresh electricity connection of 99KW in its name. Respondent No. 1 vide its letter dated 20.05.2022 informed the Appellant that their outstanding dues towards the connection installed at said premises are Rs. 70,17,865/-which has to be cleared before the new connection is given. The Appellant is stated to have replied to the letter dated 20.05.2022 on 20.06.2022 but there was no response.

6. The Appellant filed I.A. No. 962 of 2022 before the Adjudicating Authority for the issuance of necessary direction for the release of new electricity connection in its name and setting aside the outstanding raised by Respondent No. 1 through letter dated 22.05.2022, pending towards Corporate Debtor against its electricity connection at the premises situated on Khata No. 210/215, bearing Khasra No. 51/11/2-12-13 in Hadbast No. 76 situated in village Bazra Tehsil East Ludhiana, Punjab.

7. In this application, Respondent No. 1 filed reply dated 01.02.2023 in which it was stated that the sale conducted by Respondent No. 2 was a simple stand alone asset sale and not a sale of the CD as a going concern. It was also stated that as per the sale certificate, the liquidator is not responsible for any shortfall or defect or shortcoming in the said land or title of the said land and that all past, present and future statutory and other liabilities whether due or overdue by whatever name being called including electricity dues are to borne by the successful bidder. It was also stated that the sale of the land was on ‘as is where is basis, as is what is basis,