J U D G M E N T

(Hybrid Mode)

Per: Justice N. Seshasayee, Member (Judicial)

This appeal is preferred challenging an order of the Adjudicating Authority (NCLT, Mumbai), dated 12.12.2025 in I.A. No. 5599 of 2023 in CP (IB) No.1620 of 2017.

Facts

2. The order falls within a very narrow compass:

a) the appellant herein has purchased the Corporate Debtor (CD) as a going concern in the liquidation proceedings. The liquidation proceedings commenced on 30.06.2021. On purchase, a sale certificate came to be issued on 07.08.2023. Subsequently thereto, the appellant has taken out I.A.No. 5599 of 2023 seeking concession and waiver, as well as protection in terms of Sec.32A of the IBC. The Adjudicating Authority in essence has held that the appellant is not entitled to any such benefit during the liquidation period, i.e. from 30.06.2021, the date on which the Adjudicating Authority passed the order directing liquidation of the CD, till the day before the sale certificate was issued.The relevant portion of the impugned order reads as below:

“…4.8 It is noted that ’the clean state’ theory of resolution plan as recognized and propounded by the Hon’ble Supreme Court of India in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. [6 2021 sec OnLine SC 313] has been extended in a few cases of sale of the corporate debtor as a going concern during the liquidation process even though statutory provisions supporting the clean slate theory are limited to resolution plan. Further, it is proposed to examine what reliefs and concessions, including waivers and exemptions from statutory and other liabilities can legitimately be granted by the Adjudicating Authority to facilitate the operation of the corporate debtor’s business.

4.15 As far as Reliefs and Concessions in respect of past liabilities of the Corporate Debtor are concerned, the Hon’ble NCLAT in the matter of Shantech International Pvt. Ltd. vs. Devendra Singh, Liquidator of Venus Rolling Mills Pvt. Ltd. [Company Appeal (A T)(lnsolvency) No. 1520 of 2024] followed the principle that the waiver of liabilities with regard to dues of the corporate debtor should be dealt with according to the terms of the e-auction. In the present case, the Process Information Document states that the liabilities of the Corporate Debtor would be "settled, paid and extinguished" by the liquidator as per the provisions of Section 53 of the Code and the buyer would not be liable for such prior liabilities. Once the proceeds from sale of the Corporate Debtor as a going concern are distributed to all the stakeholders as per Section 53 of the Code, all claims and liabilities of the creditors, whether contingent or crystallized, known or unknown, disputed or undisputed, present or future stand settled. No entity including any Government entity can claim any past unpaid dues for pre-CIRP period from the Applicants as all claims stand settled in accordance with Section 53 of the Code. However, there can be no question of extinguishment of claims up to the date of sale of the Corporate Debtor as a going concern. When claims were filed as on the liquidation commencement date, during the liquidation process, the plea that extinguishment of claims and liabilities should be granted till the date of sale as going concern is not in consonance with the statutory scheme contained in the Liquidation Process Regulations. In view of the above, we hold that the Applicants are not liable to this extent for past liabilities of the Corporate Debtor.

4.19 With respect to reliefs over immunity for past actions, Section 32A of the Code provides that the liability of a corporate debtor, for offences committed prior to the commencement of the CIRP will stand extinguished from the date a resolution plan is approved by the adjudicating authority or sale of liquidation assets, subject to certain conditions being fulfilled. This immunity under Section 32A is applicable once the approved resolution plan mandates a change