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2025 Supreme(Online)(NCLT) 1058
NATIONAL COMPANY LAW TRIBUNAL
Mr. Praveen Gupta, Member (Judicial), Mr. Ashish Verma, Member (Technical)
ROHIT SEHGAL LIQUIDATOR OF Shri Lakshmi Cotsyn Limited – Appellant
Versus
RUNGTA CARRIERS LIMITED – Respondent
Application under Section 35 (1)(n) and Section 60(5) of the Insolvency and Bankruptcy Code, 2016 | CP(IB)142/ALD/2018
For the Appellants/Petitioners: Sh. Shubham Agarwal
For the Respondents: Sh. Anand Chhibbar, Sh. Anuj Tiwari, Sh. Amit Tiwari, Sh. Vaibhav Vats, Kaanchi Ahuja, Sh. Anuj Kumar
The sale of a corporate debtor as a going concern under the Insolvency and Bankruptcy Code allows the purchaser to acquire assets free from past liabilities, ensuring a clean slate for operational continuity.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 35(1)(n) and 60(5) - Approval of acquisition plan for Corporate Debtor as a going concern - Liquidator seeks approval for sale of assets, which was successfully auctioned - Sale proceeds to be distributed as per Section 53 of the Code - The sale does not burden the purchaser with past liabilities. (Paras 1, 19, 25, 30)
(B) Sale as a going concern - The legal entity remains intact; only ownership transfers to the purchaser, who takes over assets free from encumbrances - Past liabilities are extinguished post-sale, facilitating a clean slate for the purchaser. (Paras 22, 24, 30)
(C) Reliefs and waivers granted - The tribunal allows various concessions for the successful bidder, including exemption from past dues and liabilities, ensuring smooth transition post-acquisition. (Paras 29, 30, 31)
Facts of the case:
The liquidator filed an application for approval of the acquisition plan submitted by Rungta Carriers Ltd. for the sale of Shri Lakshmi Cotsyn Limited as a going concern. The corporate debtor was in liquidation due to lack of a resolution plan. (Paras 1, 2)
Findings of Court:
The tribunal approved the acquisition plan, emphasizing the importance of a clean slate for the purchaser and the distribution of sale proceeds to creditors per the Code. (Paras 30, 31)
Issues: The main issues addressed include the approval of the acquisition plan and the implications of the sale as a going concern, particularly regarding past liabilities. (Paras 18, 19)
Ratio Decidendi: The court held that the sale as a going concern allows the purchaser to acquire assets without past liabilities, aligning with the objectives of the Insolvency and Bankruptcy Code. (Paras 25, 30)
Result: The application for the acquisition plan is approved, allowing the liquidator to facilitate the sale. (Para 31)
| Table of Content |
|---|
| 1. application for approval of acquisition plan. (Para 1 , 2 , 3) |
| 2. details of scc meetings and asset sale decisions. (Para 4 , 5 , 6 , 7) |
| 3. successful auction and bid details. (Para 8 , 9 , 10 , 11) |
| 4. acquisition plan and eligibility of the bidder. (Para 12 , 14 , 15 , 16) |
| 5. arguments regarding reliefs and concessions. (Para 17 , 18 , 19 , 20 , 21) |
| 6. court's analysis of going concern sale. (Para 22 , 23 , 24 , 25 , 26 , 27 , 28) |
| 7. approval of the acquisition plan with directions. (Para 29 , 30 , 31) |
| 8. final orders and directions issued. (Para 32 , 33 , 34 , 35) |
ORDER
1. This Application has been filed by the liquidator of the Corporate Debtor namely, Shree Lakshmi Cotsyn Limited on 07.03.2025 under section 35(1)(n) and section 60(5) of the insolvency and bankruptcy code, 2016 read with rule 11 of National Company Law Tribunal rules seeking approval of acquisition plan submitted by Rungta Carriers Ltd. for the acquisition of the Corporate Debtor as a whole on a going concern basis (identified as Block B in the e-auction notice). The Applicant has prayed following reliefs from this tribunal:-
“…
a. Allow the present application and approve the Acquisition Plan annexed as Annexure A/3 to the present Application;
b. Grant the reliefs, concessions, and waivers asset out in detail in Column 9 of the Acquisition Plan; and …”
2. It is stated in the application that Shri Lakshmi Cotsyn Limited (Corporate Debtor) was admitted to undergo the Corporate Insolvency Resolution Process (CIRP) vide order dated 30.05.2018 passed in CP(IB)142/ALD/2018 and the Applicant was appointed as Interim Resolution Professional. Subsequently, on 06.07.2018, the Applicant was appointed as Resolution Professional.It is stated that this tribunal vide order dated 01.7.2020 passed in C.A. 55/2019 in CP(IB)142/ALD/2018 directed the commencement of liquidation process of the Corporate Debtor in the absence of any resolution plan and appointed the Applicant i.e Mr. Rohit Sehgal as the liquidator.
3. It is also stated that the Stakeholders Consultation Committee (hereinafter referred to as “SCC”) in its 31st meeting held on 23.9.2024 decided about the assets and liabilities of the Corporate Debtor to be offered for sale as a going concern during the liquidation process. The details of assets of the Corporate Debtor to be sold as a going concern, and those assets which are being retained in the Liquidation Estate to be sold/ assigned by the Liquidator have been provided in more detail as Annexure A/1 with the application.
4. During the examination of the application, it was found that the minutes of the 31st and 32nd meeting of the SCC has not been annexed with the application which confirms the sale of the Corporate Debtor as a going concern. This tribunal vide order dated 24.03.2025 directed the Liquidator to place on record the minutes of the SCC meetings for confirmation of sale of the Corporate Debtor as a going concern. the relevant extract of the order is reproduced below:-
“…
1. Ld. Counsel representing the Liquidator submits that this application has been filed for acquisition of the Corporate Debtor by the Successful Auction Purchaser and for confirmation of the sale of the assets of the Corporate Debtor, which has been published in the newspaper on 10.12.2024 and has been put on auction on 03.01.2025 for sale as going concern.
2. Ld. Counsel representing the Liquidator further submits that the auction sale has been considered by the SCC and also the consultation has taken place by the SCC comprising of the large financial banking sectors. He therefore seeks and is granted five days time to file the minutes of the SCC meeting along with the discussions and the result.”
5. In compliance with the aforesaid order dated 24.03.2025, the liquidator has filed an additional affidavit on 26.03.2025 wherein the minutes of the 31st meeting of the SCC and 32nd meeting of the SCC has been annexed as Annexure-A and Annexure B with the additional Affidavit respectiv
