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2025 Supreme(Online)(NCLT) 2570
NATIONAL COMPANY LAW TRIBUNAL
JUSTICE VIRENDRASINGH BISHT, J
AMERICAN EXPRESS BANKING CORP – Appellant
Versus
SUNIL HITECH ENGINEERS LTD – Respondent
IA(I.B.C)/1584( MB)2025 | C.P. (IB)/2295(MB)2018
For the Appellants/Petitioners: Mr. Amey
For the Respondents: Mr. Gaurav Jain
The court ruled that a successful bidder for a Corporate Debtor must be protected from past liabilities to ensure a smooth transition and maximize business value under the Insolvency and Bankruptcy Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 7 & 60(5) - Application by successful bidder for Corporate Debtor seeking essential reliefs for smooth operation post-acquisition; reiterated the principle that the sale must not burden the buyer with past liabilities before confirmation of sale. (Paras 3, 4, 8)
(B) Waiver of liabilities - Determined that while acquiring a Corporate Debtor, the buyer need not assume pre-existing liabilities provided they are not related to management as defined in Section 32A of the Code. (Paras 9, 25(b))
Facts of the case:
Application filed by the successful bidder for Corporate Debtor to obtain necessary clearances and waivers to facilitate smooth operation after acquisition.
Findings of Court:
The Applicant was granted necessary waivers and permissions to ensure a seamless transition and operation of the business.
Issues: Central questions involved were the protection from past liabilities, the necessity of waivers post-sale, and the conditions under which the Corporate Debtor could operate effectively post-acquisition.
Ratio Decidendi: The court reinforced that sales of Corporate Debtors must be free from past liabilities to maximize value and facilitate operational continuity for the new management as described in the Code.
Result: Application allowed.
| Table of Content |
|---|
| 1. application seeks essential reliefs. (Para 1 , 2) |
| 2. successful bidder needs protection from past liabilities. (Para 3 , 4) |
| 3. court affirms need for waivers to maximize value. (Para 6 , 8) |
| 4. decision allows application and provides necessary reliefs. (Para 9 , 10) |
ORDER
1. Mr. Amey, Ld. Counsel for the Liquidator and Mr. Gaurav Jain, Ld. Counsel for the Respondent are present.
2. This application has been filed by M/s. Dandare Infra Projects Private Limited, Applicant/Successful bidder under section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016, seeking following reliefs;
a. Consider and allow this Application and allow the reliefs set out herein at para 25 of this Application in terms of Section 60 (5) read with Rule 11 of NCLT Rules, 2016;
b. Pending hearing and disposal of the present application, this Hon'ble Tribunal be pleased to grant interim relief to the applicant by directing the concerns to forthwith comply with the requisitions of Para 25 (a) and (b) of the present application;
c. Pass appropriate directions for the transfer of the Corporate Debtor to the Applicant, along with certain essential reliefs and concessions as mentioned under Para 25 of the present Application;
d. Direct that the Corporate Debtor/Applicant shall be at liberty to approach this Hon'ble Adjudicating Authority to address any difficulties faced with respect to implementation in taking over of the Corporate Debtor in liquidation;
e. Grant liberty to the Applicant to amend, alter, modify, delete, rescind and/ or substitute any prayer(s);
f. Any other relief as deemed fit by this Hon'ble Tribunal.
3. That the Applicant is a Successful Bidder who has purchased the corporate debtor on a going concern basis under Reg 32A of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, and Rule 11 of the NCLT Rules, 2016, for a total consideration of Rs. 25,59,23,659/- including interest.
4. It is submitted that, to ensure the smooth running of the business of the Corporate Debtor, it is imperative that certain reliefs, concessions and permissions are provided to the Applicant. These reliefs/concessions as mentioned in the application are imperative to prevent any past liabilities of the Corporate Debtor, from being imposed upon the applicant. Further, the purpose of achieving value maximization by receiving the Corporate Debtor as envisaged under the Code and the regulations will be possible, only if the below mentioned reliefs, exemptions and concessions are granted. It is also stated by the Applicant that its case is supported by a decision of the Hon'ble NCLAT in the case of Shiv Shakti Inter Globe Exports Pvt. Ltd. vs. KTC Foods Private Limited and Drs [Company Appeal (AT) (Insolvency) No. 650 0[2020}, wherein it was held as hereunder:
"22. It is no longer Res Integra that while approving a 'Corporate Debtor' sale as a 'going concern' in Liquidation Proceedings without its dissolution in terms of Regulation 32(e) of the Liquidation Process Regulations, 2016, it is essential to see that the 'Corporate Debtor' is not burdened by any past or remaining unpaid outstanding liabilities prior to the sale of the Company as a 'going concern' and after payment of the sale proceeds distributed in accordance with Section 53 of the Code. The Impugned Order in I.A. 889 of 2020 is modified to the extent that the sale of the first Respondent as a 'going concern' is upheld and the direction sought for in prayer (c) & (e) in CA No. 1189 of 2019 seeking extinguishment of past/remaining unpaid outstanding liabilities including contingent liabilities, prior to the sale as a 'going concern', after payment of sale proceeds distributed in accordance with Section 53 of the Code, is allowed."
5. In light of the above, the Applicant has sought reliefs, exemptions and concessions, as specifically dealt with in later part of this Order.
6. The Liquidator, the Respondent in present application, pursuan
