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2025 Supreme(Online)(NCLT) 5150
NATIONAL COMPANY LAW TRIBUNAL
Rekha Kantilal Shah, Member (Technical)
Dewesh Auto Creative Services Pvt Ltd – Appellant
Versus
A.K. Power Industries Pvt Ltd – Respondent
C.P (IB) No. 1376/KB/2018
For the Appellants/Petitioners: Mr. Shaunak Mitra, Ms. Ritu Mondal
For the Respondents: Mr. Shaunak Mitra, Ms. Ritu Mondal
Successful bidders in liquidation cases may obtain relief from past liabilities upon sale approval as a going concern, promoting effective corporate revival.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) - Liquidation proceedings - Approval of sale of Corporate Debtor as going concern with residual assets - Successful Bidder entitled to various concessions such as extinguishing past liabilities - Legal principles established regarding the treatment of past dues and liabilities upon sale as going concern. (Paras 6 - 9)
(B) Corporate Debtor - Sale process - Successful auction participant seeks direction for concessions in operation and a seamless transition post-sale - Application presented regarding obligations to past liabilities and financial duties. (Paras 2 - 4, 6 - 9)
(C) Liquidator's duties and responsibilities - Court provides insights on the need for compliance with applicable laws during the sale process and relevant approvals required from authorities - Guidance established regarding the sale process and successful bidder's reliefs. (Paras 7 - 9)
(D) Legal interpretation on liabilities - Past claims extinguished upon sale approval; current liabilities and obligations reassigned to successful bidder and Corporate Debtor - Principles of corporate revivals articulated. (Paras 5 - 9) (E) Court grants multiple reliefs requested regarding liabilities, regulatory approvals, and operational continuities as provided under the Code. (Paras 7 - 9)
Findings of Court:
The court observed the need for proper legal structuring of liabilities and obligations involved in the sale of a Corporate Debtor during liquidation to ensure revival and operating efficiency.
Issues: The main issues revolved around the extent of protections granted to the successful bidder from past liabilities and compliance with statutory obligations during and after the sale.
Ratio Decidendi: The court determined that upon successfully acquiring a Corporate Debtor as a ongoing concern, the successful bidder is entitled to relief from past financial obligations and operational liabilities, thus facilitating a robust revival strategy.
Result: Application allowed and business sale approved.
| Table of Content |
|---|
| 1. details of the corporate debtor and application filed (Para 2) |
| 2. history of insolvency proceedings and liquidation process (Para 3) |
| 3. arguments regarding sale of assets and conditions (Para 4) |
| 4. counsel's submissions on compliance and payments (Para 5) |
| 5. court analysis of applicability of previous judgments (Para 6) |
| 6. disposal of the application and approval of reliefs (Para 7) |
| 7. final order and directions issued by the court (Para 8 , 9 , 10 , 11) |
ORDER
Per: Rekha Kantilal Shah, Member (Technical)
1. The Court convened through physical mode.
2. The present application I.A.(IB) No.606/KB/2025 has been filed by Veena Credit and Holding Pvt. Ltd, (“Successful Bidder”) of the Corporate Debtor A.K Power Industries Pvt Ltd (in Liquidation) under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 seeking following prayers:
a) Approve the sale of the Corporate Debtor (in Liquidation) as a going concern with residual assets only (including Flat No.401, Flat No.601 and residua; scrap/inventory);
b) Pass an order granting the reliefs and concessions more fully detailed in schedule hereto;
c) Pass such other and further orders as this Hon’ble Tribunal may deem just, proper and equitable in the interest of justice.
3. Background of the case:
I. The Financial Creditor i.e. Dewesh Auto Creative Services Pvt Ltd filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor (“CD”) i.e. A.K Power Industries Pvt Ltd vide order dated 30.09.2019 the Tribunal admitted the application and appointed Mr. Arun Kumar Khandelia as the Interim Resolution Professional (“IRP”), who was replaced by Mr. Pratim Bayal to act as the Resolution Professional (“RP”) by the Committee of Creditor. Appointment of Mr. Partim Bayal was confirmed by the Tribunal vide order, [Exhibit-A] dated 18.11.2019.
II. As no Resolution Plan was approved for revival of the Corporate Debtor, the Resolution Professional filed an application under Section 33 (1)(a) for Liquidation. The Adjudicating Authority subsequently passed an order, [Exhibit-B] dated 11.08.2021 for Liquidation of the CD and appointed the RP i.e. Pratim Bayal as the Liquidator to carry out the liquidation process.
III. Thereafter, the Liquidator, pursuant to the IBC, 2016 published Sale Notice in the ‘Financial Express’ newspaper on 23.10.2024 for “Sale of A.K Power Industries Pvt Ltd (in Liquidation) as going concern” with residual assets only (including Flat No-401, Flat No-601 and residual scrap/inventory). As per the E-Auction Notice, [Annexure-C], the reserve price for Sale of Corporate Debtor as a going concern" with residual assets only was set at Rs. 75,50,000/- (Rupees Seventy-five lakh and fifty thousand). The Earnest Money Deposit (EMD) amount was 10% of the reserve price, i.e. Rs. 7,55.000/- (Rupees Seven lakh and fifty-five thousand) and the E-Auction was scheduled for 19 January 2024.
IV. The Applicant participated in the Auction process by submitting the requisite documents. Being eligible, the Applicant deposited the EMD amount of Rs. 7,55,000/- (Rupees Seven lakhs and fifty-five thousand) being 10% of total consideration amount of Rs. 75,50,000/- (Rupees Seventy-five lakh and fifty thousand).
V. The E-Auction was held on 19.11.2024. The Applicant, M/s Veena Credit & Holdings Pvt Ltd was declared as successful Bidder to acquire the CD as going concern basis with residual assets only and the same confirmed by the Liquidator vide email dated 19.11.2024, [Annexure-D]. Liquidator, thereafter, issued the letter of Intent dated 21.11.2024, [Annexure-D]
VI. The Liquidator subsequently issued SALE CERTIFICATE,
VII. The present application has been filed by the Applicant to ensure that there are no obs
