Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(NCLT) 8293

NATIONAL COMPANY LAW TRIBUNAL
ASHISH KALIA, SANJIV DUTT, JJ
MR. AMITKUMAR RISHI KUMAR BHABHDA – Appellant
Versus
MR. AMIT CHANDRASHEKHAR PODDAR – Respondent
IA (I.B.C) No.5599/MB/2023 | CP(IB) No.1620/MB/2017

Advocates:
For the Appellants/Petitioners: Adv. Mitali Bhat, Adv. Khushboo Shah, Rajani, Nipun Singhvi, Mayur Jugtawat
For the Respondents: Adv. Kunal Kanungo, Adv. Atishay Jain

A sale as a going concern under insolvency law preserves corporate identity but does not automatically exempt buyers from past liabilities unless expressly provided.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 60(5) and 32A - Liquidation Process Regulations - Sale of Corporate Debtor as Going Concern - Successful bids for the sale of the Corporate Debtor were approved - The Tribunal considered the necessity for reliefs and concessions to ensure business operations post-sale. (Para 4.1)

(B) Corporate insolvency and reliefs - The concept of ‘clean slate’ was discussed as beneficial for reviving corporate entities while maximizing recovery for creditors. (Paragraph 4.8)

Facts of the case:
Successful bidders sought reliefs under the Code post-purchase of a corporate debtor at an E-Auction, asserting their right to operationalize the debtor as a going concern. (Para 1.1)

Findings of Court:
The Court emphasized the distinction between sales as going concerns under the Code and resolution plans, reinforcing that the applicants are not entitled to all reliefs unless explicitly granted. (Para 4.16)

Issues: Whether the applicants are entitled to various reliefs post-sale, including immunity for past liabilities and compliance with legal approvals. (Para 4.3)

Ratio Decidendi: The court found that while the sale must achieve the objectives of maximizing stakeholder value, certain legal procedures and obligations cannot be waived unilaterally by the Tribunal. (Para 4.20)

Result: The application is partially allowed, granting select reliefs while other requests are deemed rejected.

Table of Content
1. discussion about applicants' claims and liabilities during the liquidation process. (Para 1 , 2 , 3)
2. final verdict and implementation of the decision regarding partially allowed reliefs. (Para 4)

ORDER

[PER: SANJIV DUTT, MEMBER (TECHNICAL)]

1. BACKGROUND

1.1 This Interlocutory Application bearing IA (I.B.C) No.5599/MB/2023 (hereinafter referred to as “the Application”) has been filed on 31.08.2023 by Mr. Amitkumar Rishi Kumar Bhabhda and two other persons (hereinafter referred to as “the Applicants/Successful Bidders”) under Section 60 (5) along with Section 32A of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Regulation 32(e) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (hereinafter referred to as “the Liquidation Process Regulations”) and Rule 11 of the National Company Law Tribunal Rules, 2016 (hereinafter referred to as “NCLT Rules”) seeking directions from this Tribunal for grant of reliefs and concessions mentioned in paragraph 11 of the present Application.

1.2 It is stated that the Applicants are the successful bidders of Seam Industries Limited (hereinafter referred to as “the Corporate Debtor”) wherein the Corporate Debtor was sold as a going concern through an E-Auction dated 15.03.2023 for a consideration of Rs. 24,30,00,000 (Twenty- Four Crore and Thirty Lakhs only). The Liquidator of the Corporate Debtor issued the letter of intent dated 15.03.2023 in favour of the Applicants pursuant to which they paid the entire sale consideration amount and the Liquidator also issued the Sale Certificate dated 07.08.2023 to the Applicants in lieu of payment of the sale consideration.

2. AVERMENTS OF APPLICANTS/SUCCESSFUL BIDDERS

2.1 Associated Road Carriers Limited had filed an application bearing CP(IB) No.1620/MB/2017 under Section 9 of the Code so as to initiate the Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) against the Corporate Debtor This Tribunal, vide order dated 28.12.2018 (hereinafter referred to as “Admission Order”) in the said Application initiated the CIRP in respect of the Corporate Debtor.

2.2 The Corporate Debtor’s CIRP period of 330 days expired on 14.11.2019.

Pursuant to this, the erstwhile Resolution Professional (hereinafter referred to as “the RP”) filed the MA No.3818/MB/C-II/2019 (hereinafter referred to as “the Liquidation Application”) for liquidation of the Corporate Debtor wherein this Tribunal passed the order dated 30.06.2021 and appointed Mr. Subrata Monindranath Maity as the Liquidator of the Corporate Debtor. However, he was later replaced as the Liquidator by Mr. Amit Chandrashekhar Poddar.

2.3 It is submitted that public announcement notice for the 4th E-Auction was published by the Liquidator/Respondent No.1 on 20.02.2023 for selling the Corporate Debtor’s assets and the corrigendum to sale notice for the 4th E- Auction was published on 25.02.2023. As per the said notice, the E-Auction was to be conducted on 15.03.2023 and the options given for selling the Corporate Debtor in the said notice were as follows:

a) Option A- Sale of the Corporate Debtor as a Going Concern;

b) Option B- Sale of Assets of the Corporate Debtor on Slump Sale Basis;

c) Option C- Sale of Assets of the Corporate Debtor in parcels; and d) Option D- Sale of Assets of the Corporate Debtor on Standalone basis.

2.4 The Applicants were eligible to participate in the E-Auction process dated 15.03.2023 pursuant to payment of Rs.2,43,00,000/- as Earnest Money Deposit and, accordingly, they participated in the E-Auction process on 15.03.2023 with the bid of Rs.24,30,00,000/- to purchase the Corporate Debtor as going concern according to the said Public Announcement dated 20.02.2023. The Liquidator/Respondent No.1 issued the Letter of Intent dated 15.03.2023 (hereinafter referred to as “LoI”) and also issued the Sale Certificate dated 07.08.2023 after payment of the entire sale consideration of Rs.24,3