Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 1228

NATIONAL COMPANY LAW TRIBUNAL
Rajeev Bhardwaj, Judicial Member, Sanjay Puri, Technical Member
M/s. Sri Lakshminarasimha Oil Mills Private Limited – Appellant
Versus
M/s. Northern Power Distribution Company of Telangana – Respondent
IA (IBC)/1483/2024 in CP(IB) No.532/7/HDB/2019|CP(IB) No. 532/07/HDB/2019

Advocates:
For the Appellants/Petitioners: Ms. Harshita Datla
For the Respondents: G. Sai Prasen

Purchaser in going concern liquidation sale on 'as is where is' basis liable for pre-existing electricity dues; cannot seek waiver under IBC post-liquidation closure despite Section 53 distribution.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 60(5), 53(1), Chapter III (Liquidation) - Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Regulation 45(3)(a), 32A - Sale of corporate debtor as going concern in liquidation through e-auction on 'as is where is', 'as is what is', 'whatever there is' and 'without recourse' basis - Auction terms expressly stipulate that all local taxes, maintenance charges, electricity and water dues, etc., outstanding as on date or yet to fall due shall be borne by successful bidder - Electricity distribution company refused new connection unless past electricity arrears cleared - Application under Section 60(5) by erstwhile corporate debtor (now lessor) and lessee seeking waiver of arrears and direction for new connection - Held, application maintainable under Section 60(5)(c) as dispute stems from liquidation process - However, successful bidder having accepted auction terms cannot seek waiver of pre-existing electricity dues - Electricity dues verified and addressed in liquidation under Section 53 waterfall - Purchaser bound by voluntary undertaking to abide by legal opinion on arrears recovery - No merit in application - Dismissed. (Paras 38-47)

(B) Insolvency and Bankruptcy Code, 2016 - Liquidation process closure - Post-closure, tribunal's jurisdiction under Section 60(5) not ousted if dispute directly connected to liquidation - But sale conditions prevail over clean slate theory applicable only to resolution plans under Sections 30-31 - Going concern sale under Regulation 32A includes liabilities unless otherwise specified. (Paras 37, 41-42)

Facts of the case:
Corporate debtor underwent CIRP, followed by liquidation order. Assets sold as going concern via e-auction to successful bidder for Rs. 12 crores. Proceeds distributed per Section 53. Liquidation closed. Lessee of assets sought new electricity connection; distribution company demanded clearance of past arrears attached to premises. Application filed seeking waiver and supply direction.

Findings of Court:
Application maintainable but liable to dismissal. Purchaser bound by auction terms assuming all statutory dues including electricity arrears. No evidence arrears pre-date CIRP; undertaking given to pay post legal opinion.

Issues: (1) Maintainability under Section 60(5) post-liquidation closure; (2) Liability of going concern purchaser for pre-liquidation electricity dues as condition for new connection.

Ratio Decidendi: Auction purchaser of liquidated assets on 'as is where is' basis bears all attached statutory liabilities like electricity dues, notwithstanding liquidation distribution under Section 53; cannot claim immunity via IBC clean slate absent specific plan approval.

Result: Application dismissed.

Table of Content
1. background of cirp, liquidation, and asset sale to bidder. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. applicants seek waiver of pre-cirp electricity arrears. (Para 8 , 9 , 10)
3. applicants lack locus standi post-liquidation closure. (Para 11 , 12 , 16 , 17)
4. going concern sale includes assets and liabilities. (Para 13 , 22 , 24)
5. no clean slate for liquidation purchasers; dues persist. (Para 14 , 15 , 18 , 19 , 20 , 21 , 23)
6. recap of liquidation sale and electricity connection dispute. (Para 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36)
7. nclt retains jurisdiction under section 60(5)(c). (Para 38)
8. auction 'as is where is' binds purchaser to electricity dues. (Para 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47)

APPLICATION

2. It is submitted that Indian Overseas Bank filed a Section 7 application under the IBC, 2016, against M/s Sri Lakshminarasimha Oil Mills Pvt. Ltd., which was admitted on 13.11.2019, with S. Kasthuri Rangan appointed first as IRP and later confirmed as RP.

3. It is further stated that this Tribunal, vide order dated 13.05.2021, directed the liquidation of Sri Lakshminarasimha Oil Mills Private Limited and appointed S. Kasthuri Rangan as the Liquidator. Thereafter, the Liquidator issued public notices, invited and verified claims, including Rs 147.64 crore from Indian Overseas Bank and Rs 1.41 crore from TSNPDCL, and fixed a reserve price of Rs 12 crore upon receiving valuation reports from various valuers. An e-auction was conducted on 20.10.2021, in which Chittammalla Revathi emerged as the successful bidder.

4. Chittammalla Revathi paid the full sale consideration of Rs 12 crore on 04.01.2024, along with Rs 13,63,305 as interest for delayed payment, pursuant to the Tribunal’s order dated 01.01.2024. Thereafter, the Liquidator distributed the entire amount in accordance with Section 53 of the Code and handed over possession of the Corporate Debtor’s assets to the successful bidder upon issuance of the sale certificate dated 04.01.2024.

5. It is stated that the Financial Creditor released their charges on the assets of the Corporate Debtor and issued a No Objection Certificate for the filing of a certificate of charges with the Registrar of Companies. It is further stated that the successful bidder issued a letter dated 01.02.2024 advising the Liquidator to appoint two nominees as directors, and the Liquidator submitted a letter to the said Registrar for appointing the two nominees in accordance with circular No.08/2020 dated 06.03.2020 issued by the Ministry of Corporate Affairs. It is also stated that IA No.452/2024 was filed for the closure of liquidation, which was ordered on 18.04.2024 under Section 45(3)(a).

6. It is submitted that, after the sale, the 1st applicant, M/s Sri Lakshminarasimha Oil Mills Private Limited, entered into a lease agreement with the 2^nd applicant, M/S. Nagasatyasolvents Private Limited, for running the Unit.

7. It is stated that the 2^nd applicant applied to the respondent to restore the previous connection or to provide a new power connection, “informing that the Corporate Debtor, M/s. Sri Lakshminarasimha Oil Mills Private Limited, on the respondent’s advice”, requested a new electricity connection to run the unit. The respondent, vide letter dated 15.06.2024, asked the applicants to pay Rs. 30,67,251 for the extension of supply and issued a sanction letter. The applicants paid on 24.06.2024 and requested a supply. However, the respondent, by letter dated 11.07.2024, demanded Rs. 92,68,500 towards arrears, though the electricity service had been disconnected in 2014, with Rs. 89,683 claimed as of 11.08.2015.

8. The Applicants submitted that they made several representations requesting the Respondent to provide a new connection upon collecting the national fee and sought a waiver of arrears of Rs 92,68,500 due by the Corporate Debtor; however, such requests were in vain. The Applicants further submitted that no statutory or local bodies are claiming any amoun

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