2022 (6) TMI 823 - Tri - Insolvency and Bankruptcy

Seeking direction to Respondent No.1 to assist the Applicant and take necessary steps in procuring Valid Factory License and Valid Fire NOC for the Corporate Debtor by making payments from the Sale Consideration received by the Applicant - seeking extinguishment of Property Tax/ Municipal Tax dues and Land Revenue Tax dues - HELD THAT - While it is true that the facts of each case need to be seen on their own merit and preferably on a standalone basis, it is equally true that the main objective of the Code should not be lost sight of. In the instant case, the corporate debtor has been sold as a going concern and is well functioning , in that it is on its way to complete the projects left halfway by the previous management and is trying to turn the so called corporate debtor into a viable enterprise. Any past liabilities that are sought to be raised by R2 R3 would burden the enterprise and may even push it back to the insolvency from which it has been successfully retracted by the Code. The liquidator had followed the complete algorithm as enshrined in the Code for carrying out the liquidation process, which included public announcement for invitation for the claims. Despite that R2 R3 have not cared to lodge their claim, if any, before the liquidator and have not taken any steps to approach this Adjudicating Authority in good time to make any representation in this regard and therefore now they are estopped from raising the claims at this date. Application disposed off.

Summary

Issues:
1. Application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking reliefs related to tax dues, NOCs, and liabilities for a corporate debtor.

Analysis:
1. The applicant, the successful purchaser of the corporate debtor, sought various reliefs, including assistance in procuring valid licenses and extinguishing tax dues. Respondent No.1, the Liquidator, denied liabilities post-sale, emphasizing the sale was on an "As is Where is" basis.

2. The corporate debtor was liquidated and sold as a going concern. A Sale Certificate was issued post full payment by the successful bidder. The applicant needed NOCs for bank guarantees to secure new contracts, but Respondents No.2 & 3 demanded arrears payment pre-sale.

3. The Liquidator argued he had fulfilled obligations and was functus officio, hence not liable for NOCs. The Supreme Court precedent highlighted the need for resolution applicants to start afresh post-approval, without surprise claims.

4. The Tribunal noted the corporate debtor's revival efforts and the burden of past liabilities. Respondents No.2 & 3 failed to lodge claims timely, estopping them from raising issues now. The Sale Certificate absolved the purchaser of pre-11.08.2021 liabilities.

5. Urgency to secure bank guarantees for contracts led the Tribunal to grant relief for extinguishing pre-sale tax dues and issuing necessary NOCs. Other reliefs were not granted to prevent re-entry into insolvency.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the legal proceedings and decisions made by the Tribunal.