9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 279 - AT - Insolvency and BankruptcySeeking a direction to the Appellant herein to acknowledge and record the transfer of ownership in the name of the Auction Purchaser - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - whether the Successful Bidder in an Auction conducted on as is where is basis is liable to pay prior dues attached to such Auction property, when the Company is in Liquidation and the dues were claimed under Operational Debt before the Liquidator? HELD THAT - The material on record establishes that the Appellant herein had filed their Form-C on 09.03.2020 which was defective and the Liquidator vide email dated 09.03.2020 pointed out the deficiency and sought clarifications on the information provided. A reminder was also sent on 12.03.2020 to consider the claim of the Appellant herein as an Operational Creditor . Subsequent to the e-Auction conducted and the receipt of the sale consideration, the Liquidator allocated the funds in accordance with Section 53 of the Code in a waterfall mechanism. Once the Liquidation sale has been completed and the Certificate of Sale has been executed followed by handing over possession to the Auction Purchaser, any claim relating to such property for dues prior to the Auction cannot be raised against the Auction Purchaser specifically when the Company is in Liquidation and the dues were already claimed by the said party as an Operational Creditor , during the CIRP process as the Company was in Liquidation and the Appellant had already approached the Liquidator by filing a Form-B and the Liquidator has intimated to the Appellant that there is no amount left for the payment to any Operational Creditor , the Auction Purchaser cannot be made liable for any dues arising on the property before the purchase of the said property in this case. There are no illegality or infirmity in the Order of the Adjudicating Authority - appeal dismissed.
Issues Involved:
1. Whether the Successful Bidder in an Auction conducted on 'as is where is basis' is liable to pay prior dues attached to such Auction property when the Company is in Liquidation. 2. Whether the principles of the 'clean slate' doctrine apply to the Auction Purchaser in this context. 3. Whether the Appellant's claim as an 'Operational Creditor' during the Liquidation Process impacts the liability of the Auction Purchaser. Detailed Analysis: Issue 1: Liability for Prior Dues in 'As Is Where Is' Auction The Appellant contended that the Auction Purchaser is liable for the dues outstanding with the Appellant since the auction was held on an 'as is where is basis' and 'non-recourse basis'. The auction terms indicated that the assets were sold with all existing and future encumbrances. The Appellant argued that the Successful Bidder was required to discharge all liabilities of the 'Corporate Debtor'. However, the Tribunal noted that the Liquidator had already distributed the proceeds as per Section 53 of the Insolvency and Bankruptcy Code (IBC), and the dues of the Appellant, categorized as 'Operational Creditor', were not paid due to insufficient funds. The Tribunal concluded that any claim relating to such property for dues prior to the auction cannot be raised against the Auction Purchaser once the Liquidation sale is completed and possession is handed over. Issue 2: Application of 'Clean Slate' Doctrine The Tribunal referenced the Supreme Court's judgment in 'Committee of Creditors Essar Steels Standard Chartered Bank' and 'Ghanshyam Mishra and Sons Private Limited' to emphasize the principle that no surprise claims should be imposed on the Successful Resolution Applicant or Auction Purchaser after the resolution plan or auction sale is approved. The Tribunal held that the principle of 'clean slate' applies, meaning the Auction Purchaser should not be burdened with prior liabilities once the sale is confirmed and the sale certificate is issued. Issue 3: Impact of Appellant's Claim as 'Operational Creditor' The Appellant had submitted a claim as an 'Operational Creditor' during the Liquidation Process, which was rejected due to insufficient sale proceeds. The Tribunal highlighted that the Liquidator had communicated to the Appellant that no amount was left for payment to any 'Operational Creditor'. The Tribunal determined that since the Appellant's claim was already addressed during the Liquidation Process, the Auction Purchaser cannot be held liable for these dues. The Tribunal also noted that the principle laid down in 'Telangana State Southern Power Distribution Company Ltd.' was not applicable in this case, as the Appellant's claim was under the IBC provisions and had already been dealt with during the Liquidation Process. Conclusion: The Tribunal dismissed the appeal, affirming that the Auction Purchaser is not liable for any dues arising before the purchase of the property. The Tribunal upheld the Adjudicating Authority's order, emphasizing the application of the 'clean slate' doctrine and the proper distribution of proceeds during the Liquidation Process. The appeal was dismissed with no order as to costs.
|
