2021 (11) TMI 193 - Tri - Insolvency and Bankruptcy

Purchase of Corporate Debtor as a going concern under liquidation on As is Where is basis - HELD THAT - It is pertinent to note that when any Corporate Debtor, under Liquidation is purchased as a going concern, the auction purchaser, by virtue of law, is entitled to certain reliefs as folllows Past Dues - In relation to claims prior to auction purchase, it is the duty of the Liquidator to collate and admit the claims in accordance with law, Thus, any claim arising prior to e-auction is to be dealt with as per the provisions of Section 53 of the Code by the Liquidator and the Applicant/Corporate Debtor shall not be held liable to pay the same. Statutory dues - In relation to the waiver of payment of stamp duty, applicable statutory dues, taxes post purchase of corporate Debtor, it is settled position of law that there shall not be any exemption or waiver, unless provided under the Law and same shall be dealt by competent Authority in accordance with the relevant Law. Infusion as Equity - That upon purchase of Corporate Debtor as a going concern, the Auction purchaser by virtue of law shall be entitled to make allotment of shares and reconstitute board as he desires as per the provisions of the Companies Act, 2013 by following the procedure prescribed thereunder. This Adjudicating Authority is not entitled to grant any waiver or concession to any of the Auction purchaser, who purchases the Corporate Debtor as a going concern - auction purchaser may approach the respective authorities, who may consider the requests made by the applicant under the provisions of respective statutory provisions - Application disposed off.

Summary

Issues: Application for reliefs sought by auction purchaser who purchased Corporate Debtor in liquidation as a going concern.

Analysis:
1. Reliefs Sought by the Applicant: The applicant, an auction purchaser, sought various reliefs through the application. These reliefs included permitting another entity to acquire the Corporate Debtor, extinguishing all rights, title, and interest in the Corporate Debtor, allowing the carry forward of accumulated losses, and extinguishing financial liabilities and obligations prior to the sale consideration payment.

2. Treatment of Claims and Dues: The judgment highlighted the responsibilities of the Liquidator in dealing with claims and dues. It emphasized that claims arising before the auction purchase should be handled by the Liquidator in accordance with the Insolvency and Bankruptcy Code, relieving the Applicant/Corporate Debtor from liability for such claims.

3. Statutory Dues and Exemptions: The judgment clarified that exemptions or waivers of statutory dues, such as stamp duty and taxes post-purchase, are subject to relevant laws and competent authorities. It underscored that exemptions would only be granted if provided for by law.

4. Equity Infusion and Board Reconstitution: Upon purchasing the Corporate Debtor as a going concern, the auction purchaser was entitled to make allotments of shares and reconstitute the board in accordance with the Companies Act, 2013, following the prescribed procedures.

5. Limitations on Waivers and Concessions: While certain waivers and concessions were acknowledged, the Adjudicating Authority stated that it was not entitled to grant further waivers or concessions to auction purchasers acquiring the Corporate Debtor as a going concern.

6. Recourse to Respective Authorities: The judgment concluded by advising the auction purchaser to approach the relevant authorities for any requests beyond the granted reliefs, indicating that such authorities would consider the requests under the applicable statutory provisions.

7. Disposition of the Application: Ultimately, the judgment disposed of the application, affirming the reliefs granted and outlining the boundaries within which the auction purchaser could seek further assistance or concessions.