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TMI Blog2025 (2) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... he successful purchaser is to carry on the business of the CD. Regulation 32A(4), before the amendment, required that the sale was to be concluded within a period of 90 days but after its amendment on 16.09.2022, which happened before the sale affected by the liquidator on 28.08.2023, it requires that the sale has to be conducted in first attempt. There is no dispute that the sale has been conducted in the first attempt and no second attempt has been taken. There is also no dispute that purchase price paid by the successful bidder is more than the reserve price. The law is well settled as has been held by this Court in the case of M/s Shiv Shakti Globe Exports Pvt. Ltd. [2022 (3) TMI 13 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] that while approving CD sale as a going concern in liquidation proceedings without its dissolution, it is essential to see that the CD is not burdened by any cost or remaining unpaid outstanding liabilities prior to the sale of the company as a going concern and after payment of the sale proceeds are distributed in accordance with Section 53 of the Code. In the present case also, as has been stated in the purshis dated 08.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order dated 20.04.2021. 4. The erstwhile IRP constituted the CoC comprising of financial creditors, namely, State Bank of India with 98.58% voting share, Axis Bank with 4.21 % voting share and Aditya Birla Finance Ltd. with 5.21% voting share. 5. Pursuant to the publication of Form G on 20.04.2021, only one plan was received from Kalpataru Power Transmission Ltd. but the said plan was found to be conditional in nature and despite giving an opportunity, the said resolution applicant did not modify its clauses. It led to the invitation of fresh expression of interest and another form G was published on 29.10.2021 pursuant to which three resolution plans were received but all the three plans failed as they did not receive requisite majority when they were put to vote in the 16th meeting of the CoC rather the CoC voted for the liquidation and sale of the CD as a going concern by 100% majority as per Regulation 32 of the IBBI (Liquidation Process) Regulations, 2016 (in short 'Regulations'). At the relevant time, Regulation 32A(4) of the Regulations required the sale of the CD as a going concern only within the first 90 days from the date of liquidation of the CD. Regulation 32A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming him that the debt of the CD, held by SBI, has been assigned to them, On confirmation of the same, the Appellant called the 2nd meeting of SCC on 12.07.2023 in which SBI was substituted with Raj Radhe Finance Ltd.. In the 3rd meeting of the SCC held on 17.07.2023, the e-auction process document were laid before it which was finalised during the 4th meeting of the SCC held on 20.7.2023 and the SCC agreed to proceed for holding an e-auction sale of the CD as a going concern for which a public notice was published on 26.07.2023 wherein the reserve price was fixed at Rs. 42.60 Cr. being the fair market value, in terms of the valuation reports received during the liquidation. In the fourth meeting of the SCC, It was informed that the 90 days mandate as per Regulation 32A(4) prior to the amendment of September 16, 2022 had already expired, therefore, out of abundant caution, the Appellant filed I.A No. 950 of 2023 for seeking condonation of delay. He sought condonation of delay of 131 days from 19.04.2023, being the date of conclusion of 90 days, for conducting the sale of the CD as a going concern till 28.08.2023 which was proposed as the date of conclusion of e-auction of the CD as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout including any contingent liabilities, we hold that it is a settled law that when the sale proceeds of a 'Corporate Debtor' are duly distributed in the Order of priority and in the manner prescribed under Section 53 of the Code, claims of any other Creditor cannot be entertained contrary to the provisions entailed under Section 53; subsequent to the distribution of sale proceeds under Section 53 no other entity including any Government entity can claim any past unpaid or outstanding dues against the Appellant who has purchased the 'Corporate Debtor Company' as a 'going concern'. It is significant to mention that the second Respondent/Liquidator has specifically submitted that even these claims by the Uttar Haryana Bijli Vitran Nigam were not submitted in the prescribed form either during the CIRP Process or at the Liquidation stage. We are of the considered view that at this stage subsequent to the sale of the 'Corporate Debtor Company' as a 'going concern', these claims cannot be foisted upon the Appellant. The scope and objective of the Code is to extinguish all claims specifically the ones which were not even made during the CIRP or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quidator 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', we are of the earnest view that the Auction Purchaser cannot be made liable for any dues arising on the property before the purchase of the said property in this case." 14. In the case of Jasamrit Designers Pvt. Ltd. Vs. Gian Chand Narang & Ors. CA (AT) (Ins) No. 258 of 2023 para 12 is relevant which is reproduced as under:- "12. We while granting such liberty to the Appellant observe that law is well settled, a successful bidder who is declared as successful bidder of sale as going concern can seek access of the Adjudicating Authority and may pray for necessary directions in accord with and in consonance with the process document in the liquidation proceedings. In result, we partly allow this Appeal and hold that applicant's prayers i.e. relief/concessions/directions needs consideration by the Adjudicating Authority for which we grant liberty to the Applicant to make a fresh Application containing prayers which may be commensurate and in accord with terms and conditions of the process document of e-auction process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CD under liquidation alongwith all the rights, titles and interest in the CD including its legal entity which is transferred to the successful purchaser on the basis of which the successful purchaser is to carry on the business of the CD. Regulation 32A(4), before the amendment, required that the sale was to be concluded within a period of 90 days but after its amendment on 16.09.2022, which happened before the sale affected by the liquidator on 28.08.2023, it requires that the sale has to be conducted in first attempt. There is no dispute that the sale has been conducted in the first attempt and no second attempt has been taken. There is also no dispute that purchase price paid by the successful bidder is more than the reserve price. 21. Besides this, there was an application bearing I.A No. 950 of 2023 filed by the liquidator in which the following order was passed on 18.03.2024 which is reproduced as under:- "This is an application with one of the prayers seeking to condone the inadvertent delay of about 131 days from April 19, 2023 wherein the liquidator has sold the assets of the CD as a going concern. The application should have been filed before the date of the conclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 days and the application has been filed for condonation of the delay by the Appellant was an inadvertent exercise on the part of the liquidator because of the amendment dated 16.09.2022 which has taken away the rigours of Regulation 32A(4) as it stood before its amendment. 26. Besides the aforesaid fact, the law is well settled as has been held by this Court in the case of M/s Shiv Shakti Globe Exports Pvt. Ltd. (Supra) that while approving CD sale as a going concern in liquidation proceedings without its dissolution, it is essential to see that the CD is not burdened by any cost or remaining unpaid outstanding liabilities prior to the sale of the company as a going concern and after payment of the sale proceeds are distributed in accordance with Section 53 of the Code. 27. In the present case also, as has been stated in the purshis dated 08.04.2024, which has been duly taken into consideration while passing of the order in I.A No. 950 of 2023, that not only the Regulation 32A(4) has been duly amendment on 16.09.2022 and the sale as a going concern took effect on 28.08.2023 but also the entire amount has been paid by the highest bidder and that has already been distributed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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