Jasamrit Designers Private Limited vs Mr. Gian Chand Narang
Company Appeal (AT) (Insolvency) No. 258 of 2023
Facts:
1.NCLT passed an order dated 09.01.2020 for liquidation of Apex Buildsys Limited Corporate Debtor. E-Auction Notice was issued by the Liquidator for sale of the Corporate Debtor as a going concern. After issuance of several E-Auction Notices by the Liquidator, e-Auction Notice was issued on 04th May, 2022 fixing 23rd May, 2022 as date for e-auction.
2.E-auction process information document was also issued inviting bids for auction/sale of M/s. Apex Buildsys Limited as a going concern in its totality along with its employees/workers.
3.Appellant was selected as a highest bidder in the eAuction held on 23rd May, 2022. Appellant has submitted a bid of INR 91 Crores against the reserve price of INR 73 Crores. The Appellant made the payment of sale consideration. Liquidator issued a Sale Certificate dated 22nd June, 2022 to the Appellant. Appellant thereafter filed an I.A. No. 3207/2022 in Company Petition seeking certain directions/reliefs/concessions and the provisions which according to the Appellant were necessary for fulfilling and actualizing the sale of the corporate debtor as a going concern.
3.Vide order dated 02.12.2022 disposed of the Application. In the order, the Adjudicating Authority noticed large number of prayers which were made by Appellant in the Application and after extracting prayers made in the Application it noted that appellant will be entitled to claim relief from the respective department.
Issue: Whether the order passed by the AA needs interference ?
Arguments:
For Appellant:
1.Counsel for the Appellant submits that Application filed by the Appellant seeking certain reliefs/concessions/directions were necessary to affect the takeover of the Corporate Debtor on clean slate basis. The Adjudicating Authority erred in not granting the said reliefs. The question of settlement of liabilities of the creditors under Section 53 of the Code in case of sale of a corporate debtor in liquidation is a question that ought to be decided by the Adjudicating Authority in the Application filed under Section 60(5)(c ) of the Code.
2.Counsel for the Appellant submits that due to non-consideration of various reliefs, concessions and directions which are necessary for operationalization of Corporate Debtor as a going concern, the objective of the Code shall not be fulfilled.
For Liquidator:
1.Counsel for the Liquidator during his submissions supported the claims for reliefs, concessions and directions as was made by the Applicant. However, in the written-submissions, the Liquidator has submitted that there are certain reliefs claimed by the Appellant in I.A. No. 3207 of 2022 which is neither permissible under the Code nor in terms of settled position of law. Liquidator further submits that sale of the Corporate Debtor as a going concern would entail transfer of both assets as well as liabilities of the Corporate Debtor in favour of the Successful Bidder.
Decision: NCLAT partly allowed the appeal and granted liberty to file fresh applications seeking relief and concessions.
Rationale:
1.E-Auction Process Document on the basis of sale as a going concern plays an important role and clarificatory role. Other terms and conditions of the e-auction as extracted above states that all known or unknown, claimed or unclaimed, disclosed or undisclosed liabilities/ obligations, risks as on the cut-off date including prior claims of all creditors whether secured, unsecured, workers, employees, statutory authorities on account of Income Tax, Sales Tax, GST, Service Tax, DGFT, Excise, Customs etc. are required to be dealt with as per Section 53 of the Code as full and final settlement of their claims.
2.In view of the subsequent facts and notices brought on record by the Appellant and other terms and conditions of the process document as extracted, we are of the view that ends of justice will be served in granting liberty to file an Application before the Adjudicating Authority claiming reliefs/concessions/directions which may be necessary for operationalization of the Corporate Debtor as per terms and conditions of the process document.
3.Successful Bidder on e-Auction of the Corporate Debtor as a going concern can make only such prayers for reliefs/concessions which are commensurate and in accordance with the terms and conditions of the process document.
Order Copy:
