Wednesday, 13 September 2023

M K Rajagopalan Vs. S R Shriraam Sheker Liquidator of M/s. BKR Hotels & Resorts Private Limited (Under Liquidation) - That the purchaser of the Company even in the Liquidation stage cannot be burdened with past liabilities when it is not mentioned in the 'Sale Notice'.

 NCLT Chennai-1(31.08.2023) In M K Rajagopalan Vs. S R Shriraam Sheker Liquidator of M/s. BKR Hotels & Resorts Private Limited (Under Liquidation) [IA(IBC)/633/CHE/2023 in CP/472/IB/2017] held that;

  • 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 in the Liquidation stage, to aid the purchaser of the Company as a 'going concern' to start on a 'clean slate'.

  • That the purchaser of the Company even in the Liquidation stage cannot be burdened with past liabilities when it is not mentioned in the 'Sale Notice'.


Excerpts of the Order;    

IA(IBC)/633(CHE)/2023 is an application filed by the Successful Purchaser viz. M.K. Rajagopalan, under section 60(5) of the IBC, 2016 read with Regulation 32 and 33 and Schedule I Part 2 of the IBBI (Liquidation Process) Regulations, 2016 seeking relief as follows;

  • a. Allow the present Application (and)

  • b. Confirm the Sale of the Corporate Debtor as a Going Concern by way of private sale without dissolution under Regulation 32(e) read with Regulation 33(2)(c) and Part 2 of Schedule I of the IBBI (Liquidation Process) Regulations, 2016, to be made by the Respondent Liquidator in favor of the Applicant for the already remitted full consideration of Rs.68.04 Crores (and)

  • c. Grant the reliefs and concessions for the said Sale of the Corporate Debtor as Going Concern as enumerated in para 16 hereinabove

  • d. Direct the Liquidator to issue necessary Sale Certificate / Deed of Sale pursuant to the foregoing.

  • e. Grant liberty to the Applicant herein to approach this Hon'ble Adjudicating Authority in giving effect to the sale as may be allowed in this Interlocutory application.

  • f. Grant such other incidental or consequential reliefs as may be deemed fit and proper by this Hon'ble Adjudicating Authority.


# 2.The Corporate Insolvency Resolution Process in respect of the Corporate Debtor was ordered by this Tribunal vide order dated 14.08.2018. Since no Resolution Plan was received during the CIRP, based upon an Application filed by the RP, this Tribunal vide its order dated 03.05.2019 has ordered for Liquidation in respect of the Corporate Debtor and appointed one Mr. R. Venkatakrishnan as the Liquidator. Subsequently, the Respondent herein was appointed as the Liquidator in respect of the Corporate Debtor by this Tribunal vide its order dated 01.12.2022 in IA(IBC)/1033(CHE)/2022.


# 3. It is seen that the erstwhile Liquidator had issued a paper publication for the first e-auction in Indian Express and Dinamani on 04.09.2019. However, it is stated that no prospective buyers had participated in the said auction. Further, it is stated that the erstwhile Liquidator had conducted a total of 6 public auctions and all of them failed. The details of the public e-auction that have been conducted by the erstwhile Liquidator, along with the reserve price for each auction is provided hereunder:-


# 4..It is stated that the Respondent, upon being appointed as the Liquidator, took steps to sell the assets of the Corporate Debtor. It is stated that, upon realizing the fact that 6 public e-auctions have failed, the Liquidator had a detailed discussion with the stakeholders of the Corporate Debtor and initiated action to realize the liquidation estate at the earliest through Private Sale under Regulation 32(e) read with 33(2)(c) and Part 2 of Schedule I of the IBBI (Liquidation Process) Regulations, 2016.


# 5..It is stated that during the 10th SCC meeting held on 02.03.2023, it was resolved that the liquidator may sell the assets of the Corporate Debtor by mean of Private Sale in the manner specified in Schedule I under the provisions of Regulation 33 (2)(c) of IBBI (Liquidation Process) Regulations, 2016.


6. It is stated that Shri M.K. Rajagopalan, the Applicant herein has expressed his interest vide Ref No: MKR/BKR/001/2023 dated 21-03- 2023 to buy the Corporate Debtor viz. M/s BKR HOTELS & RESORTS P LTD, (under Liquidation), as a going concern under Regulation 32 (e) of IBBI (Liquidation Process) Regulations, 2016.


7. In pursuance of the same, a Demand Draft for a sum of Rs.68.04 Crores bearing No: 390351 dated 21.03.2023 drawn in favor of Liquidation A/C of the Corporate Debtor in Indian Bank, T. Nagar Branch A/c No: 7403 745 583 was handed over to the liquidator on the same day.


# 8. It is stated that, during the 11th SCC meeting held on 23.03.2023, the Demand Draft was placed before the Stakeholders. It is stated that the Stakeholders Committee has enquired about any other potential buyer in the pipeline. The liquidator had duly informed the SCC that it was intimated unofficially by the promoter that there was another buyer who had been identified by him and is interested in purchase of the Corporate Debtor. However, the details of the buyer were not disclosed to the Liquidator nor did the Liquidator receive any expression of interest or any communication from the potential buyer identified by the promoter. The SCC concluded by stating that the final decision will be taken on the next working day i.e. on 27.3.2023.


# 9 It is stated that the Liquidator had thereupon held the 12th meeting of the SCC on 27.03.2023 and there was no Expression of Interest or Proof of Funds received from the Promoter's identified buyer. Thus, the Stakeholders Committee had recommended to proceed with the sale of the assets of the Corporate Debtor as a Going Concern to the Applicant in compliance with Regulation 32(e) & 33(2)(c) of the IBBI (Liquidation Process) Regulations, 2016. Subsequent to the same, the assets of the Corporate Debtor were sold to the Applicant.


# 10 Under such circumstances, the present Application is moved by the Applicant seeking thereof to confirm the Sale of the Corporate Debtor as a Going Concern.


# 11. Heard the submissions made by the Learned counsel for the Applicant and Learned Authorized Representative for the Liquidator. It is seen that the Liquidator has already sold the Corporate Debtor as a going concern to the Applicant herein and has also distributed the

proceeds of the same to the Stakeholders of the Corporate Debtor.


# 12. It is also required to be noted here that the Applicant herein, who is the successful purchaser of the Corporate Debtor as a going concern, has filed an Additional Affidavit vide Diary No. 3491 dated 18.08.2023, wherein it has been stated that as a mark of good will, the Applicant undertakes to pay an additional sum of Rs.1.96 Crores. Thus, the total consideration paid for the sale of the Corporate Debtor as a going concern is Rs.70 Crores.


# 13. It is also stated in the Affidavit that the said additional sum of Rs.1.96 Crore shall be paid to the Liquidator by way of Demand Draft within 7 days from the date of the Order of this Tribunal.


# 14. The said additional affidavit filed by the Applicant is taken on the additional record. As stated in the Affidavit, the Applicant shall pay amount of Rs.1.96 Crores to the Liquidator within a period of 7 days from the date of this Order.


# 15. In so far as Sale as a going concern is concerned, the term 'going concern' means all such assets and the liabilities, which constitute an integral business or the Corporate Debtor, that must be transferred together, and the consideration must be for the business or the Corporate Debtor. The buyer of the assets and liabilities should be able to run business without any disruption.


# 16.There are two going concern sales defined under Regulation 32 of IBBI (Liquidation Process) Regulations, 2016. The first one pertains to Sale of "Corporate Debtor as a going concern" under Regulation 32(e) and sale of "Business of Corporate Debtor as a going concern" under Regulation 32(f).


# 17. In the sale of "Corporate Debtor as a going concern" under Regulation 32(e) of IBBI (Liquidation Process) Regulations, 2016 the Corporate Debtor will not be dissolved. In this part of sale, the entire  business, assets and liabilities, including all contracts, licenses, concessions, agreements, benefits, privileges, rights or interests of the Corporate Debtor will be transferred to the acquirer. The existing shares of the Corporate Debtor will not be transferred and shall be extinguished.


# 18. In the sale of "Business of Corporate Debtor as a going concern" under Regulation 32(f) of IBBI (Liquidation Process) Regulations, 2016, the entire business(s) along with assets and liabilities, including intangibles, will be transferred as a going concern to the acquirer, without transfer of the Corporate Debtor, and therefore, the Corporate Debtor will be dissolved. The existing shares will be extinguished. The remaining assets, other than those sold as part of business will be sold and the proceeds thereof will be used to meet the claims under Section 53 of IBC,2016


# 19. The Hon'ble NCLAT in the matter of M/s Shiv Shakti Inter Globe Exports Pvt. Ltd. Vs. KTC Foods Pvt. Ltd. Through Liquidator, Mr. Anup Kumar Singh & Anr. in Company Appeal (AT) (Insolvency) No.650 of 2020 has extended the 'clean slate' principle to going concern sale under liquidation. It has held in. para21 as follows;

  • # 21. Adverting to the contention of the Learned Counsel for the Appellant that the Adjudicating Authority has erred in denying the sale of the 'Corporate Debtor' as a 'going concern' to the Appellant without 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 Bijili 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 in the Liquidation stage, to aid the purchaser of the Company as a 'going concern' to start on a 'clean slate'. The Hon'ble Supreme Court in 'Ghanshyam Mishra & Sons Pvt. Ltd.' Vs. 'Edelweiss Asset Reconstruction Company Ltd. & Ors.', Civil Appeal No. 8129 of 2019 and in 'CoC of Essar Steel India Ltd.' Vs. 'Satish Gupta & Ors.' (2020) 8 SCC 531 has laid down the proposition that the purchaser of the Company even in the Liquidation stage cannot be burdened with past liabilities when it is not mentioned in the 'Sale Notice'.


# 20. Regulation 33(2)(c) of the IBBI (Liquidation Process) Regulations, 2016 gives the power to the Liquidator to sell the assets by means of the Private Sale, if the asset is sold at a price higher than the reserve at a price higher than the reserve price of a failed auction


# 21. In the present case, it is seen that the Liquidator has conducted a total of 6 e-auctions. The last reserve price was fixed at Rs.68 Crores. However, there was no bidder for the said amount. The Applicant, who is the successful purchaser of the assets of the Corporate Debtor, has given an offer for a sum of Rs.68.04 Crores, which was subsequently increased to a sum of Rs.70 Crores. It is also seen that the Applicant has paid a sum of Rs.68.04 Crores to the Liquidator as early as on 21.03.2023 and has undertaken to pay the remaining sum of Rs.1.96 Crore within a period of 7 days from the date of this order. Thus, by taking into consideration of the attendant facts and circumstances of the present case, the Application filed for Sale as a Going Concern by the Applicant deserves to be allowed.


# 22. The present Application has been filed under Regulation 32(e) of IBBI (Liquidation Process) Regulations, 2016 seeking approval for sale of the "Corporate Debtor as a going concern". Apart from the above, the Applicant has also sought for certain relief and concession, which is set out in para 16 of the Application. These relief are ordered as follows;


S. No. 

Reliefs/ Concessions Sought

Orders Thereon

Reliefs Under The Companies Act,2013

1.

Direct that the status of the Corporate Debtor in the records of the Registrar of Companies and on the website of the Corporate Debtor be reflected as "active" from the status of "liquidation".

Granted

2.

Permission to restructure the paid-up capital of the Corporate Debtor by extinguishing the existing paid- up capital and substituting it with the investment made by the applicant, in such manner as considered appropriate for the capital base of the Corporate Debtor.

Granted

3.

Direct that the change in shareholding of the Corporate Debtor in favour of the Applicant be implemented as per below:

a) Corporate Debtor to issue 18,00,000 (Eighteen Lakh only) fresh equity shares with a face value of Rs.10 each, aggregating to INR 1,80,00,000 to the Applicant and its nominees.

b) Except for the shares issued to the Applicant (and its nominees) by the Corporate Debtor, the entire issued share capital of the Corporate Debtor, including equity and preference shares and convertible instruments (whether pledged or not), held by shareholders of the CorporateDebtor, shallshall be entirely cancelled and extinguished, for a consideration equivalent to the amount, if any, to be received by the shareholders under Section 53 of the Code without any further approval from any creditor, shareholder, regulatory authority(ies) including the Registrar of Companies etc. The approval by this Adjudicating Authority shall be deemed to be due compliance with all the provisions of Applicable Law in this regard, and there shall be no requirement to add "and reduced" in the name of the Corporate Debtor.

c) Direct that pursuant to infusion of the Sale Consideration of INR 70 crores (Rupees Seventy Crores only) towards the acquisition of the Corporate Debtor under liquidation as a going concern sale (confirmed vide letter issued by the Liquidator), an amount of INR 18,00,000 be considered (for accounting purposes) as share application money towards allotment of fresh equity shares of the Corporate Debtor to the Applicant and the Applicant may be permitted to account for the balance Sale Consideration ofINR 69.82 crore (Rupees Sixty Nine Crore and Eighty Two Lakh only) as a Unsecured Term Loan granted by the Applicant to the Corporate Debtor or such other instrument as may be decided from time to time, with terms and conditions as mutually agreed between the Applicant and the Corporate Debtor.

Granted




Granted




Granted
















Granted

4.

To the extent any secretarial filings, corporate actions and compliances and/or any other actions, filings, intimations, etc. are required to be made in connection with the aforesaid, the Liquidator, shall be deemed to be fully authorized to act on behalf of the Corporate Debtor and to undertake all such actions. without prejudice to the foregoing, the Applicant may, if required and from time to time, seek necessary directions from the Adjudicating Authority in connection with actions to be undertaken or filings to be made with the ROC and/or any other statutory or regulatory authority in connection with matters contemplated herein.

Granted

5.

Direct that the Board of Directors of the Corporate Debtor be re-constituted and the existing Board of Directors be removed and the nominees of the Applicant be permitted to be appointed as Directors of the Corporate Debtor, and direct the Registrar of Companies to do all such acts, deeds, and things that are necessary to enable appointment of such individuals as directors of the Corporate Debtor either online or though back end mode, including filing of relevant returns a required by applicable laws. Further direct that the Registrar of Companies remove the names of all existing Directors and Key Managerial Personnel appearing on the master data of Ministry of Corporate Affair's website either online or through back-end mode.

Granted

6.

Direct that from the date of the Sale Certificate, all past liabilities, penalties, and any form of payment by way of late fees, damages, etc., which occurred or become due because of any non-compliance related to Companies Act, 1956/2013 and rules and regulations framed thereunder, till the date of the Sale Certificate shall stand extinguished.

Granted, in terms of Section 32A of IBC, 2016

RELIEFS UNDER INCOME TAX ACT 1961

7.

Direct that the sale of the Corporate Debtor to the Applicant in liquidation be treated in the same manner as a resolution plan approved under Section 31 of the Code (including but not limited to in respect of the operation of Section 31(1) and Section 32A of the Code) and all attendant benefits, privileges, and exemptions under various laws including but not limited to benefit of any tax holiday, benefit under Section 79(2)(c) of the Income Tax Act, 1961, exemption, deduction, carry forward of losses, unabsorbed depreciation of any prior years and set-off against the income arising in the exemption. future years in accordance with the taxation laws, as they are available to a resolution plan shall be available to this sale of Corporate Debtor to the Applicant under the liquidation process.

Granted, however the Applicant shall approach necessary authorities for exemption

8. 

Direct the Corporate Debtor and the Applicant shall not be liable for any Taxes and shall be granted an exemption from all Taxes, levies, fees, transfer charges, transfer premiums, surcharges, and any such other levies, that arise from or relate to the sale of Corporate Debtor to the Applicant, since payment of these amounts may make the sale unviable. Any reference to Taxes shall include any transfer premiums or charges, change of ownership/ Control charges payable in connection with the Acquisition and the consequent change in ownership and Control of the Corporate Debtor. Further, any withholding tax, income-tax, and MAT liability or consequences (including interest, fine, penalty, etc.) on the Corporate Debtor, the Applicant, and its shareholders on account of the sale of Corporate Debtor to the Applicant, write back/write off of liabilities in the books of accounts of the Corporate Debtor and revaluation of assets of the Corporate Debtor to their realisable value pursuant to the sale of the Corporate Debtor, including but not limited to liabilities if any under Section 28, Section 41, Section 56, Section 43, Section 28, Section 115JB, Section 79, Section 45, Section 269SS, Section 269T and Section 271 E of the Income-tax Act, 1961 will be written off without any impact on brought forward tax and book loss/ depreciation, pursuant to the acquisition.

This is for the appropriate authorities to consider, keeping in view of Section 32A of IBC, 2016

9. 

Direct that all the assessments, proceedings, demand notices, penalty proceedings, show-cause notices and appeals, whether completed or uncompleted, initiated or not initiated with respect to Income Tax, Central Sales Tax, GST, VAT, CENVAT, MODVAT, Customs and any other applicable Taxes under any applicable laws, shall be deemed to have been completed and closed and the Applicant and/or the Corporate Debtor shall not be liable to pay any taxes or interest or penalty or any prosecution arising out of such assessments or adjust its taxable income or brought forward losses under Income Tax Act, 1961, pertaining to any period prior to the date of the Sale Certificate including but not limited to claim arising out of any notice or order received by Corporate Debtor pertaining to any prior period having an impact on the taxable income, brought forward losses and/or Tax payable by the Corporate Debtor on account of any reason including non-compliances in relation to filings of Tax returns, non-deduction of TDS, underreporting or misreporting or non-reporting of income.


Further, all claims (whether contingent or crystallized, known or unknown, filed or not filed) of the Governmental Authorities in relation to all Taxes/interest/ penalty which the Corporate Debtor was or may be liable to pay (including with respect to financial years under assessment), all deductions and all withholding Taxes on any payment, as required under applicable law and pertaining to the past period shall stand extinguished and any assessment, re- assessment, revision, or other proceedings under the provisions of the applicable laws relating to Taxes would be deemed to be barred in relation to any period prior to the date of the Sale Certificate, by virtue of an order of this Hon'ble Adjudicating Authority;

a) Any non-compliance in relation to filing of Income-tax Return under Section 139 of Income- tax Act, 1961 including any other forms as required to e filed by Corporate Debtor under provisions of Income-tax Act, 1961

b) Non-deduction of TDS under provisions of Income Tax Act, 1961

c) Any transaction entered by Corporate Debtor having an impact on taxable income, brought forward losses and/or Tax payable/ Tax refund of such entity for any period prior to Transfer Date and any underreporting or misreporting in relation to the same.

d) Any non-recording/reporting of income by Corporate Debtor in its books of account.

e) Any tax losses which may not be available due to tax returns not filed by the Corporate Debtor or in case of erroneous filed for which the statutory due date for rectification has lapsed for the Corporate Debtor as per the provisions of Income Tax Act, 1961 should also be available to the Bidder.

This is for the appropriate authorities to consider, keeping in view of Section 32A of IBC, 2016


















Granted, in terms of

Section 32A of IBC, 2016













Granted





Granted


Granted





Granted


Granted


10.

Direct that the Corporate Debtor shall be entitled to all the assets including all benefits with respect to CENVAT, MODVAT, Input Tax Credit of various taxes appropriate including but not limited to central excise, service tax, sales tax, Goods and Service Tax, Custom Duty or cess or by whatever name known, available as balance in its financial statements which pertains to the transactions of the Corporate Debtor for the period prior to the date of the Sale Certificate. Any liability relating to a prior period arising out of or relating to any such benefit/asset accruing or to be accrued to the Corporate Debtor, will be treated as settled under the Liquidation and no additional payment shall be made or be payable with respect to such liability by the Corporate Debtor and/or the Applicant

This is for the appropriate authorities to consider, keeping in view of Section 32A of IBC, 2016

11.

Direct that on and from the date of the Sale Certificate,respective statutory authorities shall deemed to have allowed carry forward losses and depreciation as per the provision of Section 79 of the Income Tax Act, 1961 or such other applicable provisions; allowed total loss brought forward (including unabsorbed depreciation) to be reduced from the book profit for the purposes of levy of MAT under Section 115JB of the Income Tax Act, 1961;

This is for the appropriate authorities to consider, keeping in view of Section 32A of IBC, 2016

12.

Direct that the Corporate Debtor shall not be liable for any non- compliance under the Income-tax Act, 1961 including but not limited to the filing of Income-Tax Returns under Section 139 of the Income-tax Act, 1961 including any other forms as required to be filed by the Corporate Debtor under the provisions of the Income-Tax Act, 1961.

Granted

13.

Direct that the Corporate Debtor/Applicant shall be allowed to carry forward Income-tax assets (MAT credit, TDS Credit) available as per the provisions of the Income Tax Act, 1961 and utilize the same appropriately.

This is for the appropriate authorities to consider,keeping in view of Section 32A of IBC, 2016

14.

Direct that the requirement of obtaining a no objection certificate under section 281 of the Income Tax Act, 1961 and provisions of taking over its predecessor's Tax liability under section 170 of the Income Tax Act, 1961 shall not be applicable. Further, the transaction shall not be treated as void under section 281 of the Income Tax Act, 1961 for any claims in respect of Tax or any other sum payable by the Corporate Debtor or any shareholder of the Corporate Debtor. Similarly, any requirements to obtain waivers from any Tax Authorities including in terms of Section 79 and Section 115JB and any other provision of the Income Tax Act, 1961 is deemed to have been granted.

This is for the appropriate authorities to consider, keeping in view of Section 32A of IBC, 2016

RELIEFS UNDER THE INSOLVENCY & BANKRUPTCY CODE 2016

15.

Direct that all claims or demands by any person against the Corporate Debtor or any liabilities or obligations or costs or expenses owed or payable by the Corporate debtor to any person, including liabilities arising from corporate insolvency resolution process costs, liquidation costs, financial or operational debt, contractual liabilities, statutory liabilities, employee or workmen liabilities, claims of any Government authority or department, Tax liabilities, penalties, claims of any shareholders, whether direct or indirect, admitted or not, due or contingent, asserted or un- asserted, crystallized or un-crystallized, known or unknown, secured or unsecured, disputed or undisputed, in relation to any period prior to the date of the Sale Certificate, whether admitted by the Liquidator or not in full or part, shall be settled only and solely from the proceeds of the liquidation estate (being the Sale Consideration) in accordance with the Code. Consequently, upon distribution by the Liquidator to the stakeholders under Section 53 of the Code, all such claims/ liabilities/ obligations shall stand permanently extinguished without requirement of paying any additional amounts to the stakeholders of the Corporate Debtor.

Further, in case there is any pending gratuity or provident fund liability (including interest and damages) payable to employees, workmen or provident fund authority and in case the existing provident and gratuity fund (if any) of the Corporate Debtor is not sufficient to pay such liabilities in full, such liabilities will be discharged by the Liquidator from the Sale Consideration and the Applicant shall not be required to pay any additional amounts towards such liabilities (over and above the Sale Consideration paid by it to the Liquidator);

Granted in terms of Section 32A of IBC, 2016

16.

Direct that claims of any Government Authority or TANGEDCO, including for Electricity Duty/Electricity Tax, Open Access Charges, Wheeling Charges or any other Statutory Dues, pertaining to period prior to the date of the Sale Certificate shall stand settled and extinguished in accordance with Section 53 of the Code and no additional amounts shall be payable by the Corporate Debtor or the Applicant towards such dues;

Granted in terms of Section 32A of IBC, 2016

17.

Direct the Government authorities to renew without demur upon suitable application being made, expired statutory licenses like Hotel Establishment license, Fire License, Bar License, Sanitary license, Food Safety license and any other licenses or permissions or entitlements which were not renewed in respect of the both Hotels and Convention Centre/assets of the CD upon payment of requisite fees or charges but without making any demand for dues pertaining to the period prior to the date of Sale Certificate.

This is for the appropriate authorities to consider, keeping in view of the clean slate principles

18.

Direct that on and from the date of the Sale Certificate, the Liquidator (and not the Corporate Debtor or the Applicant) shall be responsible for making distributions to the existing stakeholders of the Corporate Debtor in accordance with law (including under Section 53 of the Code) and no claim, liability, costs, expenses, penalties interest shall be recoverable in any form or manner whatsoever from the Corporate Debtor/Applicant or their successors or assignees or the new management and the payment of Sale Consideration by the Applicant shall be considered as a full and final settlement towards all such claims, liabilities, costs, expenses, interest etc. by the Applicant. Further, the Liquidator (and not the Corporate Debtor or the Applicant) shall be responsible for classification of any creditor (including Tax authority) as secured or unsecured and all such creditors shall be paid by the Liquidator from the Sale Consideration and the Corporate Debtor or the Applicant shall not be liable to make any additional payments for distribution towards any unsecured or secured creditor, including if subsequently an unsecured creditor is classified as a secured creditor.

Granted

19.

Direct that on and from the date of the Sale Certificate, all claims or demands by any person (including financial and operational creditors, employees and workmen, lessors and contractual counterparties, Government and Tax authorities, municipal, land and revenue authorities) against any assets, owned by or leased to the Corporate Debtor, including immovable property and any liabilities or obligations owed or payable by the Corporate Debtor in respect of such assets to any person, including contractual liabilities, liability to the Government (including but not limited to property taxes) whether direct or indirect, whether admitted or not, due or contingent, asserted or un- asserted, crystallized or un- crystallized, known or unknown, secured or unsecured, disputed or undisputed, in relation to any period prior to the Sale Certificate, whether admitted by the Liquidator or not in full or part, shall stand permanently extinguished and no such claim, liability etc. shall be recoverable in any form or manner whatsoever from the Corporate Debtor/Applicant or their successors or assignees and the payment of sale consideration by the Applicant is a full and final settlement towards such claims, liabilities etc.

Granted

20.

Direct that on and from the date of the Sale Certificate, the assets of the Corporate Debtor including registered as well as unregistered IP assets shall continue to vest in the Corporate Debtor free from any security interest, encumbrance, attachment, claim, counter claim, charges, lien, mortgages and encumbrances of any creditor and free from any liability that may arise under any pending proceedings or litigations, without payment of any additional consideration and that the creditors holding any charges, lien, mortgages and encumbrances on the assets of the Corporate Debtor shall duly return all documents relating to such charges/lien/mortgage or encumbrances and co- operate with the Corporate Debtor/ Applicant in removal of any such charges/ attachment/ encumbrances from the public registries/ Registrar of Companies. Further, if any assets of the Corporate Debtor are under attachment, the same shall stand released from the date of the Sale Certificate and thecharges registered with concerned ROC in respect of encumbrances over the assets of the Corporate Debtor for period prior to date of issue of Sale Certificate shall stand fully discharged, extinguished and/or satisfied.

Granted

21.

Direct that all demands, inquiries, investigations, assessments, notices, causes of action, suits, claims, disputes, litigations, arbitration, or other judicial, regulatory or administrative proceedings against, or in relation to, or in connection with the Corporate Debtor or its assets or the affairs of the Corporate Debtor (other than against the erstwhile promoters or former members of the management of the Corporate Debtor), pending or threatened, present or future, in relation any period prior to the Sale Certificate shall not be continued and/or instituted in future against the Corporate Debtor/Applicant or their successors or assignees or the new management and all such demands/inquiries/investigations/ claims/proceedings etc. shall stand extinguished qua the Corporate Debtor and its assets to enable the Applicant to acquire the Corporate Debtor on a clean slate basis. Further, in the event of any attachment order passed by any Governmental Authority in relation of assets of the Corporate Debtor (including assets that are the subject matter of the pending legal proceedings) shall stand released from such attachment and the Applicant, Corporate Debtor (or its assets) shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto; All liabilities and guarantees extended by the Corporate Debtor whether monetary or non-monetary, statutory, crystallized or uncrystallized, claimed or not claimed, disputed or undisputed, confirmed or contingent or due or future due, decrees obtained for satisfaction of debt and all such obligations of the Corporate Debtor shall stand extinguished and discharged in full as against the Corporate Debtor.

All pending litigations as against the Corporate debtor before any court and/or tribunal and/or Arbitration and/or any Quasi-Judicial authority shall ipso facto stand terminated without passing of any order in any manner adverse to the interest of the Corporate Debtor/Applicant and will no longer be permissible to be prosecuted or enforced against the Corporate Debtor or the Applicant.

Any and all judgment, decree, order passed by any court and/or tribunal and/or Arbitration and/or any Quasi-Judicial authority shall ipso facto stand extinguished and shall become incapable of execution as against the Corporate Debtor/ Applicant. The Corporate Debtor/ Applicant shall not be answerable to any such judgment, decree or order.

All proceedings initiated against the Corporate Debtor for recovery of monies by all or any classes of creditors including the secured creditors and these who did not file their claims with the liquidator shall stand, in respect of period up to the date of issue of Sale Certificate shall stand dismissed and extinguished.

Granted

22.

Direct that any non-compliance of provisions of any laws, rules, regulations, directions, notifications, circulars, guidelines, policies, licenses, approvals, consents or permissions as applicable to the Corporate Debtor including but not limited to any liability arising out of non-compliance under the provisions of the Companies Act, 1956 and the Companies Act, 2013, Employees Provident Fund and Miscellaneous Provisions Act, 1952, Employees State Insurance Act, 1948, Securities Exchange Board of India Act, 1992 Foreign Exchange Management Act, 1999 and under various labour legislations including liability in respect of employee welfare dues such as gratuity, leave encashment, resettlement, retrenchment, rehabilitation obligations if any etc., prior to the Sale Certificate shall be settled only from the Sale Consideration and no amounts shall be payable by the Corporate Debtor/Applicant and no proceedings in respect thereof shall be undertaken in future against the Corporate Debtor/Applicant or their successors or assignees. Further, the Corporate Debtor/ Applicant shall have immunity in respect of all past offences of the Corporate Debtor in terms of Section 32A of the Code; The liabilities if any, arising out of non- compliance of provisions of any laws, rules, regulations, directions, notifications, circulars, guidelines, policies, approvals, consents or permissions prior to effective date shall stand extinguished against the Corporate Debtor or the applicant herein. The Corporate Debtor or applicant herein shall not be held responsible/liable for any past liabilities of the Corporate Debtor in enquiries, investigations, assessments, notices, criminal cases, civil cases, claims, disputes, litigations, arbitrations or other judicial, regulator, administrative proceedings or in relation to or in connection with the Corporate Debtor up to the date of Sale Certificate,

Granted in terms of Section 32A of IBC, 2016

23.

Direct that any claim made under any existing bank guarantee or letter of credit issued by banks to any third party based on the applications made by the Corporate Debtor or any guarantee or indemnity or counter indemnity issued by the Corporate Debtor to any third party including to any bank for issuance of bank guarantees or letter of credit and all liability of the Corporate Debtor under such guarantees/ indemnities/counter indemnities shall stand extinguished on and from the date of the Sale Certificate and that the beneficiaries of such guarantees/ indemnity/ counter- indemnity, including the banks issuing bank guarantee shall not have any recourse against the Corporate Debtor and/or the Applicant in future and the payment of sale consideration by the Applicant is a full and final settlement towards all such claims, liabilities etc,

Granted

24. 

Direct that no right of subrogation shall be available to third parties/ existing promoters/ shareholders/guarantors of the Corporate Debtor under any guarantees/ indemnities/ contractual comforts/collateral provided by such parties to any creditor of the Corporate Debtor and all such subrogation rights shall stand extinguished.

Granted

25. 

Direct that all subsisting consents, licenses, approvals, rights, entitlements, benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled to shall, notwithstanding any provision to the contrary in their terms and irrespective of the commencement of the insolvency/liquidation keeping in proceedings under the Code, in relation to the Corporate Debtor be deemed to continue without disruption, for the benefit of the Corporate Debtor/Applicant. Direct that the relevant State Pollution Control Boards shall approve renewal of the consents to establish/ operate obtained by the Company under applicable provisions of the Water (Prevention and Control of Pollution) Act, 1974, Air (Prevention and Control of Pollution) Act, 1981, in accordance with law. Direct that the Corporate Debtor shall be entitled to utilities such as water, gas and electricity from the relevant suppliers/ departments in accordance with law, without such suppliers/ departments insisting on payment of past dues to them.

This is for the appropriate authorities to consider, view of the clean slate principles Enshrined under IBC, 2016

26. 

Direct that all claims that the Corporate Debtor may have against third parties and related parties and all receivables of the Corporate Debtor, including without limitation, in relation to any litigations/proceedings initiated by the Corporate Debtor and/or for the benefit of the Corporate Debtor shall continue to remain recoverable by the Corporate Debtor in accordance with law and in case of any such claim/recovery in future, the benefits of the same shall be solely available to the Corporate Debtor;

Granted

27.

Direct that the Corporate Debtor/Applicant shall be solely entitled to all the assets including intellectual property assets, future cash flows and receivables of the Corporate Debtor and no such future cash flows/ receivables shall be available for distribution to the stakeholders of the Corporate Debtor as on the date of the Sale Certificate, except for recoveries/realisations by the Liquidator/stakeholders pursuant to any pending application(s) under Section 43, 45, 49, 50 or 66 of the Code, which proceeds shall be available for distribution as per the Code to the stakeholders of the Corporate Debtor, subject however to the cost of such proceedings being borne by the Liquidator/ stakeholders and not the Applicant or the Corporate Debtor;

Granted

28.

Direct that all notifications with regards to defaults filed with Credit Information Bureau (India) Limited, any information utility, RBI or any other regulatory authority for and on account of Corporate Debtor shall be withdrawn by the respective financial creditors and any invocation or enforcement action already undertaken before Debt Recovery Tribunal ("DRT") against the Corporate Debtor and any of its assets shall stand automatically revoked and cancelled and deemed full and void and financial creditors shall take requisite action to ensure that all such pending matters before the DRT shall stand withdrawn. Further, all accounts of the Corporate Debtor shall stand regularized and their asset classification shall be "standard" for the purposes of all Applicable Laws.

Granted

29. 

Direct that the Corporate Debtor/ Applicant would not be liable for any disability of the Corporate Debtor or Applicant in terms of Section 29A of Code for default of existing associates or subsidiaries of the Corporate Debtor;

Granted

30.

Direct that the Corporate Debtor/Applicant shall be at liberty to approach this Hon'ble Adjudicating authority to address any difficulties faced with respect to implementation in taking over of the Corporate Debtor in liquidation and in relation to this Sale of the CD as a going concern.

Granted

DIRECTIONS TO LIQUIDATOR

31.

Direct the Liquidator to, immediately,


a) write back all the liabilities of the Corporate Debtor, including creditors, term loans, working capital loans, tax liabilities, other statutory liabilities, etc. which are not payable and reflect transition of the total liabilities at the amount of the consideration (as reduced by the amount of insolvency resolution process costs and the liquidation costs) determined in the auction be de-recognised in the books of accounts of the Corporate Debtor by credit to the Reserves & Surplus;

b) The carrying value of the assets shall be restated at their realizable value (simultaneous to the above restructuring of liabilities) including but not limited to the following:

  • i. The trade receivables to the extent not receivable shall be written off to the Profit & Loss Account as bad debts.

  • ii. The other current assets (including the Inventory and other receivables) shall be analyzed to determine the assets that are not recoverable or the realizable value of such assets shall be determined and the difference between the carrying value and realizable value, shall be provided for/ written off to the Profit & Loss Account.

  • iii. The realizable value of the Investments & Long-term loan advances to be estimated and the difference between the carrying value and realizable value, shall be provided for/written off in the Profit & Loss Account..

  • iv. The residual estimated useful life of the Fixed Assets shall be evaluated and revaluation of the fixed assets shall be undertaken.

c) The carrying amount of the equity, debts, loans, liabilities, dues to creditors (including related parties) and provisions for liabilities of any nature whatsoever which are extinguished, cancelled, waived or remitted pursuant to this application shall be de-recognised in the books of accounts of the Corporate Debtor by credit to 'Reserves & Surplus' in the Balance Sheet of the Corporate Debtor.

d) The Reserve & Surplus balance (being the amount credited pursuant to clause above) along with the balances existing in securities premium reserve in aggregate will be adjusted against the debit balance of Profit and Loss account (including the amount debited pursuant to write-off of assets pursuant to clause above).

e) make requisite accounting entries for smooth transmission - the accounting treatment set out in this application shall be an integral part of the application;

f) prepare and file the said financial statements with the relevant regulators such as Registrar of Companies, Income Tax Authorities etc;

g) complete all compliances in respect of the Corporate Debtor for the period up to the Transfer Date including filing of necessary documents and returns with the Registrar of Companies, Income Tax Authorities,any other Government Authorities;


cooperate with, and provide all necessary support and assistance to the Applicant, including but not limited to handing over of the original copies of the title deeds and other relevant documents of the land and other assets owned by the Corporate Debtor, perfecting/ amending/modifying/creating the land records in relation to all parcels of land, the immovable properties and assets, belonging to the Corporate Debtor in favour of the Corporate Debtor;

The Liquidator is directed to ensure smooth transition of records of the Corporate Debtor to the Applicant.


# 23. Thus, the Application for sale of "Corporate Debtor as a going concern" stands allowed. The Liquidator, after distributing the proceeds to the stakeholders as per Section 53 of IBC, 2016 may file an Application under Regulation 45(3) of the IBBI (Liquidation Process) Regulations, 2016 for closure of Liquidation process.


# 24. With the above said directions, this Application stands allowed.


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