Auction Sale of Corporate Debtor as Going Concern in Compliance With Liquidation Norms Was Rightly Approved by NCLAT | SC

  • Blog|News|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 13 May, 2024

Recent Posts

News, Blog, Account & Audit

Classification and Disclosure of Late Payment Interest in Financial Statements

Blog, News, GST & Customs

Appellate Authority Can’t Dismiss an Appeal on Maintainability Grounds If Alternative Remedy Has Been Directed by the Court | HC

Latest from Taxmann

Auction Sale of Corporate Debtor

Case Details: Kunwer Sachdev v. Su-Kam Power Systems Ltd. - [2024] 162 taxmann.com 329 (SC)

Judiciary and Counsel Details

    • Dr. Dhananjaya Y. Chandrachud, CJI., J.B. Pardiwala & Manoj Misra, JJ.
    • Siddharth Yadav, Sr. Adv. Apoorv Agarwal, Aparna B. Iyer, Ms Kanishka, Advs. & Vaibhav Manu Srivastava, AOR for the Petitioner.
    • Neeraj Kishan Kaul, Sr. Adv. Bani Brar Rustomkhan, Toshiv Goyal, Ashay Kaushik, Ms Misha, Nikhil Mathur, Advs. Kaushik Laik & S.S. Shroff, AOR’s for the Respondent.

Facts of the Case

In the instant case, the Adjudicating Authority (NCLT) passed a liquidation order against the corporate debtor and appointed a liquidator. Pursuant to the liquidation order, the liquidator invited a Scheme of compromise/arrangement (scheme) u/s 230 of the Companies Act, 2013.

The liquidator, via an e-mail, informed that the appellant was ineligible to submit the scheme of compromise/arrangement in terms of section 230 of the Companies Act. The appellant filed an application seeking to participate in Compromise/Arrangement proceedings under sections 230 and 232 of the Companies Act, 2013.

The NCLT vide order held that the appellant was ineligible to submit a resolution plan in terms of section 29A(h) of the IBC and, thus, could not apply for compromise/arrangement under section 230-232 of the Companies Act, 2013.

Accordingly, the liquidator filed an application before the NCLT seeking approval of the highest bid received in liquidation proceedings. Subsequently, the appellant filed an application before the NCLT seeking an order for the appointment of an ‘Independent Forensic Auditor’ to conduct a forensic audit to analyse the reduction of the value of assets of the corporate debtor from the date of commencement of insolvency till the date of filing of the said application.

However, the NCLT allowed an application filed by the liquidator approving the acquisition plan of the corporate debtor and dismissed the application filed by the appellant. The appellant challenged the NCLT’s order approving the auction sale of the corporate debtor, arguing that the successful bidder had not deposed the bid amount within the stipulated time and alleging undue benefit to respondents.

The NCLAT upheld the NCLT’s decision, citing compliance with Liquidation Regulations and timely deposit of the bid amount by the successful bidder.

Supreme Court Held

The Supreme Court held that there was no reason to interfere with the NCLAT’s order. Therefore, the impugned order passed by the NCLAT did not commit any error in approving the auction of the corporate debtor as a going concern in favour of Respondent Nos. 5 to 8, and the same was to be upheld.

List of Cases Reviewed

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied