Successful Auction Purchaser Not Liable for Unfiled Pre-Liquidation Claims: NCLAT Rules in Purchaser’s Favour
- REEDLAW
- 22 hours ago
- 3 min read
The National Company Law Appellate Tribunal (NCLAT) held that a successful auction purchaser is not liable for claims that existed prior to the liquidation commencement date but were never filed, and accordingly ruled in favour of the purchaser.
On 10 July 2025, the National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating a batch of two company appeals, held that in liquidation proceedings under the IBC, any claim against the corporate debtor that existed as on the liquidation commencement date but was not filed cannot survive after the distribution of assets by the Liquidator. The Tribunal observed that the Adjudicating Authority ought to have expressly clarified that such unfiled claims also stand extinguished.
The National Company Law Appellate Tribunal (NCLAT), while adjudicating two connected appeals, addressed a specific issue arising out of the liquidation proceedings of M/s Spark Green Energy (Satara) Ltd. The appeals challenged the order dated 26 November 2024 passed by the National Company Law Tribunal (NCLT), Mumbai Bench, in IA No. 1626 of 2024 and IA No. 3067 of 2024. The appellant, who had emerged as the successful auction purchaser in an e-auction conducted on 16 October 2023, had fully paid the purchase price of ₹14.50 crores. A sale certificate was issued on 25 January 2024, and physical possession of the land, building, and plant was duly handed over to the appellant by the Liquidator. The sale proceeds were subsequently distributed to the secured creditors.
Both the appellant and the Liquidator had filed separate applications before the NCLT seeking various reliefs and concessions. While the Adjudicating Authority granted certain concessions and disposed of both applications through a common order, the appellant challenged only a specific observation made in paragraph 28.10 of the impugned order. The grievance pertained to the NCLT’s refusal to issue a general direction concerning claims that existed as on the liquidation commencement date but had not been filed. The appellant contended that while the Adjudicating Authority correctly held that claims filed and considered under Section 53 of the Insolvency and Bankruptcy Code (IBC) would not survive thereafter, a similar clarification ought to have been issued in respect of unfiled claims existing on the same date.
During the hearing, counsel for the Liquidator supported the appellant’s submission. Upon considering the arguments and the applicable regulatory framework under the IBBI Liquidation Regulations, 2016, particularly Regulation 16(2), the NCLAT held that all claims against the corporate debtor that existed as on the liquidation commencement date were required to be filed and dealt with in accordance with Section 53 of the Code. The Tribunal found merit in the appellant’s contention that such unfiled claims, too, should not survive once the sale is completed and the asset distribution concludes.
The NCLAT observed that the NCLT’s general refusal to grant relief in paragraph 28.10 was inconsistent with the statutory scheme and held that the said paragraph required modification. Accordingly, the Tribunal accepted the appellant’s argument and clarified that no claim existing as on the liquidation commencement date, but not filed, shall survive after the distribution of assets by the Liquidator. The impugned order was thus modified to that extent, and both appeals were disposed of.
Ms. Aakashi Lodha and Mr. Rohit Gupta, Advocates, represented the Appellant.
Mr. Prakhar Tandon and Mr. Agam H. Maloo, Advocates, appeared for the Liquidator.
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