Successful Bidder in Liquidation Entitled Only to Operational Reliefs; NCLAT Delhi Denies Excessive Statutory and Tax Concessions
- REEDLAW
- 9 hours ago
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REEDLAW Legal News Network reports: In a judgment delivered today, 1-09-2025, the National Company Law Appellate Tribunal (NCLAT), Delhi, clarified in a key ruling that a successful bidder in a liquidation e-auction is entitled only to the operational reliefs necessary to run the corporate debtor as a going concern. The Tribunal emphasised that excessive statutory, tax, or regulatory concessions cannot be claimed solely by virtue of acquiring the corporate debtor, reinforcing the principle of limited operational entitlements in liquidation scenarios.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member), while adjudicating a Company Appeal, emphasised that a successful bidder in a liquidation e-auction is entitled strictly to reliefs essential for operating the corporate debtor. The Tribunal clarified that additional or general statutory, tax, or regulatory benefits cannot be granted merely because the bidder acquires the corporate debtor, thereby reinforcing the principle of limited operational entitlements in liquidation scenarios.
The NCLAT, Principal Bench, dismissed the appeal filed by the Successful Bidder challenging the order dated 09.05.2025 passed by the Adjudicating Authority (NCLT), Mumbai Bench, Court V. The Appellant had sought multiple reliefs and concessions under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 and Rule 11 of the NCLT Rules, 2016, including transfer of ownership of M/s Gajanan Solvex Limited, operational flexibility, and various statutory and tax-related benefits. The Adjudicating Authority had granted several reliefs, but certain prayers, including extensive tax and statutory concessions, were either not granted or allowed only with the liberty to apply to relevant authorities, prompting the filing of the present appeal.
The facts indicated that the State Bank of India initiated CIRP proceedings under Section 7 of the IBC against the Corporate Debtor, leading to its liquidation on 01.03.2023. The liquidator conducted an e-auction, and the Appellant emerged as the highest bidder for Rs. 8.91 crore. The Sale Certificate was issued on 24.09.2024. Subsequently, the Appellant filed IA No. 1368 of 2025 seeking various reliefs to manage the Corporate Debtor on a “going concern” basis. The Adjudicating Authority granted 22 out of 40 requested reliefs, allowing the Appellant to operate the business effectively, but refused or limited certain wide-ranging and general claims, particularly those covering tax exemptions, governmental waivers, and other statutory benefits.
The Tribunal noted that the reliefs not granted, including those under Item Nos. 11, 13, and others, were excessive, unsubstantiated, and beyond the statutory ambit of the Successful Bidder’s entitlement under the IBC. The Appellant’s reliance on previous NCLT orders, including Venus Rolling Mills Pvt. Ltd., was examined, and it was observed that even in those matters, several similar prayers were not granted, and bidders were permitted to approach the concerned authorities. The Tribunal emphasised that the Adjudicating Authority had provided substantial relief necessary for the Appellant to run the Corporate Debtor as a going concern and that refusal of certain extensive or general statutory benefits did not constitute an error of law.
The NCLAT concluded that the Adjudicating Authority had exercised due discretion in granting essential operational reliefs while appropriately refusing or conditioning unmerited claims. No statutory entitlement existed for the Appellant to claim all the reliefs sought. Accordingly, the appeal was dismissed, and the Appellant was not entitled to any further relief beyond those already granted.
Ms. Anjali Sharma, Mr. Thanglunkin and Mr. Hiaikhuanlung, Advocates, represented the Appellant.
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