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

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

• • Kunwer Sachdev v. Su-Kam Power Systems Ltd. [2024] 162 taxmann.com 328 (NCLAT -New Delhi) (para 2) affirmed.