Corporate Debtor Cannot Be Sold As Going Concern After Omission Of Enabling Liquidation Provisions: NCLT Kolkata

The National Company Law Tribunal (NCLT), Kolkata Bench, has recently held that after the omission of the provisions permitting going-concern sales under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, it cannot allow the sale of a corporate debtor as a going concern or as a continuing juristic entity during liquidation.

The ruling applies where the process for such a sale had not commenced before the amendments came into force.

A bench of Judicial Member Bidisha Banerjee and Technical Member Siddharth Mishra was dealing with an application filed by the liquidator of Dooteriah & Kalej Valley Tea Private Limited. The liquidator sought permission to sell the company as a going concern. The proposed sale was on an “as is where is”, “as is what is” and “without recourse” basis.

Explaining why the relief could not be granted, the bench observed:

“The omission of Regulation 32(e) removes the mode of sale as going concern. The Tribunal cannot approve a sale under a provision that stands omitted. The prayer for confirmation of sale as going concern under Regulation 32(e) is not maintainable.”

The company operates tea estates and tea factories in Darjeeling. Before the Tribunal, the liquidator argued that selling the assets individually would lead to substantial erosion of value. According to the application, the tea estates function as an integrated enterprise. Preserving that structure would maximise value for stakeholders.

The liquidator relied on the powers available for beneficial liquidation. He also relied on the objectives of value maximisation and preservation of the corporate debtor. It was further contended that the deletion of the earlier regulatory framework governing going-concern sales did not curtail the Tribunal's jurisdiction to pass appropriate orders in aid of liquidation.

The application also referred to resolutions passed by the Stakeholders' Consultation Committee. The committee had supported approaching the Tribunal for permission to undertake a going-concern sale.

The bench pointed out that the October 14, 2025 amendments removed the provisions that previously enabled the sale of a corporate debtor or its business as a going concern. In the Tribunal's view, the liquidator can now proceed only through the modes of sale that continue to find place in Regulation 32.

The bench found that the liquidation process commenced on October 17, 2025. That was after the amendments had taken effect. It further recorded that no auction under the erstwhile going-concern sale provision had been notified or conducted. No sale deed had been executed. No successful bidder had been declared.

Addressing the reliance placed on the Stakeholders' Consultation Committee's approval, the Bench observed:

“The Stakeholders Consultation Committee approval under the omitted Regulation does not bind the Adjudicating Authority.”

The Tribunal held that the amendments applied to the case because liquidation by way of a going-concern sale had not commenced before the regulatory changes came into force. It concluded that a sale could not be approved under a provision that no longer formed part of the regulations.

The liquidator had also sought an alternative direction. He requested permission to sell all assets, rights and privileges of the company together with its juristic and legal identity. The Tribunal declined that request as well.

Rejecting the alternative prayer, the bench observed:

“Grant of such relief would amount to indirectly restoring a mode of sale consciously omitted by the Insolvency and Bankruptcy Board of India with effect from 14.10.2025.”

The tribunal nevertheless clarified that the liquidator remains empowered to realise and sell the assets of the company in the manner permitted under the existing framework. It held that there was no legal impediment to exploring a sale of the company's assets, rights, interests, licences, permits, approvals, contractual rights, actionable claims, and other properties as a composite asset package.

The bench also noted that a slump sale of assets continues to be permissible under the present version of Regulation 32. Any purchaser, however, would acquire only those assets and rights that are legally transferable. Any statutory licence, approval, leasehold right, concession, or permission would remain subject to the applicable legal framework and the approval of the competent authority wherever required.

The tribunal further clarified that its order should not be construed as conferring any automatic right of renewal, extension, or continuation of a lease, licence, permit, or statutory approval.

Accordingly, the tribunal rejected the request to sell or transfer the corporate debtor as a going concern. It also rejected the request to transfer the company as a continuing juristic entity. The liquidator was, however, left at liberty to pursue any mode of asset sale presently permissible under the liquidation framework.