NCLT Ahmedabad Bars Revival Of Going-Concern Sale After 2025 IBBI Regulation Changes

The National Company Law Tribunal (NCLT), Ahmedabad, has ruled that a proposed sale of a Corporate Debtor as a going concern cannot be continued after the October 2025 changes to the liquidation regulations merely because an auction notice had been issued before the amendment.

A division bench comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma passed the ruling. The court observed that “no auction was concluded, no successful bidder emerged, and no sale consideration was received” after the earlier auction notice.

The case arose from insolvency proceedings involving Cupid Estatecon Private Limited. Wellworth Apparels Private Limited, the sole financial creditor, had filed the Section 7 application against the company.

The Corporate Insolvency Resolution Process (CIRP) commenced on April 16, 2024. No resolution plan was received, following which the court ordered liquidation on October 3, 2024.

During liquidation, the liquidator issued an e-auction notice on May 8, 2025, proposing to sell Cupid Estatecon as a going concern. The reserve price was ₹18 lakh, and the auction was scheduled for June 11, 2025.

The proposed auction did not culminate in a completed sale, successful bid or realisation of sale consideration.

A going-concern sale refers to selling a company or its business in a manner that allows the business to continue operating, instead of breaking up and selling its assets separately.

The dispute arose after the IBBI (Liquidation Process) (Second Amendment) Regulations, 2025 were notified on October 14, 2025. The amendment omitted Regulations 31A(1)(f), 32(e), 32(f) and 32A.

The court observed that, following these changes, “sale of the Corporate Debtor or its business as a going concern is no longer prescribed as a mode of sale in the liquidation framework applicable to the present exercise.”

Wellworth Apparels, the sole member of the Stakeholders Consultation Committee (SCC), argued that the sale process had already commenced when the auction notice was published on May 8, 2025. It contended that the October 2025 amendment was prospective and therefore could not affect a process that had commenced before the amendment.

The court did not accept the contention. It noted that the earlier notice had not resulted in a completed auction, successful bidder or receipt of sale consideration. It further found that Cupid Estatecon had “no subsisting business or operational activity” and was not functioning as a going concern.

The court also noted that no continuing business undertaking had been shown that could be transferred and operated as a going concern.

Wellworth Apparels relied on CIT v. Vatika Township (P) Ltd., Hitendra Vishnu Thakur v. State of Maharashtra, Shyam Sunder v. Ram Kumar and Govind Das v. ITO on the prospective operation of statutory amendments.

The court held that these judgments did not assist the financial creditor beyond the statutory saving expressly provided in the amended regulations. It observed that “no completed going-concern sale has taken place and no vested right in favour of any purchaser has arisen.”

The court also considered Y. Shivram Prasad v. S. Dhanapal and S.C. Sekaran v. Amit Gupta. It observed that those decisions were rendered under the statutory framework then prevailing and could not be understood as creating an independent right to insist on a mode of liquidation sale contrary to the regulations applicable to the case.

The court accordingly ruled that continuation of the proposed going-concern sale was “neither warranted by the facts nor necessary for completion of liquidation.” It directed the liquidator not to proceed with or revive the earlier proposed going-concern sale process.