Going Concern Sale Not Same As Resolution Plan, No Automatic Waiver Of Dues: NCLT Ahmedabad

The National Company Law Tribunal (NCLT) at Ahmedabad has held that a purchaser who takes over a corporate debtor as a going concern during liquidation cannot automatically walk away from past liabilities or statutory dues, making it clear that such a transaction does not stand on the same footing as a resolution plan under the Insolvency and Bankruptcy Code.

The finding came on an application by the successful auction purchaser of Camerich Papers Private Limited. The company had been sold as a going concern through an e-auction held on October 13, 2025, after which the purchaser moved the Tribunal seeking reliefs tied to the acquisition.

After completing the acquisition, the purchaser, Lemit Papers, approached the tribunal seeking extinguishment of all prior claims, waiver of statutory and tax liabilities, and directions to government authorities to recognise a clean slate akin to that available under an approved resolution plan.

A coram of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma declined to grant such sweeping reliefs, though it partly allowed the application to the extent necessary to give effect to the sale.

Drawing a clear distinction between the two frameworks, the tribunal observed:

“However, it is equally well settled that a sale of the Corporate Debtor as a going concern under Regulation 32(e) of the Liquidation Regulations is fundamentally distinct from approval of a Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016. A Resolution Plan is formulated during the CIRP stage, is subject to approval by the Committee of Creditors under Section 30(4), and upon approval by the Adjudicating Authority under Section 31, attains statutory finality and binding effect on all stakeholders, including Central and State Governments and statutory authorities. The binding nature and 'clean slate' consequences under Section 31 flow expressly from the statutory scheme of Chapter II of the Code.”

The tribunal noted that a going concern sale takes place after the failure of the corporate insolvency resolution process and is governed by a different statutory framework. It further observed:

“In contrast, a going concern sale under Regulation 32(e) takes place during liquidation, after failure of CIRP, and is governed by Chapter III of the Code read with the Liquidation Regulations. Such sale is conducted by the Liquidator in terms of the E-Auction Process Document and the sale proceeds are distributed strictly in accordance with Section 53. While the object of such sale is revival and value maximisation, it does not carry the same statutory attributes as a Resolution Plan approved under Section 31.”

The purchaser had argued that without comprehensive waivers and concessions, operating the company as a going concern would be impractical and that similar reliefs ought to be extended to ensure revival. The Tribunal rejected the plea for blanket reliefs, observing that accepting such a position would effectively bypass the structured framework of the corporate insolvency resolution process.

It also clarified that its jurisdiction under Section 60(5) is facilitative and does not extend to granting blanket exemptions under tax, environmental, or other regulatory statutes. Such reliefs, the Bench said, must be considered by the competent authorities under their respective laws.

At the same time, the tribunal noted that once sale proceeds are distributed in accordance with Section 53, claims that remain unpaid stand extinguished in terms of the statutory scheme under Section 53.

The sale certificate itself records that the transfer was on an “as is where is, as is what is, whatever there is” basis. That formulation, the Tribunal noted, does not support any assumption that the purchaser steps into a liability-free entity merely because the sale was conducted as a going concern.

The application was partly allowed. Reliefs necessary to give effect to the transaction were granted, but the tribunal declined to extend the wider waivers and immunities sought by the purchaser.

For Applicant: Sanjay Majumdar, PCA along with Dr. Hiten Parikh, PCA (Auction Purchaser)

For Respondent: Nikhil Singhvi