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TMI Blog2021 (5) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 33(1) of the Code on 02.11.2020 by appointing Shri Krishna Komaravolu, the Applicant herein as Liquidator. 4. The Liquidator invited bids for the sale of the Corporate Debtor as a "going concern" by E-auction sale notice dated 09.02.2021. Subsequently on 17.02.2021 a corrigendum to the e-auction sale notice was issued in which the timelines for various processes were extended by the Liquidator. The Applicant had submitted its Bid Application Form supported with relevant and required documents including payment of Rs. 1,07,96,456/- as EMD on 02.03.2021 to the Liquidator. The Liquidator had confirmed the Applicant herein as successful bidder vide email dated 06.03.2021. It is further submitted that the entire control of the Corporate Debtor would be transferred to the Applicant/bidder on payment of balance consideration. 5. That the Applicant is only short of paying the balance consideration for acquiring the Corporate Debtor as a going concern under the provisions of the Code and that the entire control of the Corporate Debtor would be transferred to the Applicant/bidder with effect from the Transfer Date i.e. that date pursuant the Applicant/Bidder successfully pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l existing shares (being the shares held by existing Promoter Group and public shareholders) prior to issue of shares by the Corporate Debtor as stated above; and finally (3) Delisting of shares w.e.f. 1 April 2021 or the date of order of approval of this application by the Adjudicating Authority, whichever is later. (5) A direction that all the exemptions available to a resolution plan approved under the IBC Code shall also be available to the Acquisition made by the Applicant of the Corporate Debtor, including but not limited to the following: (i) the exemption available under Regulation 158(2) of SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018 to the issuance of shares on preferential basis pursuant to a resolution plan approved under the IBC Code shall be available for issuance of shares by the Corporate Debtor to the Applicant (along with its nominees); (ii) the relaxation available under Regulation 170 of SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018 to allot shares on beyond 15 days pursuant to a resolution plan approved under the IBC Code shall be available for issuance of shares by the Corporate Debtor to the Applicant (alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor), pending or threatened, present or future, in relation to any period prior to the Transfer Date or arising on account of the Acquisition shall be deemed to be withdrawn or dismissed; (9) A direction that all financial and pecuniary liabilities of the Corporate Debtor, (including without limitation, any penalty, whether contingent, assessed, known or unknown, interest, fines or fees and any other liabilities and/or obligations which may have a financial impact) in relation to any period prior to the Transfer Date shall be deemed to be extinguished; (10) A direction that any Claim that may arise post the Transfer Date including Claims under Applicable Law, contract, judicial/quasi-judicial proceedings, disputed or undisputed, crystallized or otherwise which relate to the period on or prior to the Transfer Date shall pose no additional liability (whether financial, contractual, performance or otherwise) on the Applicant or Corporate Debtor; (11) A direction that any Claim made under any guarantees issued by the Corporate Debtor on behalf of any third party(ies) shall stand extinguished on the Transfer Date and the beneficiaries of such guarantees shall be expected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Information Bureau (India) Limited any information utility, RBI or any other regulatory authority for and on account of Corporate Debtor shall be withdrawn by the respective Financial Creditors and any invocation or enforcement action already undertaken before Debt Recovery Tribunal against the Corporate Debtor and any of its assets, at any time prior to the Transfer Date, shall stand automatically revoked and cancelled and deemed null and void and Financial Creditors shall take requisite action to ensure that all such pending matters before the Debt Recovery Tribunal shall stand withdrawn. Further, on and from the Transfer Date, all accounts of the Corporate Debtor shall stand regularized and their asset classification shall be "standard" for the purposes of all Applicable Laws; (18) A direction that all subsisting consents, licenses, approvals, rights, entitlements, benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled to shall, notwithstanding any provision to the contrary in their terms and irrespective of the commencement of the insolvency/liquidation proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary support and assistance to the Applicant, including but not limited to perfecting/amending/modifying/creating the land records in relation to all parcels of land, the immovable properties and assets, belonging to the Corporate Debtor in favour of the Corporate Debtor within 15 days from Transfer Date; (24) a direction to the Liquidator to, immediately, (i) write back all the liabilities of the Corporate Debtor, including creditors, term loans, working capital loans, tax liabilities, other statutory liabilities, etc. which are not payable and reflect the total liabilities at the amount of the consideration (as reduced by the amount of insolvency resolution process costs and the liquidation costs) determined in the auction; and (ii) the assets which are not recoverable (debtors, inventories and loans and advances, etc.) should be written down to their realizable value; in the financial statements (Profit and Loss Account and the Balance Sheet) of the Corporate Debtor as on 31st March 2021. The said financial statements should be prepared and filed by the Liquidator with the relevant regulators such as Registrar of Companies, Income Tax Authorities, etc.; (25) A direction to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing reasons or other reason not listed below. (b) Any non-compliance in relation to filing of Income-Tax Return under Section 139 of Income-tax Act, 1961 including any other forms as required to be filed by Corporate Debtor under provisions of Income-Tax Act, 1961 (c) A direction be issued that the requirement of obtaining a no objection certificate under section 281 of the Income-tax Act, 1961 and provisions of taking over its predecessor's Tax liability under section 170 of the Income-tax Act shall not be applicable. Further, the transaction shall not be treated as void under section 281 of the Income Tax Act, 1961 for any claims in respect of Tax or any other sum payable by the Corporate Debtor or any shareholder of the Corporate Debtor. Similarly, any requirements to obtain waivers from any Tax Authorities including in terms of Section 79 and Section 115JB and any other provision of the Income Tax Act, 1961 is deemed to have been granted on the Transfer Date. (d) A direction be issued that the Adjudicating Authority be pleased to give or issue necessary directions, instructions to the Central Board of Indirect Taxes ('CBDT') and Customs and State GST autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for Applicant and Counsel for Liquidator. The Learned Counsel would contend that the Applicant purchased the Corporate Debtor as a going concern. The Liquidator can sell the assets of the Corporate Debtor during liquidation in any of the modes stated in Regulation 32 of Liquidation Process Regulations. The Applicant purchased the Corporate Debtor as a going concern with a view to run the business and that in order to run the Company as a going concern, the Purchaser/Applicant herein is entitled to have certain reliefs stated above. The Liquidator has filed his reply stating that the assets of the Corporate Debtor is ordered to be sold as on going concern as it will fetch more value. The Liquidator also stated that the bid amount is more than the liquidation value. Already Applicant has deposited Rs. 1,07,96,456/-. In order for the Applicant to kick start the business and follow the law laid down under the Companies Act, 2013, it is imperative for the Tribunal to grant necessary reliefs. 10. There is no specific provision in the Code with respect to "Sale of the Company as a going concern". The Hon'ble Supreme Court judgment in the matter of Arcelor Mittal India Private Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Issue of Capital & Disclosure Requirement) Regulations, 2018, exemption available under Regulation 3(2) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and Regulation 3(3) of SEBI (Delisting of of Equity Shares) Regulations, 2009. The Applicant/Corporate Debtor is exempted to comply with SEBI regulations as otherwise would be required to be complied in order to give effect to the acquisition by the Applicant of taking control over entire share capital and management of the Corporate Debtor including but not limited to the cancellation/extinguishment of existing share capital, issuance of new shares to the Applicant and delisting of the Corporate Debtor from the stock exchanges and any other compliance related or ancillary thereto. 3) The Applicant shall get all the rights, title and interest over whole and every part of the Corporate Debtor, including but not limited to contracts free from security interest, encumbrance, claim, counter claim or any demur. The sale consideration, when received shall be distributed by the Liquidator in terms of Section 53 of the Code. 4) The Applicant shall not be responsible for any other claims, liabilities or obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the balance sheet. 11) The Liquidator is directed to ensure completion of pending filings with the Registrar of Companies, Income Tax Authorities and any other Government/Statutory Authorities. 12) The Corporate Debtor is entitled to get the benefits of brought forward losses, if any, subject to permission of the appropriate authority, if so entitled under the relevant provisions of the Income Tax Act, 1961. 13) As far as the prayer for considering the bid submitted by the Applicant as Resolution Plan under Section 79 of Income Tax Act, 1961 is concerned, the Applicant may approach the authority concerned who would consider such request under the Income Tax Act. 14) The Liquidator is directed to provide all support and assistance to the Applicant for the smooth functioning of the Corporate Debtor to complete the acquisition. 15) With regard to relief sought directing CBDT, customs and State GST Authorities and other statutory authorities to exempt income/gain/profits if any, arising pursuant to acquisition of Corporate Debtor and further with regard to exemption from stamp duty and tax liability, it is open to the Applicant to approach the authorities concerned and it ..... 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