TaxTMI 
TaxTMI 
2022 (8) TMI 716
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....ted (in liquidation) published an invitation of Expression of Interest (EOI) for acquisition of the assets/plant of the company (in liquidation). The list of assets included in the invitation of EOI included land, the factory, plant and machinery on such land. It is submitted that the EOI disclosed that the assets would be sold by way of slump sale and the applicant acquiring the asset would be required to endeavour to run the concern/business of the company after acquiring its assets. The entire aforesaid developments took place in connection with a proceeding initiated for corporate resolution under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'the IBC') in which the corporate resolution had failed and liquidation had been initiated. 3. It is submitted that the petitioners' bid for the assets was accepted by the liquidator and the assets were ultimately sold to the petitioners. Since there was no electricity connection, the petitioners applied for fresh electricity in respect of the factory premises. 4. However, it was alleged by the WBSEDCL that there was nexus between the petitioners and the erstwhile owner of the company, due to which the petitioners ....
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....es for payment of any statutory dues apart from sale price, it is contended. 11. Learned counsel for the respondent no.1 further submits that Clause 3.4.2 of Regulation 55 dated August 7, 2013 of the West Bengal Regulatory Commission (WBERC) as well as Clause 2.5 of the WBSEDCL Procedure-B (2010) clearly say that where there are arrears of charges outstanding for a premises, before the application is processed, the applicant shall be liable for clearing the dues if nexus is established with the erstwhile defaulting consumer. 12. It is further submitted that the Electricity Act, 2003 (in short, 'the 2003 Act'), being an earlier enactment, prevails over the IBC, even if there is a non obstante clause in the latter enactment, since the earlier enactment is a special enactment on the particular subject in issue. 13. By Notification dated December 26, 2018, it was declared by the Government of West Bengal that with effect from January 1, 2019, the entire distribution business and activities undertaken by the Durgapur Project Limited (DPL) along with all assurances, assets and liabilities will be transferred to the WBSEDCL via the mechanism of slump transaction of assets. 14. ....
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....ale under Clauses 6, 7 and 11 that the purchaser takes the responsibility of clearing the dues in relation to the property and the liquidator will have no liability. Admittedly, the sale proceeding was challenged by the erstwhile licensee before the NCLT, Kolkata, which is still pending. 23. The sale proceedings-in-question, it is argued, was a process for slump sale as defined under Section 2(42c) of the Income Tax Act, 1961 and it is made clear that the transfer of assets without transfer of liabilities is not a slump sale. 24. Sections 174 and 175 of the 2003 Act, it is reiterated, empower the WBSEDCL to act under the provisions thereunder. 25. It may be noted that the liquidation process in the present case was undertaken as a result of the failure of the corporate insolvency resolution proceeding and is governed by the IBC. As such, irrespective of the nomenclature in the terms and conditions of the sale, the provisions of the IBC prevail. 26. Moreover, the distribution license had made a claim before the Adjudicating Authority, during the resolution process, which was not admitted in the said proceeding. Hence, the distribution licensee cannot make a claim all over again,....
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....e property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate or to sell the same in parcels in such manner as may be specified. The proviso thereto says that the liquidator shall not sell immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant. Clause (j) empowers the liquidator to invite and settle claims of the creditor and claimants and distribute proceeds in accordance with the provisions of the Code. 32. Section 38 of the IBC provides for consolidation of claims by the liquidator, Section 39 the verification of claims and Section 40 deals with the admission or rejection of claims by the liquidator. 33. Hence, the powers of the liquidator are on a similar footing as those of a Resolution Professional in a resolution proceeding. It is also noteworthy that Section 5 (18) of the IBC stipulates that a Liquidator has to be a Resolution Professional in the first place. 34. Section 53 provides for distribution of assets in liquidation and sets out the order of priority....
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....s from the sale of the liquidation assets shall be distributed in the following order of priority and within such period and in such manner as may be specified, namely:- (a) the insolvency resolution process costs and the liquidation costs paid in full; (b) the following debts which shall rank equally between and among the following:- (i) workmen's dues for the period of twenty-four months preceding the liquidation commencement date; and (ii) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; (c) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date; (d) financial debts owed to unsecured creditors; (e) the following dues shall rank equally between and among the following:- (i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date; (ii) debts owed to a se....
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....n sale. 44. It is well-settled that the debts of the power distribution licensee do not operate as charge on the assets of the corporate debtor. 45. Hence, both sale of the corporate debtor and the business(es) of the corporate debtor as a going concern, as envisaged in Regulation 32, Clauses (e) and (f) respectively, do not contemplate automatic transfer of all pre-CIRP liabilities of the corporate debtor to the auction purchaser. 46. In any event, the Regulations framed under the authority conferred by the IBC cannot be construed to override the provisions of the Code itself. Hence, no interpretation contrary to Section 53 of the IBC which, again, is preceded by a non obstante clause, can be attributed to the expression "going concern sale", as contemplated in Rule 32 of the Liquidation Process Regulations, 2016. 47. The expressions "going concern sale", "as is where is basis", etc. may have several shades of connotations in market parlance. However, in an auction sale under an IBC liquidation process, such terms are circumscribed by the provisions of the Code and the ancillary Regulations, as discussed above. 48. Hence, in the present case, the claim of the WBSEDCL of outst....