NCLAT Rules, Successful Bidder Can't Claim Exemptions From Statutory Compliance Merely On Grounds Of Being Successful Bidder Of Corporate Debtor
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member), has held that a successful bidder cannot claim exemptions from statutory compliances merely on the ground of having purchased the corporate debtor as a going concern. The Tribunal emphasized that such purchasers are bound by law to comply with statutory obligations, and filing sweeping applications seeking general exemptions amounts to a misuse of judicial time.
Background
The appeal was filed by Shanti International, the successful bidder of Gajanan Solvex Limited, challenging an order dated 9 May 2025 passed by the National Company Law Tribunal (NCLT), Mumbai Bench, Court V, in IA No. 1368 of 2025, by which the NCLT had rejected several reliefs and concessions sought by the bidder. The bidder had prayed for transfer of ownership of the corporate debtor along with various tax waivers, regulatory exemptions, and other benefits. The NCLT, while granting certain reliefs necessary for running the business of the corporate debtor as a going concern, declined to grant the broader set of exemptions sought, observing that such reliefs were too wide, general, and beyond its jurisdiction. It further directed that the applicant could approach the concerned statutory authorities for specific issues. Aggrieved by the partial rejection, the appellant approached the NCLAT under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), contending that the adjudicating authority had failed to grant similar reliefs as those allowed in Venus Rolling Mills Pvt. Ltd.
Appellant’s Contentions
The appellant argued that the NCLT had erred in refusing to grant certain concessions which had been allowed in comparable liquidation proceedings. It was contended that the adjudicating authority should have issued directions to statutory bodies such as the Income Tax Department, GST authorities, Pollution Control Board, Zilla Parishad, and others, granting waivers of all past dues, taxes, penalties, and compliance requirements. The appellant also argued that the refusal to grant specific reasons for each denied relief rendered the order unsustainable.
Findings Of The Tribunal
The NCLAT observed that the sale of the corporate debtor was conducted strictly on an “as is where is,” “as is what is,” and “no recourse” basis, and therefore, the successful bidder could not demand concessions that were never part of the auction conditions. The Tribunal found that the reliefs sought by the bidder were excessively broad, encompassing over 40 prayers, including tax holidays, exemptions from statutory dues, write-offs of past liabilities, and immunity from regulatory compliance. Referring to the NCLT’s observations, the Bench noted that many of the reliefs claimed—particularly those under prayer 11—ran into ten columns and sought blanket exemptions from nearly every regulatory body, including the CBDT, GST, ESIC, Pollution Control Board, and local authorities. The NCLAT remarked that such reliefs were “neither admissible nor even capable of being prayed for” and that the application itself amounted to a waste of judicial time. The Bench held: “The mere fact that the appellant has been declared a successful bidder in the auction of the corporate debtor as a going concern does not entitle the appellant to claim all kinds of reliefs imaginable, including exemption from statutory compliances. Filing such applications only leads to wastage of the court’s time.”
The Tribunal clarified that the reliefs already granted by the NCLT, including those necessary for continuation of business operations, were adequate. Out of the 40 reliefs sought, 22 had already been granted, including those pertaining to operational continuity, statutory filings, and management of the corporate debtor. With respect to the appellant’s grievance about lack of reasons for rejected prayers, the Bench observed that the NCLT had duly considered all requests and that the absence of detailed reasoning for each ungranted relief did not vitiate the order, since the decision was based on the principle that no statutory entitlement existed for such sweeping concessions. “There is no statutory entitlement of the appellant to claim particular reliefs. The reliefs were granted only to ensure that the corporate debtor, sold as a going concern, can function effectively. The rest of the reliefs—relating to statutory waivers and fiscal exemptions—were rightly declined.”
Reference To Venus Rolling Mills
The NCLAT also addressed the appellant’s reliance on Venus Rolling Mills Pvt. Ltd., noting that the NCLT had already taken cognizance of that decision. It clarified that in Venus Rolling Mills too, several reliefs of similar nature were not granted, and the successful bidder was merely permitted to approach the concerned authorities for consideration of specific issues. The Bench held that the current case was consistent with that precedent and did not warrant any interference. “The submission that several reliefs granted in Venus Rolling Mills were denied to the present appellant is unfounded. Even in that case, many reliefs were declined, and liberty was only granted to approach appropriate authorities.”
The NCLAT concluded that the adjudicating authority had granted all necessary reliefs enabling the appellant to operate the corporate debtor as a going concern and that no further exemptions could be claimed merely because the appellant was a successful bidder. It held that: “Mere fact that no specific reason has been given for each refusal does not vitiate the order. There is no statutory entitlement to demand a particular relief. The reliefs granted were only with the intent that the successful bidder may run the corporate debtor effectively, not to grant blanket exemptions from law.” Accordingly, the appeal was dismissed, and the order of the NCLT, Mumbai Bench, was affirmed.
In essence, the NCLAT reaffirmed that purchasers of corporate debtors in liquidation cannot claim immunity from statutory compliance and that liquidation sales conducted on an “as is where is” basis bind buyers to existing legal and regulatory frameworks.
Appearance
For Appellant: Ms. Anjali Sharma, Mr. Thanglunkin and Mr. Hiaikhuanlung, Advocates.
For Respondent : -
Cause Title: Shanti International, Through Amol Mittal Versus Ram Singh Setia, Liquidator of Gajanan Solvex Ltd.
Case No: Company Appeal (AT) (Insolvency) No. 1063 of 2025
Coram: Justice Ashok Bhushan (Chairperson), Mr. Arun Baroka (Technical Member)
