Shiv Shakti Inter Globe Exports Pvt. Ltd. Vs KTC Foods Private Limited (NCLAT Delhi)
Summary: NCLAT New Delhi allowed the appeal of M/s Shiv Shakti Inter Globe Exports Pvt. Ltd. to the extent of extinguishing the past and remaining unpaid outstanding liabilities, including contingent liabilities, of K.T.C. Foods Private Limited after its sale as a going concern in liquidation. The Appellant had successfully purchased the Corporate Debtor in an e-auction for Rs.18,45,86,646/-. The sale proceeds were distributed in accordance with Section 53 of the Insolvency and Bankruptcy Code, 2016, and possession of the Corporate Debtor’s assets was thereafter handed over to the successful bidder.
The dispute arose because, although the NCLT Chandigarh had directed closure of the liquidation process without dissolution of K.T.C. Foods Private Limited, it had not granted the requested relief for extinguishment of the Corporate Debtor’s remaining unpaid liabilities and waiver of consequences arising from past non-compliances. Subsequently, Uttar Haryana Bijli Vitran Nigam informed the Appellant that Rs.81,34,157/- was outstanding against K.T.C. Foods Private Limited. According to the record, this claim had not been submitted in the prescribed form either during CIRP or during liquidation.
The NCLAT held that once the sale proceeds of a Corporate Debtor are duly distributed in the order of priority prescribed by Section 53 of the IBC, claims of other creditors cannot subsequently be entertained contrary to Section 53. After such distribution, no entity, including a Government entity, can claim past unpaid or outstanding dues against the purchaser who has acquired the Corporate Debtor as a going concern. Claims not made during CIRP or liquidation cannot subsequently be foisted upon the purchaser.
