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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the auction purchaser of Unit No. 1, sold under the SARFAESI regime before commencement of CIRP, could be saddled with workers', employees' and other statutory liabilities, and whether the Adjudicating Authority under the Insolvency and Bankruptcy Code had jurisdiction to determine and fasten such liabilities on the purchaser under Section 60(5).
Analysis: The majority held that the auction notice, subsequent correspondence and acceptance of offer showed that the purchaser bought the asset on an "as is where is" basis and with clear notice that known statutory and other liabilities would be borne by the purchaser. The sale was completed and the sale certificate issued before commencement of CIRP. In that setting, the purchaser could not disown the burdens attached to the sale by relying only on the recital that the property was sold free from encumbrances. The majority further held that the Adjudicating Authority had jurisdiction to examine the liability question in relation to the CIRP and to determine whether the workmen's dues and similar claims were to be borne by the purchaser or remained against the corporate debtor. The dues of EPF were treated as an encumbrance and first charge on the establishment to the extent applicable to Unit No. 1.
Conclusion: The purchaser was held liable to bear the claims fastened by the impugned order, and the challenge to that order failed.
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