Pre-sale liability allocation: disclosed dues on an "as is where is" unit sale were held to bind the purchaser, not the corporate debtor.

A pre-CIRP sale of an industrial unit on an "as is where is" and "as is what is" basis, with the bidder expressly notified of outstanding employee, labour, provident fund, income-tax and other dues, shifts those liabilities to the purchaser rather than leaving them with the corporate debtor. The tribunal treated the disclosed liabilities as part of the purchase burden and held that the corporate debtor could not later be fastened with Unit-1's dues after the sale. The only exception noted was any EPF amount already deducted and still retained by the corporate debtor, which had to be remitted to the appropriate authority.

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Issues: Whether the liabilities relating to Unit-1, including workers' dues and other statutory or employee-related claims, were payable by the purchaser of the unit sold before commencement of CIRP or continued as claims against the corporate debtor.

Analysis: The sale notice and sale certificate showed that Unit-1 was sold on an "as is where is" and "as is what is" basis, with express intimation to the bidder of outstanding employee, labour, provident fund, income-tax, and other liabilities. The bidder was specifically informed that the claims had been brought to its notice before the auction and that the sale certificate would follow the necessary directions. On these facts, the liabilities attached to the sold unit were treated as part of the purchase burden and not as liabilities remaining with the corporate debtor. The only exception noted was the amount, if any, already deducted towards EPF and still lying with the corporate debtor, which had to be remitted to the appropriate authority. The corporate debtor could not be fastened with liabilities of Unit-1 after the sale.

Conclusion: The liabilities of Unit-1 were held payable by the purchaser, and the corporate debtor was relieved of those liabilities except for any EPF amount still retained by it.

Ratio Decidendi: Where a pre-CIRP sale of an industrial unit is expressly made on an "as is where is" basis and the purchaser is put on notice of specific outstanding dues and liabilities before the auction, those liabilities can be fastened on the purchaser and not on the corporate debtor.

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