Going-concern liquidation sale does not shift pre-CIRP and CIRP electricity dues to the auction purchaser.

A going-concern liquidation sale of a corporate debtor did not transfer liability for pre-CIRP and CIRP electricity dues to the successful auction purchaser. The auction notice and sale certificate did not impose past electricity liabilities on the buyer, and the supplier had already lodged its claims in liquidation. Pre-CIRP dues were treated as operational debt and electricity consumed during CIRP as insolvency process cost, both payable through the liquidation waterfall under the Insolvency and Bankruptcy Code, 2016. The supplier's contractual supply terms could not override the Code's overriding effect, so recovery had to be pursued through the insolvency claim process rather than against the purchaser.

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Issues: Whether the successful auction purchaser in a liquidation sale of the corporate debtor as a going concern is liable to pay the corporate debtor's pre-CIRP and CIRP electricity dues, or whether such dues are recoverable only in accordance with the Insolvency and Bankruptcy Code, 2016.

Analysis: The sale was held as a going concern under the liquidation process, and the auction notice and sale certificate did not fasten past electricity liabilities on the purchaser. The electricity supplier had already lodged its claims in liquidation, making the dues part of the insolvency process to be dealt with under the statutory framework governing verification, collation and distribution of claims. Pre-CIRP dues were treated as operational debt and the electricity consumed during CIRP as insolvency process cost, both falling for payment under the liquidation waterfall. Regulation 8.4 of the supply terms could not override the Insolvency and Bankruptcy Code, 2016, because the Code has overriding effect and the supplier's remedy lies in the liquidation claim process, not in recovering the dues from the auction purchaser. The reliance on the SARFAESI auction precedent was distinguished because that case turned on different sale terms and did not involve liquidation under the Code.

Conclusion: The successful auction purchaser was not liable to clear the corporate debtor's pre-CIRP and CIRP electricity dues, and the supplier was required to pursue its claim under the insolvency liquidation mechanism.

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