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

A going concern sale in liquidation under the Insolvency and Bankruptcy Code does not automatically transfer all pre-CIRP liabilities to the auction purchaser. The liquidation scheme is a complete code: the liquidator must admit claims, realise assets and distribute proceeds only through the statutory waterfall under section 53. Regulations 32 and 32A permit sale of the corporate debtor or its business as a going concern, but any liability transferred is confined to what is identified within that sale framework and cannot override the liquidation priority regime. Accordingly, pre-CIRP electricity dues of an admitted operational creditor are recoverable only through liquidation distribution, not by a second demand against the purchaser.

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Issues: Whether a distribution licensee can insist on payment of pre-CIRP electricity dues from an auction purchaser who acquired the corporate debtor as a going concern in liquidation under the Insolvency and Bankruptcy Code, 2016, or whether such dues must be pursued only through the liquidation process and distribution under section 53.

Analysis: The liquidation framework under the Insolvency and Bankruptcy Code, 2016 is a complete code. The liquidator is required to verify and admit claims, realise assets, and distribute the proceeds strictly in the order of priority under section 53. Regulation 32 and Regulation 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 permit sale of the corporate debtor or its business as a going concern, but the scheme does not authorise automatic transfer of all pre-CIRP liabilities to the auction purchaser. The reference to liabilities in a going concern sale is limited to assets and liabilities identified for that sale under the regulatory framework, and cannot override section 53. An operational creditor whose claim has been admitted in liquidation cannot seek a second recovery from the successful purchaser merely because the sale is described as a going concern sale.

Conclusion: The demand for pre-CIRP electricity dues from the auction purchaser was not sustainable, and the dues had to be worked out only through the liquidation process and the statutory waterfall.

Final Conclusion: The writ petition succeeded, and the petitioner was entitled to new electricity connection without being compelled to pay the erstwhile owner's pre-CIRP dues.

Ratio Decidendi: A going concern sale in liquidation under the Insolvency and Bankruptcy Code, 2016 does not by itself transfer all pre-CIRP liabilities to the purchaser, and an admitted operational creditor must recover only through the statutory distribution mechanism under section 53.

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