Going concern sale protection: completed public auction cannot be suo motu annulled where consideration paid and stakeholders raised no objection.

Where a public auction sale of a corporate debtor as a going concern had been completed with transfer of possession, consideration paid and distributed, and stakeholders issuing no-objection confirmations without substantive challenge, the Adjudicating Authority should not, while deciding an application for reliefs and concessions, suo motu declare the completed going-concern sale null and void; the impugned annulment and related directions were set aside and the successful purchaser was allowed reliefs with leave to file a fresh application within thirty days.

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Issues: (i) Whether the Adjudicating Authority could, while adjudicating an application by the successful auction purchaser for reliefs and concessions, suo motu declare the sale of the corporate debtor as a "going concern" null and void and issue directions including cancellation of the sale and disciplinary action against the liquidator.

Analysis: The Tribunal noted that the public auction was held on 04.12.2020, the appellant was declared the successful purchaser, a sale agreement in favour of the appellant was executed, the corporate debtor was handed over and operated by the appellant, and financial creditors had issued no objection / no dues certificates and did not challenge the auction. No party before the Adjudicating Authority had disputed the going concern character of the sale at the time the application for reliefs and concessions was being considered. The Tribunal examined the record and the fact that the sale had culminated, consideration paid and distributed, and there was no challenge to the auction notice or sale raising a substantive dispute on the going concern nature of the transaction.

Conclusion: The Adjudicating Authority's declaration that the going concern sale was null and void and related directions cannot be sustained; the impugned order dated 07.10.2024 is set aside and the appeals are allowed in favour of the successful auction purchaser. The Tribunal permitted the applicant to file a fresh application for the reliefs and concessions within 30 days.

Ratio Decidendi: Where a public auction sale as a going concern has been completed without challenge, consideration paid, and stakeholders have issued no-objection confirmations, the Adjudicating Authority should not, while adjudicating an application for reliefs and concessions, suo motu declare the completed going concern sale null and void.

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