AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 1349
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....ebtor"] as a going concern pursuant to Auction dated 25.04.2024, pursuant whereof Sale Certificate was also issued in favour of the present Appellant dated 20.07.2024 inter alia seeking various relief(s) and concession(s) viz-a-viz running the business of the Corporate Debtor as a going concern was disposed of by the Tribunal, for grant of following prayers:- "16 a. Set aside the direction of the Ld. Adjudicating Authority contained in order dated 05.05.2025 wherein the Appellant has been directed to increase the Share Capital and grant relief as sought by the appellant. b. Modify the Order dated 05.05.2025 passed by the Ld. Adjudicating Authority, in so far, as the it related to the Share Capital of the Corporate Debtor; c. Pass any other order as this Hon'ble Appellate Tribunal may deem fit in the interest of justice." 2. The tribunal by passing impugned order rejected the request of appellant for restructuring of shareholding of the CD. 3. Ld. counsel for the appellant submits that Corporate Insolvency Resolution Process was initiated against the Corporate Debtor vide Order dated 03.01.2022 passed by the Ld. Adjudicating Authority in Company Peti....
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.... of Rs. 10 each to be issued by the company, out of which 19999 were requested to be allotted Sri Abhay Shah and one share to Sri Asit Gulabrai Mehta and balance amount of Rs. 6,65,61,000/- (Rupees Six Crores Sixty-Five Lakh Sixty-One Thousand Only) was requested to be treated as debt infused in the Company. 8. It is also submitted that the Adjudicating Authority without any justification held that the corporate debtor is sold as a going concern, and it is the responsibility of the auction purchaser to run the corporate debtor as a going concern, therefore, it is necessary that the CD is not unnecessarily burdened with debt and interest and thereafter directed the auction purchaser to classify Rs. 3,30,00,000 as equity and the balance amount of Rs. 3,37,61,000 as debt infused in the company. 9. It is submitted that the Appellant is aggrieved by the non-grant of the relief and concession as sought by the Appellant and supplanting of the capital structure by the Adjudicating Authority as per its own wisdom without any prior notice or any issue having been raised in relation to the same either by the Appellant or by the respondent. 10. It is vehemently submitted that the Ld. ....
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....te Debtor as a going concern and within its limited jurisdiction, the Adjudicating Authority, if, finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only then exercise its jurisdiction accordingly, however the same will not allow the Ld. Adjudicating Authority to step into the shoes of CoC or SCC or Successful Bidder to substitute the approved commercial aspects of the company with its own. 14. It is also submitted that Ld. Adjudicating Authority has failed to appreciate that the Corporate Debtor has not been having any ongoing business for years and the Auction Purchaser cannot be imposed with fresh new considerations after completing the auction sale and has a right to fix capital structure of the Company as per its own business consideration, more so, when no objection have been raised by any of the concerned stakeholders in respect of the same and Ld. Adjudicating Authority has imposed conditions which are even beyond the scope of the terms and conditions of the tender document, is also beyond the jurisdiction of the Ld. Adjudicating Authority as the modification tantamount to post facto imposition of stipulation upon the Appella....
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....except the prayer with regard to restructuring of shareholding of the company. 20. The appellant with regard to shareholding of the company had requested in terms that an amount of Rs. 2,00,000/ - (Rupees Two Lakhs Only) be treated as payment made towards Issue of Equity Shares wherein 20,000 shares of Rs. 10 each to be issued by the company out of which 19999 shares were proposed to be issued to Shri Abhay Shah and only one share was proposed to be issued to Shri Asit Gulabrai Mehta 1 and balance amount of Rs. 6,65,61,000/ - (Rupees Six Crores Sixty-Five Lakh Sixty-One Thousand Only) was proposed to be treated as debt infused in the Company. Ld. Adjudicating Authority however modified this relief and granted the same as under: - "Regarding (ii), the corporate debtor is sold as a going concern, and it is the responsibility of the auction purchaser to run the corporate debtor as a going concern. Therefore, it is necessary that the CD is not unnecessarily burdened with debt and interest. Therefore, the auction purchaser is directed to classify Rs.3,30,00,000/- as equity and the balance amount of Rs. 3,37,61,000 as debt infused in the company." 21. Aforesaid mo....
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....cation prima facie exceeds this supervisory powers granted to the Adjudicating authority under the code, more so when the proposed restructuring of share capital by the appellant auction purchaser has not been opposed by SCC or the liquidator and not stated to be in violation of any law. 25. It is also to be recalled that in the sale of the Corporate Debtor as a 'Going Concern' the Corporate Debtor is retained and it is dissolved and the CD will be transferred along with the assets to the auction purchaser. So, the Corporate Debtor as a legal entity remains as such. Therefore, in such sale the equity shareholding of the Corporate Debtor is extinguished and the auction purchaser takes over the CD with the assets, licenses, entitlements including the business of the Corporate Debtor, assets, properties and rights etc. excluding the liabilities. No need to say that in such sale the assets that are included in the E- Auction Memorandum only have to be taken over by the Auction Purchaser. Thus the Corporate Debtor survives and the ownership including the legal entity is transferred to the purchaser and in the sale as a 'going concern', the purchaser will be carrying on the business o....