Tribunal permits issuance of fresh equity shares, reconstitution of board, and transfer of corporate debtor ownership; clarifies limits on immunity from past liabilities under Insolvency and Bankruptcy Code
In a significant ruling on October 13, 2026, the National Company Law Tribunal (NCLT), Mumbai Bench, presided over by Mr. Anil Raj Chellan (Technical Member) and Mr. K. R. Saji Kumar (Judicial Member), approved the sale of GENRX Pharmaceuticals Private Limited as a going concern to Bajaj Healthcare Limited. This approval follows Bajaj Healthcare's successful bid and full payment of ₹10.88 crore as sale consideration during the liquidation proceedings initiated under the Insolvency and Bankruptcy Code, 2016 (IBC).
The corporate debtor, GENRX Pharmaceuticals, had undergone a Corporate Insolvency Resolution Process (CIRP) initiated in 2018, but the resolution plans failed to secure requisite approval, leading to liquidation proceedings starting January 2023. The liquidator, Mr. Rajesh Kumar Mittal, conducted multiple e-auctions, culminating in Bajaj Healthcare being declared the successful bidder in February 2025.
The Tribunal underscored the objective of a going concern sale: preserving the corporate entity as an operational business, safeguarding employment, and maximizing stakeholder value. Bajaj Healthcare's acquisition was thus confirmed, subject to compliance with the terms of the liquidation process and applicable law.
Key reliefs granted include permission for Bajaj Healthcare to undertake capital restructuring of GENRX Pharmaceuticals. This encompasses cancellation and extinguishment of the existing share capital without consideration, issuance of 1,08,50,000 new equity shares at ₹10 each to the successful bidder and its nominees compliant with Section 29A of the IBC, and reconstitution of the board of directors with Bajaj nominees. The Tribunal waived procedural requirements under the Companies Act, 2013, such as opening separate bank accounts and obtaining valuation reports, subject to necessary filings with authorities.
Importantly, the Tribunal applied the "clean slate" principle to the extent permissible under Section 53 and Section 32A of the IBC. This means that Bajaj Healthcare and the corporate debtor are not liable for any past liabilities, claims, encumbrances, or proceedings relating to periods before the transfer date (April 4, 2025), as the sale was conducted on an "as is where is," "no recourse" basis. Claims, including those relating to tax, statutory dues, and contractual liabilities prior to the transfer, were held extinguished or discharged. However, immunity from investigations, prosecutions, or enforcement actions is limited strictly to the scope provided under Section 32A of the IBC, and broad blanket immunity was denied.
The Tribunal also clarified that contracts of the corporate debtor cannot be unilaterally terminated or modified by judicial order without hearing the counter parties, and licences or permits do not revive automatically by virtue of this order; the successful bidder must approach relevant authorities for such renewals or approvals.
Further directions included:
- - Registrar of Companies to record satisfaction of charges on corporate debtor's assets upon transfer, facilitating release of encumbrances;
- - Liquidator to cooperate with Bajaj Healthcare by handing over books, papers, and assets, subject to statutory costs borne by the acquirer;
- - Cancellation of all prior powers of attorney granted by the corporate debtor;
- - Denial of a six-month grace period for compliance with various laws, emphasizing the acquirer's responsibility to comply afresh.
Several prayers by the applicant Bajaj Healthcare seeking general tax exemptions, blanket continuance of licenses, revival of approvals, or unrestricted jurisdiction of the NCLT to address future difficulties were declined, with the Tribunal observing that the NCLT's jurisdiction is confined to matters arising out of insolvency or liquidation proceedings.
This ruling aligns with precedents such as Shantech International Pvt. Ltd. v. Devendra Singh, Liquidator of Venus Rolling Mills Pvt. Ltd. and the Supreme Court's decision in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., clarifying distinctions between going concern sales during liquidation and resolution plans under CIRP.
The order thus provides a comprehensive framework for the operationalisation of corporate debtors sold as going concerns in liquidation, balancing the protection of the buyer from past liabilities with adherence to statutory norms and due process.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Liquidation - Sale of corporate debtor as going concern - Successful bidder entitled to capital restructuring, reconstitution of board and transfer on clean slate basis to extent permissible under process documents, applicable law and Section 32A of IBC - Reliefs contrary to process document, seeking blanket continuance/revival of licences, general tax exemptions, broad contractual termination rights or unrestricted future liberty before NCLT cannot be granted.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 29A, 32A, 33(1), 53, 60(5); Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016; Companies Act, 2013 Sections 42, 62(1)(c), 66
