Case Note & Summary
The appeal arose from an order dated 02.09.2025 by the National Company Law Tribunal, New Delhi, which directed the Appellants to pay Rs.3 Crores under a Business Purchase Agreement (BPA) dated 14.07.2017. The Appellants, who were Directors of Corsalite Educational Services Private Limited, contended that they were not parties to the BPA and thus should not be held liable. The BPA involved the acquisition of the business of Wave Global Educational Services Private Limited, the Corporate Debtor, for a total consideration of Rs.3 Crores. The Appellants argued that the Adjudicating Authority lacked jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, as the dispute arose from a commercial contract. They also claimed that the Liquidator did not establish any personal liability against them and that the BPA's obligations were not fulfilled. The Respondent, Liquidator of the Corporate Debtor, contended that the Appellants had assumed control over the Corporate Debtor and were liable for the unpaid consideration. The Tribunal found that the Adjudicating Authority had jurisdiction to adjudicate the matter and that the unpaid consideration constituted an asset of the liquidation estate. The Tribunal upheld the findings of the Adjudicating Authority, emphasizing that the Appellants had exercised control over the Corporate Debtor and could not evade liability by claiming they were not parties to the BPA. The appeal was dismissed, affirming the order of the Adjudicating Authority.
Headnote
A) Insolvency Law - Jurisdiction of Adjudicating Authority - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - The Adjudicating Authority possessed jurisdiction to entertain the Liquidator's application for recovery of unpaid consideration under the Business Purchase Agreement as it constituted an asset receivable by the Corporate Debtor during liquidation. The unpaid consideration was directly connected with the liquidation estate and the authority exercised its powers duly vested by the provisions of the Code. Held that the jurisdiction under Section 60(5) is wide and encompasses all questions related to insolvency or liquidation proceedings (Paras 28-36). B) Corporate Law - Liability of Directors - Business Purchase Agreement - The Appellants, who were Directors of the purchasing company, were held liable for payments under the Business Purchase Agreement despite not being signatories, as they exercised control over the Corporate Debtor and appropriated benefits from the agreement. The court found that the corporate veil could be lifted due to the Appellants' direct involvement in the management and financial affairs of the Corporate Debtor (Paras 36-38).
Issue of Consideration
Whether the Learned Adjudicating Authority possessed jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 to entertain the Application filed by the Liquidator?
Final Decision
The Tribunal dismissed the appeal, affirming the order of the National Company Law Tribunal which directed the Appellants to pay Rs.3 Crores under the Business Purchase Agreement. The Tribunal held that the Adjudicating Authority had jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 and that the unpaid consideration constituted an asset of the liquidation estate.
Law Points
- jurisdiction under Section 60(5)
- liability under Business Purchase Agreement
- corporate veil
- Insolvency and Bankruptcy Code
- 2016
