NCLT Rejects Liquidator’s Plea to Sell Darjeeling Tea Company as Going Concern, Allows Asset Sale Through Slump Sale Route

June 10, 2026 : The National Company Law Tribunal (NCLT), Kolkata Bench, has refused to allow the sale of Dooteriah & Kalej Valley Tea Private Limited as a “going concern” during liquidation proceedings, holding that the legal framework permitting such sales was removed by amendments to the Insolvency and Bankruptcy Board of India (IBBI) Liquidation Regulations in October 2025. However, the Tribunal clarified that the liquidator remains free to explore the sale of the company’s assets, rights, licenses, and business interests through legally permissible modes, including a slump sale.

The order was passed by a Division Bench comprising Judicial Member Bidisha Banerjee and Technical Member Commodore Siddharth Mishra while deciding an application filed by liquidator Sanjeev Jhunjhunwala under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC). The liquidator had sought permission to sell the corporate debtor as a going concern on an “as-is-where-is” and “as-is-what-is” basis. In the alternative, he requested approval to transfer all assets, rights, licenses, statutory permissions, contractual interests, and the corporate entity itself as a single package.

The company entered the Corporate Insolvency Resolution Process (CIRP) in December 2017 following a petition filed under Section 9 of the IBC by an operational creditor. Although a resolution plan was approved in September 2018, it was never implemented. Consequently, the Tribunal recalled the approval order in October 2025 and directed liquidation of the company under Section 33 of the IBC, appointing the present applicant as liquidator.

During the proceedings, the liquidator informed the Tribunal that the company operates multiple tea estates and tea factories in Darjeeling, West Bengal. According to the liquidator, the tea gardens function as an integrated business unit, with processing facilities shared across estates. He argued that a piecemeal sale of assets would significantly erode value, disrupt operations, and adversely affect workers and stakeholders. The Stakeholders’ Consultation Committee (SCC) had also recommended seeking permission for a going-concern sale to maximize value and preserve the business as a functional enterprise.

The liquidator relied on Sections 35(1)(e) and 35(1)(f) of the IBC, contending that preservation of the corporate debtor and maximization of value are among the Code’s primary objectives. It was argued that the integrated nature of tea cultivation, processing, manufacturing, workforce arrangements, contracts, licenses, and goodwill made a going-concern sale the most beneficial option for creditors and stakeholders.

However, the Tribunal noted that the legal position had changed substantially after the IBBI amended the Liquidation Process Regulations with effect from October 14, 2025. The amendments removed Regulations 32(e), 32(f), and 32A, which previously permitted the sale of a corporate debtor as a going concern during liquidation. Following the amendment, Regulation 32 allows only four methods of sale: standalone asset sales, slump sales, sale of asset sets, and sale of assets in parcels.

Examining the timeline, the Bench observed that although the SCC had recommended a going-concern sale in December 2025, no auction notice had been issued and no sale process had actually commenced before the application was filed. Therefore, the amended regulations applied to the case. The Tribunal held that “the omission of Regulation 32(e) removes the mode of sale as going concern” and that it could not approve a sale under a provision that no longer exists in law.

The Bench further emphasized that approval by the Stakeholders’ Consultation Committee could not override statutory amendments. It observed that granting permission to transfer the company itself as a continuing legal entity would effectively restore a mechanism consciously removed by the regulator. According to the Tribunal, “the prayer for confirmation of sale as going concern under Regulation 32(e) is not maintainable.”

At the same time, the Tribunal acknowledged the liquidator’s powers under Section 35 of the IBC and the existing provisions of Regulation 32. It held that there was no legal obstacle to selling the company’s assets, contractual rights, licenses, permits, actionable claims, and other transferable interests as a composite package or through a slump sale. The Bench clarified that any purchaser would acquire only those rights legally vested in the corporate debtor and capable of transfer under applicable law. Statutory licenses, leasehold rights, concessions, and approvals would remain subject to the approval of the competent authorities wherever required.

Importantly, the Tribunal stated that its order should not be interpreted as granting any automatic right to renew or extend leases, licenses, permits, or statutory approvals. This observation is particularly significant given that several tea estate leases involved in the case had either expired or were awaiting renewal.

The ruling provides important guidance on the effect of the October 2025 amendments to the IBBI Liquidation Regulations. It clarifies that where a going-concern sale had not actually commenced before the amendments took effect, liquidators cannot seek approval for such a sale under the deleted provisions. Instead, value maximization must be pursued through the sale mechanisms that remain available under the current regulatory framework, particularly slump sales and composite asset transfers. The decision is expected to influence liquidation strategies in future insolvency cases, especially where businesses operate as integrated enterprises and stakeholders seek preservation of commercial value during liquidation.

Case Reference: Sanjeev Jhunjhunwala, Liquidator of Dooteriah & Kalej Valley Tea Pvt. Ltd. v. Dooteriah & Kalej Valley Tea Pvt. Ltd., I.A. (IB) No. 27/KB/2026 in C.P. (IB) No. 557/KB/2017