Usually not, though the point is contested. When a liquidator sells a plot, shed or flat under the Insolvency and Bankruptcy Code, 2016, the dues the company ran up before its insolvency are claims against the liquidation estate, paid in the order fixed by section 53, and the words "as is where is" in the auction notice do not by themselves make them yours. On 2 September 2026 the NCLT Allahabad held exactly that in Positron Biogenics Pvt Ltd v UPSIDA and ordered the authority to refund Rs 82,53,013.53 that the buyer had paid under protest to get its plot transferred. Electricity is harder. In K.C. Ninan v Kerala State Electricity Board (19 May 2023), a case outside the Code, the Supreme Court held that a distribution licensee may insist on the previous consumer's arrears before a fresh connection if its conditions of supply say so, and Karnataka's conditions say so.
Part of the money recovery practice at S Jain & Attorneys, Bangalore.
This guide is for an individual or a small business that bought at an IBC liquidation e-auction and is now asked to clear the old company's dues before transfer, mutation or a power connection. The homebuyer waiting for the liquidator to sell is served by our guide on a builder's liquidation.
| Who is demanding what | What the orders say | Your first move |
|---|---|---|
| Development authority: the old company's lease rent, maintenance and interest | A pre-CIRP claim for the section 53 waterfall. Refund of Rs 82.53 lakh ordered (NCLT Allahabad, 2 September 2026) | Ask it to pursue its claim with the liquidator, then apply under section 60(5) |
| Municipality: property tax before the sale was confirmed | Akin to an unsecured creditor's claim. Demand of Rs 68.09 lakh quashed (NCLAT, 22 November 2021) | Pay from confirmation of the sale, contest the rest |
| Electricity company: arrears of the old connection | Recoverable from the new owner where the supply conditions say so (Supreme Court, 19 May 2023, outside the Code), and Karnataka's do | Ask for the computation and apportionment, pay under protest if you must |
| Any of them, where your auction notice put all dues on the bidder | You pay (NCLT Hyderabad, 11 March 2026) | Read the information sheet before you bid |
Three numbers carry the argument.
Rs 82.53 lakh refunded
Maintenance charges for 2000 to 2009 with interest, demanded from the auction buyer of a Kanpur plot and paid under protest, ordered back in September 2026.
Rs 2.77 crore already claimed
The same authority had lodged its claim over a year before the auction, admitted in full, so it could not also collect from the buyer.
Rs 92.68 lakh payable
Where the information sheet said every electricity and water due would be borne by the successful bidder, the NCLT Hyderabad refused to lift the demand.
Does "as is where is" make me pay the old company's arrears?
Not on its own. In Positron Biogenics, L.M.L. Limited went into liquidation in March 2018. After the e-auction of October 2022 the authority refused to transfer the leasehold plot unless the buyer paid Rs 82,53,013.53 of maintenance charges for 2000 to 2009 with interest, lease rent and GST. The auction document had sold the asset "as is where is" and "without recourse". The tribunal read those words as notice, not as a transfer of debt: "the mere 'as is where is' condition or the subsequent transfer of the leasehold interest cannot convert the pre-CIRP liability of the Corporate Debtor into an independent personal liability of the Applicant" (paragraph 22). It followed the NCLAT in Bhatpara Municipality v Nicco Eastern Pvt Ltd (22 November 2021), which quashed a Rs 68,09,123.61 property tax demand on a factory buyer because tax for the period before the sale was confirmed is "akin to claim of an unsecured creditor" paid under section 53 (paragraph 16).
The Supreme Court in K.C. Ninan, which Positron Biogenics does not discuss, said a sale "as is where is" "postulates that the purchaser would be acquiring the asset with all its existing rights, obligations and liabilities" (paragraph 133). And the clause in your own process document can do what the bare phrase does not. In the Sri Lakshmi Narasimha Oil Mills liquidation (NCLT Hyderabad, 11 March 2026) the information sheet said every local tax, maintenance, electricity and water due, outstanding or yet to fall due, "would be borne by the Successful Bidder", and the tribunal held the buyer to it (paragraphs 41 and 47). Our reading, which no court has stated in these terms, is that the line runs between a notice to inquire, which leaves the old dues in the waterfall, and an express allocation of named dues to the bidder, which does not.
Key takeaway. "As is where is" tells you to look. The clause that names the dues and says the successful bidder bears them is the one that makes you pay.
Who decides: the NCLT or the authority?
For a development authority or a municipality, the NCLT that ordered the liquidation. Section 60(5)(c) of the Code covers "any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings". In Bhatpara the municipality argued that once the certificate issued the NCLT lost jurisdiction over a stranger's tax, and lost.
Electricity is harder because the licensee relies not on the company's debt but on a statutory condition of supply. The Electricity Act, 2003 puts the duty to supply in section 43 and a two-year bar on recovery in section 56(2). K.C. Ninan held that the section 43 duty is subject to the licensee's charges and compliances, that a supply code requiring the new owner to clear the previous owner's arrears has statutory character (conclusions (a) and (d) to (f)), and that section 56(2) restricts disconnection, not recovery under the conditions (paragraph 131). For Karnataka, the High Court at Dharwad applied clause 4.09(iv) of the Conditions of Supply of Electricity of the Distribution Licensees in the State of Karnataka to the auction buyer of a liquidated steel company's land in OPG Power Generation Pvt Ltd v Gulbarga Electricity Supply Co Ltd (W.A. 100052/2021, 6 July 2021). The clause, as quoted there, makes the licensee "collect the outstanding arrears in respect of the said premises" from a fresh applicant "before connection is given". It directed apportionment because the buyer had taken 119 of 800 acres. That judgment is before the Supreme Court in SLP(C) 15805/2021, adjourned on 18 August 2026, with no stay in the orders we have read. Neither ruling concerned a sale under the Code, and the NCLT Hyderabad held an auction buyer's electricity dispute maintainable (paragraph 38).
I paid under protest to get the transfer: can I get it back?
Yes, if the protest was real and you did not sign the point away. The Positron Biogenics buyer wrote on 17 and 25 August 2023 disputing liability, asked the authority to lodge its claim with the liquidator, and paid by demand draft "under protest", recording that the money would be refunded with interest if its application succeeded. The authority then took an affidavit and indemnity bond. The tribunal held that the affidavit and indemnity "cannot be treated as an independent undertaking or deposit by the Applicant towards the pre-CIRP dues" and that the payment was not "a voluntary acceptance of the underlying liability" (paragraphs 13 and 14). It directed a refund of Rs 82,53,013.53 and said nothing about interest. The Hyderabad buyer, by contrast, had undertaken "without prejudice" to abide by the licensee's counsel's opinion on the old arrears "and pay the arrears after exploring all the recourses available", and that undertaking was held against it (paragraphs 43 and 47).
Common mistake. Signing whatever the authority puts in front of you to get the file moving. An undertaking to pay the old dues, even one given without prejudice, can be read as your own promise. A payment under written protest is not.
What stamp duty do I pay on the sale certificate?
In Karnataka, duty on the price you paid. Article 15 of the Schedule to the Karnataka Stamp Act, 1957 charges a certificate of sale granted to the purchaser of property sold by public auction "by a Court or Tribunal or officer of Government or by any other authority under any enactment" with "the same duty as a conveyance (No. 20) for a market value equal to the amount of the purchase money only". The Karnataka Stamp (Amendment) Act, 2023 (Act 4 of 2024) left Article 15 alone. Section 45A, the undervaluation machinery, does not list a certificate of sale among the instruments it reaches, so our reading, with no Karnataka ruling found, is that the registering officer cannot substitute a guidance value for the bid. Where a market-value inquiry is possible, the Bombay High Court in Bhadrashree Steel & Power Ltd v State of Maharashtra (9 October 2026) set aside an assessment on Rs 35,70,60,500 and directed duty on the auction price of Rs 8,03,60,000, holding that a transparent e-auction under the NCLT's supervision fixes the "true value of the assets" (paragraphs 52 to 56).
Registration is unsettled. Section 17(2)(xii) of the Registration Act, 1908 exempts a certificate of sale granted to a purchaser at public auction "by a Civil or Revenue Officer", and section 89(4) has a Revenue Officer send a copy for filing in Book 1. A liquidator is neither, and the Code is silent. The Karnataka High Court held in Thomson Plantations (India) Pvt Ltd v Senior Sub-Registrar (10 November 2005) that Article 15 duty can be demanded when the purchaser presents the original, not when a copy arrives under section 89(4).
Can I hold back the balance until permissions come?
No. Clause 1(12) of Schedule I to the IBBI (Liquidation Process) Regulations, 2016 gives the highest bidder ninety days from the demand, or the period in the auction notice, to pay the balance, charges twelve percent interest on payments after thirty days, and cancels the sale if the money does not come. Clause 1(13) completes the sale only on full payment, after which the certificate issues with the approval of sixty-six percent of the committee of creditors. In the Vindhyavasini Corporation liquidation (NCLT Mumbai, 16 October 2026) a bidder withheld Rs 5,25,09,600 for two parcels whose non-agricultural permissions had lapsed. The letter of intent put statutory approvals on the bidder, so the tribunal gave a final thirty days to pay with twelve percent interest, failing which all three sales, including the one already completed, would stand cancelled and the earnest money forfeited (paragraphs 34, 39 and 44). In the Asten Realtors liquidation (NCLT Kochi, 16 October 2026) a highest bidder kept from paying by a High Court stay was refused impleadment. The bench relied on Eva Agro Feeds Pvt Ltd v Punjab National Bank (Supreme Court, 6 September 2023), which held that the highest bidder "has no indefeasible right to demand acceptance of his bid" but that a liquidator who rejects it must record reasons, and that ordinarily the highest bid may be accepted unless the bidding is statutorily infirm, collusive or fraudulent (paragraphs 34.1 and 38). Since 2 June 2026 a liquidator who rejects the highest bid under clause 1(11A) needs sixty-six percent of the committee's voting share and must give reasons.
Deadline warning. Interest starts thirty days after the liquidator's demand, and when the payment period ends the sale is cancelled and the earnest money is at risk. A pending permission does not stop the clock unless the tribunal extends it.
What due diligence should I do before bidding?
Start with the dues clause: read the process document and its information sheet for any sentence that puts statutory dues, utility charges or transfer fees on the successful bidder. Ask the liquidator, who keeps the list of stakeholders under regulation 31, which claims have been admitted, and inspect the asset under clause 1(1E). The Positron Biogenics tribunal relied on the claim record on the IBBI website, which showed the authority's Rs 2,77,12,397 claim lodged over a year before the auction. Pull the encumbrance certificate and khata yourself, with our guides on the encumbrance certificate and e-khata transfer, and ask the electricity company in writing what arrears stand against the RR number. Confirm your section 29A eligibility, since clause 1(12D) forfeits the earnest money of an ineligible bidder.
If you bought the company as a going concern rather than a plot, the answer changes. The Madras High Court held in EMC Ltd v State Tax Officer (15 October 2026) that a Rs 87.68 lakh GST demand for a period inside the insolvency process survived a going concern sale. The NCLAT, in the Talwalkars Better Value Fitness liquidation (3 September 2026), said that after distribution under section 53 "no entity including any Govt. entity can claim any past unpaid or outstanding dues" from a going concern purchaser (paragraph 47), but that compliances and renewal fees on the change of ownership are the purchaser's (paragraph 64). The 2026 Amendment Act, in force from 26 May 2026, omitted sections 38 to 42, but its Explanation to section 35(1) keeps them for liquidations begun on or before that date.
Step by step: from the first demand to the refund
- Get the demand in writing with a period-wise computation and mark every line that predates the insolvency.
- Re-read your process document, letter of intent and sale certificate for any clause that allocates named dues to the bidder.
- Write to the authority disputing the pre-insolvency sums and asking it to pursue its claim with the liquidator under section 53.
- Write to the liquidator asking whether the authority filed a claim, how much was admitted and what it will receive.
- If the transfer cannot wait, pay under written protest, record the dispute and the refund expectation in the covering letter, and sign no undertaking to pay the old dues.
- Apply under section 60(5) to the bench that ordered the liquidation, impleading the authority and the liquidator, with the auction documents, claim record, demand and protest letters.
- For an electricity demand, ask for apportionment where you bought part of the premises and consider a writ petition if the licensee will not reconsider.
- Have the liquidator forward the sale certificate to the Sub-Registrar, pay Article 15 duty on the purchase money, and keep the Book 1 filing receipt with the possession letter.
Where buyers go wrong
In our practice the first loss is at the bidding stage, when a buyer reads the reserve price but not the information sheet, and finds after the sale that one sentence made every utility and tax bill his own. The second is the undertaking signed at the authority's counter to get the file moving. The third is delay on the balance price while permissions are chased, which costs twelve percent and then the deposit.
Four figures to keep in view.
Ninety days, twelve percent
The balance is due within ninety days of the demand, interest runs at twelve percent after thirty days, and the sale is cancelled on default.
Duty on the bid price
The Bombay High Court directed stamp duty on the liquidator's auction price of Rs 8.03 crore, not a Rs 35.70 crore market value, because a transparent NCLT-supervised e-auction fixes the true value.
Sixty-six percent to reject
From 2 June 2026 a liquidator can reject the highest bid only with the approval of sixty-six percent of the committee's voting share, and must send the bidder reasons.
119 of 800 acres
Where an auction buyer took part of a disconnected installation, the Karnataka High Court directed the licensee to apportion the arrears first.
Frequently Asked Questions
The authority already filed its claim with the liquidator. Can it still demand the same money from me?
The NCLT Allahabad said no. The authority's Rs 2.77 crore claim was admitted in the insolvency proceedings and the tribunal held that its pre-insolvency dues "cannot simultaneously be recovered from the auction purchaser merely because the purchaser required transfer of the leasehold interest in its favour". It keeps its right to what the waterfall pays it.
The municipality will not mutate the property until I clear the old property tax. Do I pay?
Pay the tax from the date the sale was confirmed and contest the earlier years. In Bhatpara Municipality the NCLAT held that tax for the period before the sale was confirmed is a claim against the estate under section 53 and quashed the demand on the buyer, who told the NCLAT, with certificates, that the municipality had meanwhile mutated the property.
The electricity company wants the old company's arrears before it gives me a connection. Is that legal?
In Karnataka probably yes, subject to the amount, but no ruling cited here decides it for a sale under the Code. The Supreme Court in K.C. Ninan upheld supply conditions of this kind in sales outside the Code, and the Karnataka High Court applied clause 4.09(iv) to a buyer from a company wound up under the Companies Act while ordering apportionment. That judgment is before the Supreme Court with no stay in the orders we have read. The two-year limit in section 56(2) restricts disconnection, not recovery under the conditions, so argue quantum, apportionment and interest, and keep the point under the Code open.
The liquidator says the sale was "no recourse" and he cannot help. Is that right?
He need not indemnify you, but he is a proper party. The NCLAT in Bhatpara noted that the liquidator should have brought liabilities affecting the asset to the tribunal's notice through the asset memorandum, and his claim records are the evidence that the authority is already in the waterfall. Implead him in your section 60(5) application and ask for the claim record and the asset sale report.
I bought the whole company as a going concern. Does the same answer apply to its tax dues?
Not automatically. The Madras High Court in October 2026 held that a GST demand for a period inside the insolvency process survived a going concern sale, and remitted the matter on a twenty-five percent deposit. The NCLAT in the Talwalkars matter said that after distribution under section 53 no entity can claim past dues from a going concern purchaser, but that compliances and renewal fees on the change of ownership are the purchaser's. Take advice on the specific tax before you bid.
Can the committee of creditors cancel my winning bid after I have paid the earnest money?
Until you have paid the full price the sale is not complete, and from 2 June 2026 clause 1(11A) lets the liquidator reject the highest bid with the approval of sixty-six percent of the committee's voting share, giving you reasons. The Supreme Court in Eva Agro Feeds held that the highest bidder has no indefeasible right to acceptance but that an unreasoned cancellation does not stand, and it restored a sale the liquidator had cancelled. Your earnest money comes back unless you were ineligible or in default.
Do I have to register a liquidator's sale certificate in Karnataka?
The point is unsettled. Section 17(2)(xii) exempts certificates granted by a Civil or Revenue Officer and a liquidator is neither. The Karnataka High Court has held, for a recovery officer's certificate, that Article 15 duty can be demanded when the purchaser presents the original for registration and not when a copy is filed under section 89(4), so ask the liquidator to forward a copy, and budget duty on the purchase money in case registration is insisted on.
How long does a refund application take and what does it cost?
As an indicative range, a documented section 60(5) application runs from a few tens of thousands of rupees in fees to several lakhs if jurisdiction is contested, and the Positron Biogenics application took from October 2023 to September 2026. Interest on the refund was not awarded in that order, so do not budget for it.
This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.
