IBC Cannot Waive Statutory Requirements Under Other Laws: NCLT Mumbai

The National Company Law Tribunal at Mumbai has recently held that the Insolvency and Bankruptcy Code does not wipe out the need for statutory approvals or licenses required under other laws, even after a resolution plan is approved or a company is sold as a going concern during liquidation. The tribunal made it clear that the insolvency framework is meant to streamline timelines, not to bypass regulatory compliance. A coram of Judicial Member Ashish Kalia and Technical Member Sanjiv Dutt, in an order dated December 12, 2025, clarified that the Code does not dispense with statutory approvals or licences required under other laws. Quoting Section 31, the tribunal observed, “A plain reading of Section 31 of the Code emphasizes the need to obtain approvals required under the applicable laws even after a resolution plan is sanctioned. Thus, the scheme of the Code is not to dispense with the approvals and licenses required under the various laws but to mandate that the same be obtained within a timeframe.” The ruling was delivered in the insolvency proceedings of Seam Industries Ltd. The company was admitted into insolvency on December 28, 2018, on a petition filed by Associated Road Carriers Ltd. After no resolution plan came through within the prescribed period, the tribunal ordered liquidation on June 30, 2021. In a fourth e-auction held in 2023, Seam Industries was sold as a going concern on March 15, 2023, for Rs. 24.30 crore. After acquiring the company, the successful bidders approached the tribunal seeking wide-ranging reliefs. They asked for continuation of licenses, waivers from statutory compliances, and freedom to terminate or alter existing contracts. Their argument was that a going concern sale in liquidation should offer benefits similar to those available under an approved resolution plan so that the business could be revived without legacy burdens. The tribunal did not accept that approach. It reiterated that even an approved resolution plan does not automatically carry forward licenses or statutory permissions. On contracts, the tribunal said, “Similarly, the terms of a contract cannot be unilaterally changed, except through legislative intervention, to strike the appropriate balance between contractual freedom on the one hand and corporate rescue on the other. Thus, we are of the view that the contracts with the corporate debtor cannot be unilaterally altered or terminated without even hearing the other party.” Ultimately the tribunal partly allowed the application only to the limited extent permitted under the auction terms and the applicable law. All other reliefs were declined, with liberty to the bidders to approach the relevant authorities for approvals and permissions in accordance with law. Case Title: AmitKumar Rishi Kumar Bhabhda & Ors vs Amit Chandrasehkhar Poddar & OrsCase Citation: 2026 LLBiz NCLT (MUM) 7Case Number: IA (I.B.C) No. 5599/MB/2023 in CP (IB) No. 1620/MB/2017For Applicant: Advocates Mitali Bhat, Khushboo Shah Rajani, Nipun Singhvi, Mayur JugtawatFor Respondent: Advocates Kunal Kanungo, Atishay JainClick Here To Read/Download Order

IBC Cannot Waive Statutory Requirements Under Other Laws: NCLT Mumbai

Kirit Singhania

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