“Clean Slate" Principle Does Not Extend To Liabilities On Date Of E-Auction Sale Of Corporate Debtor As 'Going Concern': NCLAT

The NCLAT ruled that the “clean slate” principle does not extend to liabilities existing on the date of the e-auction sale of a corporate debtor as a going concern. The tribunal held that liabilities up to the liquidation commencement date are extinguished, but those arising after this date remain. The case involved Venus Rolling Mills Pvt. Ltd., where the successful bidder, Shantech International Pvt. Ltd., sought relief from liabilities up to the sale date. The tribunal clarified that the clean slate principle applies only to pre-liquidation liabilities, ensuring clarity in the treatment of post-liquidation claims.