Abstract

Once a company enters Corporate Insolvency Resolution Process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“IBC” or “the Code”), a moratorium freezes dealings with its assets. Yet tribunals routinely allow resolution professionals to sell assets that sit outside the company’s core business — even during this freeze — to raise cash, pay down secured debt, or keep the business running. This article looks at why that isn’t a contradiction. Drawing on the Jet Airways litigation, the 2025 Arshiya Limited ruling, and a 2025 NCLT order in the Gigeo Construction Company matter (which the author argued), it shows that the moratorium and the power to sell non-core assets serve different purposes and were never meant to conflict. It closes with the practical test tribunals now apply when deciding whether to allow such a sale.

I. Why the Moratorium Doesn’t Stop Every Sale

Section 14(1)(b) of the Code stops the corporate debtor from “transferring, encumbering, alienating or disposing of” its assets once CIRP begins. Read in isolation, that sounds absolute — no sales, of anything, for as long as the process runs. But Regulation 29 of the CIRP Regulations, 2016 is headed “Sale of assets” and does exactly what it says: it lets the resolution professional (“RP”) sell unencumbered assets outside the ordinary course of business, provided the Committee of Creditors (“CoC”) approves by the same 66% vote required under Section 28(3), and provided the price isn’t below the liquidation value set by registered valuers.

The way tribunals have reconciled these two provisions is straightforward once you see who each one is aimed at. Section 14 stops the company’s old management — the people who might otherwise strip value out of the estate before creditors get paid. Sections 20, 25 and 28, on the other hand, hand day-to-day control to the RP, working under the CoC’s supervision, with a duty to keep the business running and raise funds where needed. The moratorium restrains one actor; Regulation 29 empowers a different one. Both talk about “assets,” but that’s where the overlap ends — they’re not actually pulling in opposite directions.

II. Jet Airways: The Founding Precedent

The Jet Airways insolvency gave tribunals their first serious opportunity to work through this question, because the airline held valuable assets that had nothing to do with keeping planes in the air, at a time when its planes weren’t flying anyway.

In one set of proceedings before the NCLT’s Principal Bench, the RP, Mr. Ashish Chhawchharia, got approval to sell a non-core asset simply to help pay down an overseas debt owed to HDFC Limited. Nobody seriously disputed this — it’s the kind of routine, sensible housekeeping the Code is meant to allow.

The more important ruling came in Jet Aircraft Maintenance Engineers Welfare Association v. Ashish Chhawchharia [2022 SCC OnLine NCLAT 278]. Here the NCLT had allowed the sale of an encumbered non-core property during the moratorium, specifically to fund buying back six aircraft the airline had taken on financial lease. The bank holding the mortgage agreed to release its charge once it was paid. Objectors argued that Section 14 leaves no room for discretion at all — sales just aren’t allowed, full stop. The NCLAT disagreed. It held that the moratorium binds the corporate debtor, not the RP or CoC, who get their sale powers from entirely separate parts of the Code. It also confirmed that an RP can even sell unencumbered assets, without further ado, whenever doing so genuinely helps realise better value — so long as the price and CoC approval both check out, which the tribunal verified from the CoC’s own meeting minutes before signing off.

III. Arshiya (2025): Sharpening the Rules

A fuller and more recent treatment came in Pankaj Mahajan v. Edelweiss Asset Reconstruction Co. [2025 SCC OnLine NCLAT 1793], involving the corporate debtor Arshiya Limited. The RP asked to sell two mortgaged land parcels inside a Free Trade Warehousing Zone — to two of the debtor’s own subsidiaries, which were themselves going through separate insolvency processes and needed the land to make their own resolution plans work. The CoC looked at an alternative (granting a right of way instead of selling outright), rejected it, commissioned two independent valuations, and approved an outright sale by an 85.46% vote. Both mortgagees consented.

The NCLT had agreed to the sale in principle, but added a condition: resolution applicants from the two subsidiary insolvencies should be invited to bid competitively. The NCLAT struck that condition down entirely, and its reasoning is worth setting out plainly:

1. Commercial wisdom stays with the CoC. How the sale is structured is a business call for the CoC to make, not something the tribunal can second-guess or redesign.
2. Auctions aren’t mandatory. Two independent valuations and a properly informed CoC vote can satisfy the “value maximisation” requirement just as well as a public auction — sometimes better, where only a handful of buyers realistically exist.
3. Consent cures the encumbrance problem. Regulation 29 talks about unencumbered assets, but where the secured creditor is part of the CoC and has consented, that consent does the same job — it removes the very risk the rule is protecting against.
4. New rules don’t apply backwards. A 2025 amendment (Regulation 36A(1A), requiring the RP to invite expressions of interest before selling assets) came in after the CoC had already approved this sale, so it had no bearing on the case — and in any event, it couldn’t be used to force one company’s insolvency process to borrow a bidding procedure from someone else’s.

IV. Gigeo Construction: A Recent Order on an Encumbered Non-Core Asset

A 2025 NCLT Mumbai Bench order in Omkara Assets Reconstruction Private Limited v. Gigeo Construction Company Private Limited [IA(I.B.C)/3197(MB)2025 in C.P. (IB)/1180(MB)2022, dated 21 July 2025] — a matter the author argued — applies this same reasoning to a real-estate developer, and is worth walking through in some detail.

The facts. Gigeo Construction Company Private Limited, a Nagpur-based developer, is undergoing CIRP. Omkara Assets Reconstruction Private Limited, the sole member of the CoC (holding a mortgage assigned to it over dues originally owed to Piramal Capital & Housing Finance), flagged an 8-acre agricultural parcel — Khasra Nos. 21/1 and 21/2, Village Dhuti, Nagpur — right at the CoC’s first meeting as having nothing to do with the debtor’s construction business, and as security for its own claim. At the CoC’s second meeting, the members unanimously agreed to label the parcel “non-core” and sell it by e-auction, with proceeds going first towards CIRP costs. At the CoC’s thirteenth meeting, carried by a 93.88% vote, the CoC authorised the RP to seek NCLT approval, agreed the reserve price would be fixed once that approval came through, and recorded that Omkara ARC would receive the sale proceeds once it released its charge. By this point, the parcel had already been excluded from the pool of assets on offer to anyone bidding to take over the company.

What the RP asked for, and why the Tribunal agreed. The RP applied to the NCLT under Section 60(5) for leave to go ahead with the sale. The Tribunal noted something worth flagging for practitioners: Regulation 29 lets an RP sell unencumbered assets without needing Tribunal approval at all. Because this parcel was mortgaged, though, the RP came to court anyway — a step the Bench described as one that wouldn’t otherwise have been necessary for an unencumbered asset. Far from treating the mortgage as a problem, the Bench treated the RP’s decision to seek approval as the right and cautious course, and it leaned directly on the Jet Airways ruling as authority for allowing the sale of an encumbered non-core asset once the secured creditor has agreed. It also confirmed two supporting facts before granting leave: the parcel’s book value came in under the 10% cap set by the proviso to Regulation 29(1), and the parcel had already been carved out of the resolution-plan process, so selling it couldn’t touch anything a future resolution plan would depend on. On that basis, the Tribunal allowed the sale to proceed by open auction.

Why it matters. The order spells out something many practitioners take for granted without checking: an RP doesn’t need NCLT approval at all to sell a genuinely unencumbered non-core asset — it’s the mortgage that brings the matter to court, and it’s the secured creditor’s consent that resolves it. Gigeo ties together every strand of the test tribunals now apply — CoC approval well above the statutory threshold, secured-creditor consent standing in for “unencumbered” status, a book value comfortably under the statutory cap, and an asset already excluded from the resolution-plan process — each one checked on its own facts, not borrowed from any other case.

V. The Practical Test

Put together, these rulings point to a fairly simple three-part checklist that tribunals now apply before allowing a sale of non-core assets mid-CIRP:

1. The asset isn’t needed to keep the business running. This is often confirmed by the fact that it’s already been left out of the Request for Resolution Plan — as it was in Gigeo.
2. The price stacks up. Either it’s at or above the liquidation value set by valuers, or, for a mortgaged asset, the secured creditor has consented — as happened in both Gigeo and the Jet Airways matters.
3. The CoC has signed off by the statutory super-majority. Unanimous in Gigeo’s second meeting, 93.88% in its thirteenth, 85.46% in Arshiya. The tribunal’s job is to check that this happened properly — not to redo the CoC’s commercial judgment for it.

Where all three boxes are ticked, tribunals have consistently been willing to let the sale go ahead — deferring to the CoC on the business decision itself, while still insisting on real evidence that the process behind it was sound.

VI. Conclusion

Read together, the Jet Airways matters, the Arshiya ruling, and the Gigeo order tell a consistent story: the CIRP moratorium was never meant to be a blanket freeze on everything the company owns. It targets the old management, not the RP or CoC — and it leaves both free to reshape the estate, including by selling non-core, even mortgaged, assets, so long as value, consent, and process line up. Tribunals check the process closely — valuation, voting thresholds, creditor consent — but leave the underlying business decision where it belongs, with the CoC.