### Individual Asset Sale Below 20% Net Worth Threshold Does Not Constitute Disposal Of An Undertaking Under Section 180

The Appellant, a minority shareholder in Respondent No. 1 (MPTA Ltd), alleged mismanagement by the majority.

During the pendency of a Company Petition, the company sold "Saakar Bungalow," a residential property in Pune, to Respondent No. 2 (Buttepatil Properties) for ₹9.50 crores.

The Appellant contended the sale violated Section 180 of the Companies Act, 2013, as it was an "undertaking" sold without a special resolution and was undervalued.

Earlier, the NCLT had vacated a status quo order on 18.08.2023 to allow the sale because the company’s loan account with Axis Bank was declared an NPA and SARFAESI proceedings were initiated.

The sale proceeds were paid directly to Axis Bank to settle dues.

The Appellant challenged the NCLT’s order dated 02.05.2025, which had confirmed the sale.

The Court applied Section 180(1)(a) of the Companies Act, 2013, which restricts the Board’s power to dispose of the "whole or substantially the whole of the undertaking" without a special resolution, noting the quantitative threshold in the Explanation (20% of net worth or income).

It relied on *P.S. Offshore Inter Land Services Pvt. Ltd. v. Bombay Offshore Suppliers Ltd.* and *International Cotton Corporation (P.) Ltd. v. Bank of Maharashtra*, which establish that an "undertaking" means a business as a going concern or an organized profit-making activity, and not mere isolated assets or tools of business.

It also applied Section 2(16) of the Act to distinguish between "assets" and "undertaking".

The principle from *Wander Ltd. v. Antox India* regarding limited appellate interference in discretionary orders.

The Tribunal reasoned that Section 180(1)(a) applies only to "undertakings" and not isolated assets.

It found that Saakar Bungalow was a passive, non-revenue-generating asset acquired in 2017 and was not part of the company's operational business.

The 20% valuation threshold in the Explanation only applies if the asset first qualifies qualitatively as an "undertaking".

Regarding good faith, the Tribunal noted the sale was essentially a "distress sale" under SARFAESI overseen by Axis Bank for debt recovery, and the Appellants (as guarantors) were aware of the financial defaults.

Since the Appellants failed to bring a higher bidder despite being given an opportunity by the NCLT and had previously withdrawn their challenge against Axis Bank, the purchaser's title was protected under Section 180(3).

On valuation, the Court found the sale price of ₹9.50 crores (exceeding the Fair Market Value of ₹8 crores) was reasonable given the litigation and "as is where is" basis.

The Court affirmed that the sale was a bona fide distress transaction to satisfy bank dues and that there was no evidence of undervaluation or perversity in the NCLT's exercise of discretion.

Both appeals and pending applications were dismissed.