CEO offer letter dated a day before the deal: NCLAT makes three Corsalite directors pay Wave Global Rs 3 crore

Wave Global Educational Services sold its coaching business to Corsalite for Rs 3 crore in July 2017 and was in liquidation by 2021. The Principal Bench finds the purchaser was the alter ego of its three directors, who took every share within four months, and trims the payment direction to them and Corsalite alone.

The National Company Law Appellate Tribunal has held three directors of Corsalite Education Services Pvt Ltd personally answerable, along with their company, for the Rs 3 crore Corsalite agreed to pay for the coaching business of Wave Global Educational Services Pvt Ltd in 2017. Wave Global is now in liquidation, and the money will go into its liquidation estate.

In a judgment of 27 October 2026 authored by Indevar Pandey, Member (Technical), a three-member Principal Bench with Justice N. Seshasayee, Member (Judicial) and Arun Baroka, Member (Technical) found that the liquidator did not need to plead lifting of the corporate veil.

The record itself showed Corsalite was the vehicle through which Subbarao Siddabattula, Ilangovel Thulasimani and Charu Noheria took over the company.

A coaching business sold for Rs 3 crore

Wave Global ran medical, IIT-JEE and CBSE tutorials. On 14 July 2017 it signed a Business Purchase Agreement (BPA) with Corsalite, under which Corsalite would acquire the business for Rs 3 crore: Rs 2.35 crore towards liabilities listed in Appendix A, Rs 65 lakh as directors' bonus and Rs 1 lakh for the promoters' shareholding.

Clause 2(d) said the Appendix A liabilities would be paid on a monthly schedule from the income the company generated, with any shortfall reducing that month's payment and carrying forward. Closing was to happen by 31 July 2017.

The same day, the promoters Rajiv Kumar Prasad, who held 67 per cent, and Bimal Kumar, who held 33 per cent, transferred their entire shareholding to Corsalite. The three Corsalite directors became directors of Wave Global, as did Chaitanya Narra, Nitin Kumar and Anne Sivaram, described as associates or directors of Corsalite.

On 25 August 2018 the three directors resigned and transferred their shares to one Rekha Gautam. Wave Global was admitted into the corporate insolvency resolution process (CIRP) on 18 November 2019 on a Section 9 petition, and ordered into liquidation on 11 August 2021. Radhey Shyam Yadav, the resolution professional, became liquidator.

The liquidator wrote to Corsalite on 25 June and 16 September 2020 demanding the Rs 3 crore, then sent a legal notice on 14 September 2021 to Corsalite and the three directors. They denied liability on 7 October 2021. In May 2022 he moved the NCLT New Delhi bench under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.

By order of 2 September 2025 in I.A. No. 2902 of 2022, the NCLT allowed the application and directed the respondents to refund the amount due within four weeks, to be deposited in the liquidation account. The five former directors, Corsalite and Anne Sivaram were all named in the direction. The five appealed.

Strangers to the contract, they said

The appellants argued that the BPA was signed only by Wave Global and Corsalite. Siddabattula had signed as an authorised representative of Corsalite, not personally, and Narra, Kumar and Sivaram were not even Corsalite directors at the time. No contractual liability could be fastened on them.

The liquidator, they said, had never pleaded lifting of the corporate veil, and the NCLT had recorded their objection but given no finding on how personal liability arose. They relied on Balwant Rai Saluja v. Air India Ltd, (2014) 9 SCC 407, for the proposition that the veil is lifted only in exceptional circumstances, none pleaded here.

They also challenged jurisdiction. A disputed pre-CIRP contractual claim, with an arbitration clause in the agreement, could not be decided in summary proceedings under Section 60(5). They cited the NCLAT rulings in Arkay Logistics Ltd v. Abhijit Guhathakurta and Amier Hamsa Ali Abbas Rawther v. NLC India Ltd.

On the merits of the contract, they said Clause 2(d) tied payment to income the company never generated, so the obligation never arose. And a settlement agreement of 14 January 2019 recorded that Wave Global itself owed Corsalite Rs 1.5 crore, an unsecured loan of Rs 1,25,46,804 and invoices of Rs 24,53,196, which the NCLT had ignored.

The liquidator answered that the appellants had taken complete control after the BPA, that Clause 8 recorded the buyer accepted the assets on an as-is-where-is basis after due diligence, and that Section 35(1)(d) of the Code and Regulation 39 of the Liquidation Process Regulations obliged him to recover every due of the corporate debtor.

Sahil Raveen appeared for the appellants. Varun Goel appeared for the liquidator, who was present in person.

Section 60(5) covers a receivable of the estate

The bench framed three questions at paragraph 28. The first was whether the NCLT had jurisdiction under Section 60(5) to entertain the application filed by the liquidator. The second and third:

(ii) Whether the amount payable under the Business Purchase Agreement constitutes an asset receivable by the Corporate Debtor recoverable during the liquidation? (iii) Whether the Appellants along with Respondent No.2 are liable to make payments arising under the Business Purchase Agreement? (para 28)

On jurisdiction, it read Section 35(1)(d), which requires the liquidator to protect and preserve the assets of the corporate debtor, with Regulation 39, which directs him to recover all dues to the company in a time-bound manner. Unpaid consideration under the BPA is a receivable forming part of the liquidation estate.

Its recovery arises out of and in relation to the liquidation within Section 60(5)(c). Recovery of money admittedly forming part of the assets of the corporate debtor cannot be sent to a civil court merely because the liability originates in a contract, the bench said.

Arkay Logistics and Amier Hamsa were distinguished as purely contractual disputes between third parties needing independent adjudication. Here the liquidator sought consideration admittedly agreed under the BPA, squarely within his statutory functions. The NCLT, the bench added, is the only competent authority for matters of this nature in liquidation.

Who signed, and who moved in

The bench then turned to the record, and one document stood out. On 13 July 2017, a day before the BPA, Siddabattula offered Rajiv Kumar Prasad, the 67 per cent promoter, the post of Chief Executive Officer of Wave Global at an annual salary of Rs 60 lakh. Bimal Kumar was offered the post of Director (Academic).

The letterhead already read Wave Global, Powered by Corsalite. The letter was dated 13 July, signed on 14 July, and asked for acceptance by the end of 13 July. Siddabattula signed as authorised signatory of Wave Global. The appellants, the bench concluded, had taken over the company even before the agreement was signed.

The shareholding told the same story. On 14 July 2017 Corsalite received 9,999 shares and Siddabattula one. On 7 November 2017 Corsalite transferred all 10,000 to the three directors: 5,000 to Siddabattula, 2,500 each to Thulasimani and Noheria. The company then issued 3,195 fresh shares, including 695 to Narra and 2,500 to Sivaram.

The 2017-18 board report showed the five as principal shareholders, Siddabattula at 37.89 per cent. Board minutes recorded nine meetings between 14 July 2017 and 31 March 2018 with full attendance. The letterhead was changed, a new coaching centre was opened at Janakpuri with company funds, and a valuation of 25 January 2018 priced each share at Rs 14,400.

On that valuation, fresh shares worth about Rs 4 crore were issued. On 29 December 2017 Wave Global signed a share purchase agreement for 70 per cent of Axis Tutorials Pvt Ltd for Rs 1,08,31,300, paid from its own account, and Noheria became a director of Axis Tutorials.

The liquidator's reply recorded collections of Rs 1,42,06,928 over three weeks allegedly not deposited in the company account. The former directors Prasad and Rekha Gautam told the NCLT that the books were taken to Hyderabad by Siddabattula and the company run from there.

Rekha Gautam, in an affidavit of 28 October 2022, said her only relationship with Wave Global was as a creditor owed Rs 2,39,46,122 for a master franchise fee, fit-out and interest. She said she never functioned as a director and was made one by fraud and misrepresentation in connivance with Corsalite.

Clause 2(d) and the money that was raised

Clause 2(d), the bench held, merely prescribes the commercial mechanism for discharging specified liabilities. It cannot be read as extinguishing the purchaser's primary obligation to pay the agreed consideration.

The appellants' reading would let a purchaser postpone payment indefinitely by asserting inadequate revenue, despite having assumed complete control of the company. Commercial contracts get a business efficacy interpretation, and those who ran the business cannot rely on the financial consequences of their own management to escape its terms.

During the thirteen months they were in control, more than Rs 4 crore was raised by issuing equity and over Rs 1 crore of company money went into Axis Tutorials, whose income never entered the company accounts. Having accepted the assets as-is-where-is under Clause 8, the purchaser could not call the consideration unenforceable.

The settlement agreement of 14 January 2019 did not help either. Corsalite had filed no claim before the liquidator, so the question of considering its Rs 1.5 crore did not arise in these proceedings.

Privity is not a cloak

On personal liability, the bench said the case could not be decided merely by identifying whose signatures appear on the BPA. The substance of the transaction had to be gathered from the contract and the conduct of the parties immediately after it.

The appellants' defence suffered an inherent contradiction. They claimed no connection with the BPA, yet became the controlling persons in Wave Global immediately after it; no control, yet Siddabattula became chairman and authorised signatory and Noheria ran the finances; no involvement, yet the board minutes recorded their presence at every decision.

The sequence, from execution through Corsalite to immediate assumption of management, transfer of every share to themselves, use of the assets and simultaneous resignation, was one continuous transaction. Corsalite, the bench found at paragraph 77, “functioned merely as the alter ego of Appellant Nos.1 to 3”.

Privity determines the enforceability of rights between parties to a contract. It cannot be used to disregard the later acts of persons who themselves took control of the company, ran its finances and acted on the very transaction they now disown. The corporate form cannot become a cloak for avoiding responsibility for acts personally undertaken.

As to the missing plea, the bench held at paragraph 85 that “there is no requirement for lifting of corporate veil”. The actions on record showed the buyer was used as a vehicle to take over the corporate debtor, and the appellants were the real beneficiaries and decision-makers behind every material transaction after 14 July 2017.

Balwant Rai Saluja did not assist them. The Supreme Court there recognised that the veil is lifted where corporate personality is used to defeat legitimate rights or perpetuate injustice, and this case fell within those exceptions. The NCLT had committed no error in fastening liability on Corsalite and the three directors.

The direction, narrowed

The bench did find one discrepancy. Prayer (a) in the liquidator's application sought Rs 3 crore with interest at 18 per cent a year from 1 June 2018 from the respondent and its directors. The legal notice of 14 September 2021 had gone only to Corsalite and the three directors, and only they had replied.

Paragraph 11 of the NCLT order directed the respondents to pay without saying which ones. Since the liquidator had sought the money only from Corsalite and its three directors, the bench held the recovery must be from them: Siddabattula, Thulasimani, Noheria and Corsalite. Narra and Kumar remain bound only by the disclosure and cooperation direction in paragraph 11(ii).

Order

The appeal was disposed of with partial modification. Corsalite and the three directors must pay the amount due to Wave Global, with interest due, to the liquidator within four weeks of the order of 27 October 2026. The liquidator will deposit it in the liquidation account as part of the liquidation estate.

The direction in paragraph 11(ii) of the NCLT order, requiring the former directors and officers to disclose assets and documents and cooperate with the liquidator, stands unchanged. Pending interlocutory applications were disposed of, with no order as to costs.