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2026 Supreme(Online)(NCLAT) 568
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Mohd. Faiz Alam Khan, J
Lorenzo Vitrified Tiles Private Limited – Appellant
Versus
Committee of Creditors of Vrundavan Ceramic Private Limited – Respondent
Company Appeal (AT) (Ins) No. 1950 of 2024 | Company Appeal (AT) (Ins) No. 1952 of 2024
For the Appellants/Petitioners: Ms. Eshna Kumar, Ms. Astha Agrawal
For the Respondents: Mr. Arjun Sheth, Mr. Shubhanshu Tiwari, Ms. Somya Jain, Mr. PBA Srinivasan, Ms. Barnali Paul, Mr. Manish Kumar, Mr. Harshit Khare, Mr. Prafful Saini, Mr. Ayuj Agrawal, Ms. Aditi Sharma
Inordinate and unexplained delay in filing a resolution plan approval application, beyond the maximum CIRP period, justifies rejection of the plan and initiation of liquidation, even if the plan was approved by 100% of the CoC.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 12, 33, and 61 - Company Appeal (AT) (Ins) - Rejection of Resolution Plan - Initiation of Liquidation - The court analyzed the time-limit for completion of CIRP under Section 12 and the circumstances for initiation of liquidation under Section 33(1)(a), where the Adjudicating Authority does not receive a resolution plan within the maximum period permitted. (Paras 37-39)
(B) Insolvency and Bankruptcy Code, 2016 - Resolution Plan - Delay in filing - The court held that the timeline given by the Adjudicating Authority for submission of a revised resolution plan was not complied with, and the delay of over 8 months in filing the plan approval application, without any justified explanation, warranted rejection and initiation of liquidation. The court observed that the delay caused by the Resolution Professional and the Committee of Creditors, including the failure to convene timely meetings and seek extensions, was not attributable to the litigants or the court's process. (Paras 61-67, 76-77)
(C) Insolvency and Bankruptcy Code, 2016 - Liquidation - Last resort - Despite the objective of IBC to revive the corporate debtor, the court emphasized that an endless resolution process causing devaluation of assets cannot be preferred, and timely liquidation is necessary to protect creditor interests and maximize asset value. (Paras 68-71)
(D) Insolvency and Bankruptcy Code, 2016 - Commercial wisdom of the Committee of Creditors - The court noted that the Adjudicating Authority has limited powers of judicial review over the commercial wisdom of the CoC, but the CoC's failure to act with diligence was subject to scrutiny. (Para 73, 77)
Facts of the case:
The corporate debtor was admitted into CIRP in January 2020. The Resolution Professional (RP) filed an application for approval of a resolution plan approved by the CoC (sole financial creditor, State Bank of India) in August 2021. The Adjudicating Authority remanded the plan back to the CoC in November 2023 for reconsideration in light of a Supreme Court judgment, with a direction to file the revised plan by 30.11.2023. The CoC's first meeting after this order was on 04.12.2023, and the plan was approved again in January 2024. The RP filed the approval application on 05.07.2024 (after a delay of over 8 months), which was rejected, and liquidation was ordered. Appeals were filed by the Resolution Applicant and the RP.
Findings of Court:
The Appellate Tribunal upheld the Adjudicating Authority's order, finding no illegality in initiating liquidation given the inordinate and unexplained delay by the RP and the CoC in complying with the timeline, and their failure to seek any extension of the CIRP period. The adverse remarks against the RP were deemed justified based on the factual record. (Paras 61-77)
Issues: The main issues were whether the Adjudicating Authority correctly rejected the resolution plan and ordered liquidation due to delay, and whether the adverse observations against the RP were warranted.
Ratio Decidendi: The court ruled that the delay in filing the resolution plan approval application, almost entirely attributable to the inaction of the RP and the CoC, and not to the litigants or the judicial process, justified the rejection of the plan and the initiation of liquidation, as the objective of timely resolution is paramount. The general rule is that 330 days is the outer limit for completing CIRP, and extension is only permissible in exceptional cases where delay is due to no fault of the litigants. (Paras 64-67, 74)
Result: Both appeals dismissed. No order as to costs. (Para 78)
| Table of Content |
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| 1. the court has jurisdiction to hear and dispose of related appeals through a common judgment. (Para 1 , 2) |
| 2. the cirp initiation under section 7 of the ibc is the starting point of the insolvency process for the corporate debtor. (Para 3) |
| 3. a factual chronology of cirp events, including extensions, resolutions, and plan approvals, is essential to establish the procedural timeline. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 4. the resolution applicant argues that delays were not its fault and that a resolution plan approved by the coc should be respected as a binding contract. (Para 13 , 14 , 15 , 16 , 17 , 18) |
| 5. the resolution professional argues that the rejection of the plan on hyper-technical grounds was erroneous and that the timelines for resolution are not mandatory. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
| 6. the state bank of india argues that the rp failed to comply with the court's timeline, justifying liquidation, and that the rp has no locus to appeal. (Para 27 , 28 , 29 , 30 , 31 , 32) |
| 7. the intervener, intec capital ltd., argues that its claim was wrongfully treated and that it dissented from the revised distribution in the resolution plan. (Para 33 , 34 , 35) |
| 8. the court identifies sections 12 and 33 of the ibc as the key legal provisions governing time-limits for cirp and initiation of liquidation. (Para 36 , 37) |
| 9. section 12 mandates completion of cirp within 330 days, and section 33 allows liquidation if the resolution process is not completed within that maximum period. (Para 38 , 39) |
| 10. precedents establish that time taken in legal proceedings can extend cirp, but the primary goal is revival, with liquidation as a last resort. (Para 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51) |
| 11. the court examines the factual timeline, noting the cirp began in 2020 and the resolution plan was approved by the coc in august 2021. (Para 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60) |
| 12. the court finds that the rp's failure to comply with the 30.11.2023 deadline and subsequent delays justify the initiation of liquidation. (Para 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68) |
| 13. timely resolution is crucial to prevent asset devaluation; liquidation is preferred over an endless process that harms creditor interests. (Para 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76) |
| 14. both appeals are dismissed as without merit, and the order for liquidation and adverse remarks against the rp are upheld. (Para 77 , 78 , 79 , 80) |
J U D G M E N T
(Hybrid Mode)
[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]
1.Both the aforesaid appeals have been filed against the same impugned order passed by the Ld. Adjudicating Authority and for the sake of convenience are being disposed of by passing this common judgment.
2. CA (AT) (Ins) No. 1950 of 2024 has been filed by the Resolution Applicant (RA) of the Corporate Debtor (CD) Challenging the impugned order dated 27.09.2024 passed by the National Company Law Tribunal, Ahmedabad Bench, (Adjudicating Authority) in IA No. 33 of 2024 moved in CP IB No. 561 of 2018 for the approval of the Resolution Plan whereby the Resolution Plan approved by the Committee of Creditors (CoC) has been rejected by the Ld. Adjudicating Authority and order for liquidation of the CD has been passed while CA (AT) (Ins) No. 1952 of 2024 has been preferred by the Resolution Professional of the CD (RP) challenging the same impugned order wherein the Ld. Adjudicating Authority in the process of rejecting the Resolution Plan has made some adverse observations against the conduct of the RP.
3. The facts of the aforesaid appeals are that vide order dated 21.01.2020 passed in CP IB No. 561 of 2018 the Vrundavan Ceramics Pvt. Ltd. (CD) was admitted into the Corporate Insolvency Resolution Process (CIRP) on an application moved under Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) filed by the State Bank of India.
4. The IRP during the course of CIRP collated the claims of the various creditors and constituted th
