Back
2026 Supreme(Online)(NCLT) 464
NATIONAL COMPANY LAW TRIBUNAL
Vinay Goel, Judicial Member
V. K. Abdul Rahim – Appellant
Versus
Jasin Jose – Respondent
IA (IBC)/195/KOB/2025 IN TIBA/07/KOB/2019|IA (IBC)/381/KOB/2025 IN IA (IBC) 195/KOB/2025 IN TIBA/07/KOB/2019|TIBA/07/KOB/2019
For the Appellants/Petitioners: Rishi Vincent
For the Respondents: Akhil Suresh, Jasin Jose, Nigi George, Rehana Shukkur
Liquidation proceedings under IBC cannot be withdrawn or closed based on stakeholder settlement post-commencement, as no statutory mechanism exists; Section 12A limited to CIRP stage; suspended promoter lacks locus.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 12A, 33, 35, 60(5) - IBBI (Liquidation Process) Regulations, 2016 - Regns. 31A, 37(7) - Liquidation proceedings - Withdrawal/closure post-commencement - Section 12A confined to CIRP stage (Chapter II); no statutory mechanism for withdrawal/closure of liquidation (Chapter III) based on stakeholder settlement or unanimity - Adjudicating Authority cannot create remedy absent explicit provision - Liquidator disapproved for placing impermissible withdrawal issue before Stakeholders’ Consultation Committee - Promoter/suspended director lacks locus post-liquidation as control vests with Liquidator - MSME registration irrelevant during liquidation, no benefit to asset realisation/distribution under Section 53. (Paras 32-44)
(B) Liquidation Process - Irreversibility - Once commenced, process irreversible save as statutorily provided; stakeholder consensus cannot redirect course - Permitting withdrawal risks complications, undermines certainty/finality; no revival/re-commencement safeguard if settlement fails. (Paras 37-39)
Facts of the case:
Promoter/suspended managing director filed applications during ongoing liquidation seeking withdrawal/closure based on unanimous Stakeholders’ Consultation Committee approval of settlement plans (100% voting), handover of remaining assets (project land, car, deeds), and direction for MSME registration to aid revival. Liquidation followed failed CIRP; claims ~Rs.27.71 crore exceeded assets (~Rs.3.95 crore); prior DRT proceedings pending; bank later opposed citing lapsed one-time settlement.
Findings of Court:
Liquidation proceedings cannot be withdrawn/closed on settlement post-commencement; no locus for suspended promoter; MSME registration unnecessary in liquidation; Liquidator to continue process per Code/Regulations.
Issues: (a) Whether liquidation proceedings can be withdrawn/closed based on post-liquidation settlement; (b) Whether direction for MSME registration permissible during liquidation; (c) Locus of suspended managing director/promoter to seek reliefs. (Para 31)
Ratio Decidendi: Statutory framework distinguishes CIRP (withdrawal via Section 12A pre-liquidation) from irreversible liquidation; judicial innovation minimal per Supreme Court guidance - equity cannot override explicit law; Liquidator must adhere to statutory limits, not facilitate impermissible proposals. (Paras 29-30, 34, 40)
Result: Both IAs dismissed; Liquidator directed to continue liquidation process.
| Table of Content |
|---|
| 1. initiation of cirp and liquidation proceedings (Para 1 , 2 , 3 , 4) |
| 2. asset shortfall and liquidation inadequacy (Para 5 , 6 , 7) |
| 3. stakeholder-approved settlement for withdrawal (Para 8 , 9 , 10 , 11 , 12) |
| 4. parties' conflicting positions on settlement validity (Para 13 , 14 , 15 , 16) |
| 5. msme registration during liquidation process (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24) |
| 6. support for revival over continued liquidation (Para 25 , 26 , 27 , 28) |
| 7. no statutory withdrawal mechanism post-liquidation (Para 29 , 30 , 31 , 32 , 33 , 34) |
| 8. liquidation irreversibility and procedural bounds (Para 35 , 36 , 37 , 38 , 39) |
| 9. section 12a inapplicable; no promoter locus (Para 40 , 41 , 42 , 43) |
| 10. dismissal of applications; continue liquidation (Para 44 , 45 , 46) |
ORDER
1. The IA(IBC)/195/KOB/2025 has been filed by Mr. V.K. Abdul Rahim, the suspended Managing Director and Promoter of the Corporate Debtor, seeking
“This Hon’ble Tribunal may be pleased to drop/close/permit to the following relief: withdraw the CIRP/Liquidation proceedings against the CD on the basis of the decision of the 24th SCC Meeting of the CD and to relieve the 1st respondent/Liquidator from his duties by handing over the balance assets of 88 cents of project land and the BMW car bearing registration No. KL-07-BM-8575 belonging to the CD and the original tile deeds of 24 cents of unencumbered property in Re.sy. 189/4 of Mulavukad Village belonging to the CD to the applicant, as the Promoter and suspended Managing Director of the CD”
2. IA (IBC)/381/KOB/2025 has been filed by the same Applicant against the same Respondents under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016, seeking a direction to the Respondent No.1/Liquidator to obtain MSME registration for the Corporate Debtor to facilitate its revival as a going concern. Since the parties to both the Interlocutory Applications are the same and the issues involved therein arise out of the same set of facts and are connected, both the applications were heard together, and a common order is passed. Brief facts in IA(IBC)/195/KOB/2025
3. The Respondent No.2, Federal Bank Limited, had filed the main petition TIBA/07/KOB/2019 under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. By order dated 20.09.2019, this Adjudicating Authority admitted the application, commenced the Corporate Insolvency Resolution Process, and appointed the RePsapgeo 3n odfe 2n3t No.1 as the Interim Resolution Professional. Subsequently, the Committee of Creditors confirmed his appointment as the Resolution Professional. Despite publishing Form G and inviting Expressions of Interest, no resolution plan was received. Consequently, on 16.09.2020, this Adjudicating Authority ordered the liquidation of the Corporate Debtor and appointed the Respondent No.1 as the Liquidator.
4. Accordingly, the Respondent No.1 constituted the Stakeholders Consultation Committee, including the Respondent No.2 and the Applicant as members. The Respondent No.3 was appointed as the representative of home buyers, who are unsecured financial creditors, while the Respondent No.2 was included as the principal creditor. Thus, the Stakeholders Consultation Committee includes all relevant financial creditors and stakeholders, in line with the requirements of the Insolvency and Bankruptcy Code, 2016.
5. Before the initiation of the Corporate Insolvency Resolution Process and the liquidation order, Respondent No.2 had already initiated proceedings before the Debt Recovery Tribunal, Ernakulam, which are still pending. Citing Regulation 37(7) of the IBBI (Liquidation Process) Regulations, 2016, and Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, it is contended that the liquidation process is not maintainable and should not continue while the Debt Recovery Tribunal proceedings are ongoing.
6. Following the liquid
