Calcutta HC Sets Strict 6-Month Deadline to Conclude Liquidation of 32 Banking Companies [Read Order]

In a major step to resolve long-standing legacy litigations, the Calcutta High Court has directed the Official Liquidator to wind up 32 banking firms finally within a limited time frame of six months following an application moved by the Reserve Bank of India (RBI).

The RBI approached the Court under Section 39 of the Banking Regulation Act, 1949, to finalise the liquidation process of 32 banking entities which were formally directed to be liquidated by a notification dated June 3, 2025. The procedures for the liquidation of these corporations are connected to a previous proceeding (CP No.331 of 1949) where the Punjab National Bank (PNB) was designated as the Court Liquidator and has been conducting the winding-up since then.

Before the Court, all the parties including the RBI made a shocking admission that at present the exact information of assets, properties and liabilities of these 32 entities are not known and there are no specific records easily available. In the absence of a proper administrative mechanism, the RBI saw it fit to file the present application so as to put a legal quietus on these lingering processes.

The Court observed that the recent revisions to the Companies Act, 2013, do not place any embargo on the power of the High Court to conduct such liquidation proceedings. The Court found no legal impediment in passing final directives by relying on Section 39 of the Banking Regulation Act, 1949 which specifically specifies that the RBI or a recognised bank (like PNB) shall be designated as the official liquidator, overriding contradictory provisions in the Companies Act.

Justice Ravi Krishan Kapur disposed of the petition with a set timeframe and specified requirements on the Official Liquidator (PNB). The Court ordered that the entire liquidation procedure must be conclusively concluded within six months. To ensure transparency and accountability, the Official Liquidator was directed to go through all the available records to find out full particulars of the 32 firms including any traceable assets and liabilities and intimate the same to the RBI.

In addition, the Court directed that the Official Liquidator should make a status report with the RBI every three months on the progress of the winding up procedure. Further, liberty was given to the liquidator to issue suitable notices to all the affected parties to the proceedings. Finally, the Court permitted the RBI, as the sector regulator, to seek formal directions from the Court in the future to officially conclude the liquidation proceedings after completion of the six-month procedure.