NCLAT Holds Insolvency Withdrawal Impermissible After Liquidation: Upholds Bank of Baroda’s Initiation that S.12A Cannot Apply Post‑Liquidation [Read Order]

In a recent ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has reaffirmed that withdrawal of insolvency proceedings under Section 12A of the Insolvency and Bankruptcy Code, 2016, is impermissible once liquidation has commenced, thereby upholding the Bank of Baroda‑initiated process

The appeal arose from the NCLT’s common order dated 21 February 2024, which allowed the Resolution Professional’s application under Section 33 of the Insolvency and Bankruptcy Code, 2016, seeking liquidation, and approved Bank of India’s proposal for the appointment of a liquidator. Aggarwal’s plea to keep these applications in abeyance pending his Supreme Court challenge was rejected.

The appellant Gokul Aggarwal had argued that since the same debt was claimed by Bank of India in the CIRP of both RNA Corp (the principal borrower) and Chamber Constructions (the corporate guarantor), parallel proceedings were impermissible. He relied on the Supreme Court’s earlier status quo order in Civil Appeal Nos. 827‑828 of 2021 staying the CIRP of RNA Corp.

The Appellate Tribunal noted that the Supreme Court has since delivered its judgment in ICICI Bank Ltd. v. Era Infrastructure (India) Ltd., 2026 SCC Online SC 314, holding that simultaneo

Ps against a principal borrower and its corporate guarantor are legally maintainable. “Thus, proceedings against both the principal borrower and the corporate guarantor can be proceeded with simultaneously,” the bench observed.

The bench, Justice N. Seshasayee(judicial member), Arun Baroka, and Indevar Pandey (technical member) clarified that Section 12A, permitting withdrawal of insolvency proceedings upon settlement, applies only during the CIRP stage and not after liquidation.

Citing its own precedent in Asha Chopra & Ors. v. Hind Motors India Ltd., the Tribunal held that once liquidation is ordered, any revival must follow the route of a scheme under Section 230 of the Companies Act, 2013, as provided in Regulation 2B of the Liquidation Regulations.

The bench also noted that it was not present when his application (IA No. 41/2024) was heard, and under Rule 48 of the NCLT Rules, the Adjudicating Authority was entitled to decide the matter on merits. Finding no procedural infirmity, the Tribunal dismissed the appeal, observing that continued litigation was only delaying the insolvency process.

The NCLAT upheld the liquidation of Chamber Constructions Pvt. Ltd., paving the way for the liquidator to proceed with asset realization in accordance with law.

Accordingly, all the related IAs are dismissed, and the liquidator is allowed to proceed further to take action in the liquidation proceedings.

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