NCLT allows Exclusion of Time spent by Liquidator in complying with Judicial Orders and Directions of Stake Holders [Read Order]
The tribunal held that period from 01.05.2025 to 30.06.2025 stands justified for exclusion and is excluded from the Liquidation period
NCLT - Liquidator - Judicial Orders - taxscan
NCLT - Liquidator - Judicial Orders - taxscan
The Kolkata Bench of the National Company Law Tribunal (NCLT )has permitted exclusion of time spent by liquidators in complying with judicial orders and directions of the stakeholder body. The tribunal held that the period from 01.05.2025 to 30.06.2025 stands justified for exclusion and is excluded from the Liquidation period.
The application has been preferred by a Mr. Manish Jain, Liquidator of Sasa Musa Sugar Works Private Limited under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, (“I&B Code”)seeking to allow the application and to exclude 61 days from 1st May, 2025 (the date when the order was passed by the Hon’ble National Company Law Appellant Tribunal) till 30th June, 2025 (the date of the 6th SCC meeting when the SCC Members authorized the Liquidator to publish further e-auction notice for the Corporate Debtor as a going concern)
It is submitted that the liquidation of the Corporate Debtor commenced on 20.02.2025 by order of this Adjudicating Authority and the Applicant was appointed as Liquidator under Section 34(1) of the IBC. Upon taking charge, the Applicant secured the assets and assessed that a sale of the Corporate Debtor as a going concern would maximise value.
It is claimed that in furtherance thereof, the 2nd SCC Meeting (29.03.2025) resolved to attempt a going-concern sale with a reserve price of ₹125 crores, inclusive of the FD component of ₹9.5 crores. An e-auction was conducted on 03.05.2025, which failed for want of bids.
The NCLAT permitted the suspended directors to place a Scheme of Compromise/Arrangement under Section 230 of the Companies Act, 2013 before the Liquidator. In compliance, the scheme was placed in the 4th SCC Meeting (26.05.2025); clarifications were sought, and time was granted to submit a revised scheme.
It is submitted that a revised scheme dated 03.06.2025 was considered in the 5th SCC Meeting (09.06.2025). The scheme was rejected by the SCC and the stakeholders on the grounds of lack of investor details, absence of credible source of funds, and a long repayment timeline of 36 months, which was not in the interest of creditors who could realise value sooner through an auction.
The Applicant approached seeking permission to conduct up to three subsequent e-auctions for sale as a going concern without block-wise asset segmentation. This Adjudicating Authority , by order dated 24.06.2025, was pleased to allow the prayer.
The SCC in its 6th Meeting (30.06.2025) authorised the Liquidator to issue further e-auction notices pursuant to the said order. Subsequently, in the 7th SCC Meeting (28.07.2025), it was unanimously resolved that the period 01.05.2025 to 30.06.2025 consumed entirely in compliance with judicial directions, consideration of the Section 230 scheme, SCC approvals, and obtaining leave from this Adjudicating Authority, all of which were beyond the control of the Liquidator be excluded.
It is submitted that the exclusion of 61 days is necessary to protect the integrity of the liquidation process and to prevent any adverse inference of delay against the Liquidator when such time was spent strictly on account of judicial and stakeholdermandated processes.
Regulation 47 of the Liquidation Regulations prescribes a model timeline, which is directory. The NCLAT and this Adjudicating Authority have consistently held that time spent due to judicial orders, appellate proceedings, or directions of stakeholder bodies merits exclusion to ensure that the Liquidator is not penalized for events outside his control. This regulation is expressly directory, prescribing a model timeline to guide the process. It has been judicially recognised that exclusion of periods consumed in litigation or judicial directions is permissible so as not to penalise the liquidator.
It was observed that while the liquidator must ordinarily adhere to strict auction cycles, Regulation 33 itself recognises that the SCC may advise extension or deviation from the time periods. In the present case, the SCC itself resolved in its 7th meeting (28.07.2025) that the 61 days ought to be excluded, noting that the period was consumed by judicially mandated processes.
The bench comprising Justice Bidisha Banerjee (Member-Judicial) and Siddharth Mishra (Member-Technical) viewed that applying the combined scheme of Regulation 47 (model timeline, directory in nature) and Regulation 33 read with Schedule I (strict auction cycles but subject to SCC advice and Tribunal’s leave).
The tribunal held that the period from 01.05.2025 to 30.06.2025 stands justified for exclusion and is excluded from the Liquidation period.
The exclusion will not prejudice any stakeholder; rather, it safeguards the process by ensuring that the Liquidator is not held in default for delays arising entirely from judicial compliance and stakeholder deliberation. The objective of value maximisation through a going concern sale under Regulations 32(e) and 32A continues to be preserved.
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