Excluding Liquidation Time After Extension On Same Grounds Amounts To Review: NCLT Ahmedabad

The National Company Law Tribunal (NCLT) at Ahmedabad has rejected a liquidator's request to exclude the first year of liquidation of Nakoda Limited from the statutory timeline, holding that once additional time is granted for delays, the same period cannot later be wiped out altogether.

In an order dealing with a plea to modify its earlier decision granting a one-year extension of Nakoda Limited's liquidation period, a division bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma held that  “the application attempts to secure exclusion through modification after having secured extension on same facts clearly amounts to seeking review which is not permissible under the law,”

It ruled that such a review is barred under the Insolvency and Bankruptcy Code.

The insolvency proceedings arose from a Section 7 application filed by Canara Bank against Nakoda Limited, which was admitted on July 12, 2021. After revival efforts failed, the Committee of Creditors, comprising 12 financial creditors with claims of Rs 5.23 crore, approved liquidation with a 90.2% majority, noting that the company's plant had remained shut since 2013, would require nearly Rs 100 crore to restart, and had attracted no resolution applicants.

The tribunal ordered liquidation on February 8, 2023, and appointed Ravindra Kumar Goyal as liquidator. The process soon ran into hurdles after the Enforcement Directorate attached major assets, including the Surat plant and windmills in Tamil Nadu, under the Prevention of Money Laundering Act. Seven windmills in Madhya Pradesh also could not be taken possession of due to an interim order passed by the Debt Recovery Tribunal at Jabalpur.

Several e-auctions conducted between June and August 2023 failed after no bidders deposited earnest money. Only one asset, a bungalow in Lonavala, was sold in the fifth auction held on January 16, 2024.

When the one-year liquidation period ended on February 8, 2024, the liquidator moved the tribunal citing court orders, asset attachments and repeated auction failures. Accepting that these obstacles were beyond the liquidator's control, the NCLT granted a one-year extension on March 8, 2024.

The liquidator later filed a fresh application seeking to modify that order by excluding the period from February 8, 2023 to February 8, 2024 from Nakoda Limited's liquidation timeline on the same grounds.

Rejecting this plea, the tribunal noted that “no fresh facts or changes in circumstances or development post 08.03.2024 is pleaded” to justify shifting from extension to exclusion.

The bench further observed that the March 8, 2024 order had attained finality after expiry of the appeal period under Section 61 of the IBC and could not be altered by invoking inherent powers.

Accordingly, the tribunal dismissed the application without costs.

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