Resolution Professional Has No Vested Right To Be Liquidator, Mid-Process Replacement Unwarranted: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has held that a resolution professional has no "vested right to be appointed as liquidator" and that replacing the liquidator midway through the process is inappropriate when it risks additional costs and the majority creditor supports the incumbent.

A bench of Judicial Member Justice N Seshasayee and Technical Members Arun Baroka and Indevar Pandey said that while the adjudicating authority cannot overrule the Committee of Creditors' choice, it was still not appropriate to replace the liquidator midway through the process.

The findings came while dismissing an appeal by Nipan Bansal, the former resolution professional of Cheema Spintex Limited, who had challenged the National Company Law Tribunal, Chandigarh Bench's decision to appoint Arun Gupta as liquidator despite the CoC recommending him.

The NCLT had relied on an IBBI communication dated July 18, 2023, which advised adjudicating authorities to consider appointing someone other than the resolution professional as liquidator in certain situations, such as when issues of independence or oversight might arise.

The NCLAT noted that although a later ruling had removed the “cloud” over this communication, its existence at the time of the NCLT's order did not justify changing the liquidator now.

Cheema Spintex was ordered into liquidation on July 12, 2024 after a CoC vote. Bansal filed for liquidation and submitted his to continue as liquidator under Section 34(1) of the Insolvency and Bankruptcy Code. On May 8, 2025, relying on the IBBI's 2023 advisory, the NCLT appointed Gupta instead.

Bansal then approached the Punjab and Haryana High Court, which dismissed his writ petition on May 19, 2025 and directed him to pursue remedies under the IBC, leading to the present appeal.

In the NCLAT, Bansal argued that the tribunal's ruling in Manish Jaju v CoC & Ors (2025) had already held that the IBBI could not override CoC's choice, and that once this “cloud” was removed he alone must be appointed.

Gupta submitted that he had made substantial progress in liquidation, including preparing the liquidation estate, the asset memorandum and verifying claims, and had begun steps toward asset sales. IDBI Bank, which holds more than 92 percent of the CoC voting share, told the bench it had no objection to Gupta continuing and cautioned that any delay would diminish asset value.

Refusing to interfere, the tribunal stressed both the lack of any entitlement and the disruption that a change would cause. It said,

"a) The appellant does not have any vested right to be appointed as the liquidator.

 b) It may not be appropriate to change the liquidator in the middle of the liquidation process as there will be cost implications, more so when the 3rd respondent, with majority voting share far in excess of 66% is happy with the second liquidator."

Subsequetntly, The appeal was dismissed without costs.