Not Your Panel, Not Your Pick: NCLAT Draws A Clear Line On Liquidator Appointments

The National Company Law Appellate Tribunal (NCLAT), by its judgment dated 01 Dec 2025 in Omkara Asset Reconstruction Pvt Ltd v. Amit Vijay Karia and a connected appeal, has examined an important question: who holds the authority to determine the liquidator when the resolution professional declines to furnish consent under section 34(1) of the Insolvency and Bankruptcy Code, 2016 ('IBC' or 'the Code'). NCLAT has concluded that the authority lies with the Committee of Creditors (CoC), with the Adjudicating Authority's role limited to formal appointment upon such CoC recommendation.This article examines whether that conclusion is correctly tethered in the statutory scheme governing liquidation.The factual background is also instructive. The CoC's nomination of a liquidator took place in the context of the IBBI Circular dated 18 July 2023, which advised that an insolvency professional other than the resolution professional should be appointed as liquidator. Although this Circular was subsequently set aside on 08 Sep 2025 in Manish Jaju v. CoC of Rajesh Landmark Projects Pvt. Ltd., it formed the backdrop to the CoC's decision to nominate a new liquidator. When the Adjudicating Authority nevertheless appointed a different insolvency professional, this divergence between the CoC's nomination and NCLAT's choice set the stage for the appellate controversy.The Statutory Framework: Sections 34(1), 34(4)(c), and 27NCLAT has reproduced the governing provisions, and the analysis here proceeds strictly on that basis. Section 34(1) states that when liquidation is ordered, the resolution professional shall act as the liquidator, subject to the submission of written consent, “unless replaced by the Adjudicating Authority under sub section (4).” Section 34(4)(c) requires such replacement where the resolution professional fails to provide the written consent contemplated under section 34(1).NCLAT's consideration was also informed by its recent decision in Manish Jaju (supra), which held that the Board cannot, through a circular, alter the statutory position under section 34. Once the circular was invalidated, the central issue reverted to whether the Code itself contained any express mechanism empowering the Adjudicating Authority to select a liquidator when the resolution professional declined consent.The statute, however, does not specify who is to select the replacement in such a circumstance. Section 27, which provides for replacement of the resolution professional during the corporate insolvency resolution process, contains no language extending its procedure into the liquidation stage. The task, therefore, is to determine whether NCLAT's application of section 27 to section 34(4)(c) is supported by the structure of the Code.CIRP and Liquidation: Distinct Legal ArchitecturesA central feature of the Code is the separation between the Corporate Insolvency Resolution Process (CIRP) and the liquidation process. During CIRP, the CoC exercises complete primacy over commercial decisions and retains the power to replace the resolution professional at any time. The resolution professional functions within a tightly supervised framework and is required to seek approval of the CoC for specified actions.Liquidation is materially different. Upon commencement under section 33, the CoC no longer has any function, and the statutory scheme reassigns the conduct of the process to the Liquidator, who exercises powers under sections 35 and 36 and functions under the jurisdiction of the Adjudicating Authority, with creditors thereafter participating only through the advisory Stakeholders' Consultation Committee. The Committee is advisory in nature, and its views are not binding on the liquidator.The Liquidator thus enjoys a relative autonomy under the Code inasmuch as the powers conferred by sections 35 and 36 are vested directly by statute. By contrast, the IRP and RP function within a more circumscribed framework in which their actions are expressly subject and subservient to the commercial decisions and approvals of the CoC.The autonomy that creditors enjoy under the Code is therefore confined to the CIRP and cannot be equated with the liquidation process, which is designed to function under a different legal logic. This difference is central to the analysis that follows.NCLAT's Reasoning: Importing Section 27 into Section 34NCLAT reasoned that at all earlier stages of the Code – appointment of the interim resolution professional, appointment of the resolution professional, and replacement of the resolution professional – the Adjudicating Authority has no independent authority to select a candidate of its own choice. From this, it concluded that even at the liquidation stage, the Adjudicating Authority lacks the power to select a liquidator when the resolution professional declines consent.NCLAT therefore held that the replacement contemplated under section 34(4)(c) must be carried out through the mechanism of section 27,...

Not Your Panel, Not Your Pick: NCLAT Draws A Clear Line On Liquidator Appointments

Rajasekhar V.K

A recent NCLAT ruling extends creditor primacy into liquidation. But does the IBC’s design support this judicial bridge between two distinct stages?

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