NCLT Can Invoke Inherent Powers To Permit Withdrawal Of Voluntary Liquidation Despite Absence Of Specific Provision In IBC: NCLT Chandigarh

The National Company Law Tribunal, Chandigarh Bench, comprising Harnam Singh Thakur (Member-Judicial) and Shishir Agarwal (Member-Technical), has disposed of an application seeking withdrawal of voluntary liquidation. The adjudicating authority held that even in the absence of specific provision under the IBC, it can allow the withdrawal of voluntary liquidation by invoking its inherent power under Rule 11 of the NCLT Rules, 2016. Background of the Case The management of the applicant company decided to wind up the company by passing a resolution for voluntary liquidation. The decision was taken to avoid the operating expenses incurred by it. The shareholders of the company approved the decision at the Extraordinary General Meeting (EGM) and appointed Mr. Suman Kumar as the liquidator of the company. The liquidation process commenced u/s 59 of the IBC, 2016, and a public announcement was made. There were no debts, claims, or pending litigations against the company, and no assets had been sold by the liquidator. Now, given the favorable market trends and projected business growth, the management has decided to revive its operation. The shareholders approved the decision for withdrawal of liquidation, and the liquidator also consented to the withdrawal. The liquidator confirmed that no sale of the assets of the company has been made and no petition has been filed by him before the adjudicating authority. The applicant filed the application u/s 59, 60(5), and other applicable provisions of the IBC, praying for withdrawal of voluntary liquidation. Ruling of the Adjudicating Authority The bench initially discussed that there is no specific provision under the IBC, 2016, or the voluntary liquidation regulation that permits the withdrawal of the process. However, the absence of such provision does not bar NCLT from exercising its inherent jurisdiction under Rule 11 of the NCLT Rules, 2016, especially when liquidation was not initiated due to any financial distress or statutory compulsion. The bench also discussed NCLT Bengaluru Bench's ruling in the matter of Biocad India Pvt. Ltd. CP. 47/BB/2023, wherein the NCLT terminated the voluntary liquidation process midway where there was no objection from the liquidator to revive the company. The NCLAT observed, “The liquidation was initiated voluntarily and is now sought to be withdrawn by the same consenting stakeholders, and no third-party rights are affected, this Tribunal is of the view that the inherent powers of the Tribunal under Rule 11 of the NCLT Rules, 2016, can be invoked to meet the ends of justice.” Therefore, considering the peculiar facts and the revival prospects of the company, we are inclined to exercise our inherent jurisdiction under Rule 11 of the NCLT Rules, 2016, and allow the withdrawal of the voluntary liquidation process. Lastly, the NCLT directed the liquidator to hand over the assets and management of the company back to the board of directors within two weeks of the order. Case Title: Enel Green Power India Private Limited v. Suman Kumar Verma Case Number: CP (IB) No. 3 (CH) 2024 For Applicant: Mr. Mohit Chaurasia, Mr. Ashutosh Gupta, Mr. Gaurav Rana & Mr. Ajitesh Kumar, Advocates For Respondent: Suman Kumar Verma, Liquidator (In Person) Bench: Harnam Singh Thakur (Member-Judicial) and Shishir Agarwal (Member-Technical) OrderDate: 01.07.2025 Click Here To Read/Download The Order

NCLT Can Invoke Inherent Powers To Permit Withdrawal Of Voluntary Liquidation Despite Absence Of Specific Provision In IBC: NCLT Chandigarh

Mohd.Rehan Ali

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