Liquidator Cannot Be Penalized For Event Outside His Control: NCLT Kolkata Permits Exclusion Of Time Spent In Procedural Compliance

The National Company Law Tribunal, Kolkata Bench, comprising Justice Bidisha Banerjee (Member-Judicial) and Siddharth Mishra (Member-Technical), has permitted exclusion of time spent in complying with judicial orders and directions of the stakeholder body, saying that the liquidator cannot be penalized for an event outside his control. The liquidation order of the corporate debtor was passed, and a liquidator was appointed under section 34(1) of the IBC. In the 2 SCC meeting, it was decided to attempt the sale with a reserve price of Rs. 125 Cr. However, the auction failed due to lack of bids. In the meantime, on 01.05.2025, the NCLT allowed the suspended director to place a scheme of compromise/arrangement u/s 230 of the Companies Act, 2013, before the liquidator. In the 5th SCC meeting dated 09.06.2025, the scheme was rejected on the grounds of lack of investor details, absence of credible source funds, and a long repayment plan. Thereafter, the applicant approached the adjudicating authority seeking permission to conduct three subsequent e-auctions, which was allowed by the tribunal. Hence, the 6th meeting also authorized the liquidator to issue further sale notices. After this, in the 7th SCC meeting, which was held on 28.07.2025, it was unanimously decided that the period between 01.05.2025 and 30.06.2025 was beyond the control of the liquidator and it should be excluded. The applicant contended that the 61-day period should be excluded, as this will have an adverse effect against the liquidator. It highlighted that the time was spent in the judicial and stakeholder processes, which were beyond the appellant's control. Findings of the Adjudicating Authority The adjudicating authority observed that the mentioned period was consumed in judicial process, consideration of scheme u/s 230, SCC meetings, etc. And the liquidator could not have published the fresh auction notice until the leave of the tribunal and SCC approval. Further, the bench observed that regulation 47 of the liquidation regulations prescribes the model timeline, which is directory. Also, the adjudicating authority has time and again discussed that the time spent in the judicial orders, appellate proceedings, or directions of stakeholder bodies should be excluded in order to ensure that the liquidator is not penalized for events outside his control. Lastly, the bench observed that the combined reading of regulations 47 and 33, read with Schedule I, justifies the exclusion of the 61-day period. Case Name: Central Bank of India v. Sasa Musa Sugar Works Pvt. Ltd. Case No.: I.A. (IB) No. 1322/KB/2025 In Company Petition (IB) No. 157/KB/2021 Bench: Justice Bidisha Banerjee (Member-Judicial) and Cmde Siddharth Mishra (Member-Technical), Order Date: 04.09.2025 Click Here To Read/Download The Order

Liquidator Cannot Be Penalized For Event Outside His Control: NCLT Kolkata Permits Exclusion Of Time Spent In Procedural Compliance

Mohd.Rehan Ali

Tags