Only CoC Can Appoint Liquidator, NCLT's Power Limited To Replacing RP: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has recently ruled that only the Committee of Creditors (CoC) has the authority to select a liquidator when the Resolution Professional (RP) does not consent to continue, holding that the Adjudicating Authority cannot appoint a liquidator of its own choice. The tribunal was deciding appeals filed by Omkara Asset Reconstruction Company, which held nearly the entire voting share in the CoCs of two stressed companies. A coram of Judicial Member Justice N Seshasayee and Technical Member Arun Baroka underscored that section 34(1) and section 34(4)(c) of the Insolvency and Bankruptcy Code, when read together, only empower “Adjudicating Authority to replace the resolution professional and not to appoint a liquidator. But, the authority to replace the resolution professional is left to the CoC under Sec.27 as per the procedure contemplated therein. Even in terms of Sec.27, the Adjudicating Authority appoints only that RP whom the CoC has chosen, subject only to the confirmation by the Board. Therefore, replacement of RP within the meaning of Sec.34(1) read with Sec.34(4)(c) can be done only as per the procedure contemplated in Sec.27.”The ruling came after the NCLT Indore, in the liquidation proceedings of Chinar Realty Private Limited and Chinar Retails and Infrastructure Private Limited, appointed liquidators who were neither the RPs during CIRP nor the nominees proposed by the CoC. In both corporate debtors, CIRP had failed, and the CoCs resolved to send them into liquidation while nominating AAA Insolvency Professionals LLP and Stress Credit Resolution Pvt Ltd as liquidators. Despite this, NCLT Indore appointed different individuals, prompting Omkara ARC to appeal. Examining the statutory framework from the appointment of the Interim Resolution Professional to liquidation, NCLAT reiterated that at no stage is the Adjudicating Authority granted independent power to choose its own IRP, RP, or liquidator. It clarified that even if the Insolvency and Bankruptcy Board of India (IBBI) does not confirm the CoC's nominee within 10 days, the Adjudicating Authority may only make an interim arrangement until confirmation is received. The tribunal added that the adjudicating authority may independently act only in exceptional situations involving gross misconduct or collusion between the RP and the CoC. It said “The power to arrest and interfere with statutory frauds is inherent in the very structure of our judicial system of which the tribunals are a part and it does not require the statute to spell the authority to do it.” NCLAT also noted that a 2023 IBBI circular requiring the appointment of a liquidator different from the RP has already been declared void in light of section 34, though the CoC is free to nominate any liquidator subject to IBBI's approval. Allowing the appeals, the tribunal set aside NCLT Indore's orders dated June 11, 2025, and directed the Adjudicating Authority to appoint the Liquidator once IBBI issues its confirmation. Case Title: Omkara Asset Reconstruction Pvt. Ltd. v. Amit Vijay Karia & Anr. with COC of Chinar Retails and Infrastructure Private Limited v. Amit Vijay Karia & Anr. Case Number: Company Appeal (AT) (Ins.) No. 914 of 2025 with Company Appeal (AT) (Ins.) No. 915 of 2025. For Appellant: Senior Advocate Abhijeet Sinha with Advocates Kiran Sharma, Niharika Sharma, Somdutta Bhattacharya, Saikat Sarkar, Heena Kochar, and Advocates Shankari Mishra and Mehak Khandelwal. For Respondent: Advocates Bharat Gupta, Varun Tyagi, Vishesh Chauhan, Ishan Srivastava, Shagun Gupta and Snigdha S. Jena for Mayuri Daga. Click Here To Read/Download Order

Only CoC Can Appoint Liquidator, NCLT's Power Limited To Replacing RP: NCLAT

Shivangi Bhardwaj

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