Suspended Director Cannot Halt Liquidation By Submitting Third-Party Settlement Offer After Expiry Of CIRP: NCLAT New Delhi

The NCLAT, Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member-Technical), has held that a suspended director cannot halt liquidation by submitting a third-party settlement offer after expiry of CIRP. The appellant contended that it had given the higher offer and has also filed the application seeking direction to consider its offer. It was submitted that considering the higher offer is in accordance with the objectives of the CIRP. However, the NCLT kept the application pending and directed liquidation of the corporate debtor in furtherance of the application by the RP. It also highlighted that it received an offer from the investor to settle on Rs. 8 Cr. For its submission, it relied on the judgment Gayatri Polyrub Pvt. Ltd. vs. Anil Kohli and Another, of Company Appeal (AT) (Ins.) No. 650 of 2023, wherein the NCLAT considered the higher offer of the two resolution applicants by stopping the liquidation process. The bench observed that the NCLT had noted that the 330-day period lapsed and no resolution plan was received; therefore, the liquidation order was passed. Also, learned counsel for the appellant has referred to the minutes of the CoC, and that also highlights that the 330-day period lapsed and no resolution plan was received. Further, the CoC decided for liquidation in February 2025, and the appellant is claiming that it received the offer from the investor in March 2025. This is not the case where the resolution plan was filed by the suspended director, and he only filed the application after CoC's decision to go for liquidation. Considering the appellant's reliance on Gayatri Polyrub Pvt. Ltd. vs. Anil Kohli and Another (Supra), the bench observed that in the said case the 330-day time period didn't lapse. Also, the tribunal accepted the higher offer only after it was considered by the CoC. And here in the present case the appellant is not a resolution applicant, and he is just claiming to receive an offer from the investor. Hence, there is no error in the liquidation order. While considering the reliance of the appellant on V. Navaneetha Krishnan vs. Central Bank of India, Coimbatore & Another, Company Appeal (AT) (Ins.) No. 288 & 289 of 2018, where the section 12A proposal was considered post-CoC's decision for liquidation and after the lapse of the CIRP period. The bench observed that the present is not a case where a settlement proposal was made by the appellant. It also clarified that in that judgment, the liquidation decision was taken after 178 days only; that's why the tribunal directed to consider the proposal. Hence, the appeal was dismissed, citing lack of merit. Case Name: Deborshi Sadhan Bose v. Rakesh Duggar, Liquidator of E.C. Bose & Company Pvt. Ltd. & Ors. Case No.: Company Appeal (AT) (Insolvency) No. 1267 of 2025 Order Date: 01.09.2025 Click Here To Read/Download The Order

Suspended Director Cannot Halt Liquidation By Submitting Third-Party Settlement Offer After Expiry Of CIRP: NCLAT New Delhi

Mohd.Rehan Ali

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Suspended Director Cannot Halt Liquidation By Submitting Third-Party Settlement Offer After Expiry Of CIRP: NCLAT New Delhi

Mohd.Rehan Ali

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers