Liquidation under insolvency law must first explore revival measures, including compromise, arrangement and going-concern sale before final winding up.

Liquidation under the insolvency framework was upheld where the statutory period had expired and no approved resolution plan existed, so the liquidation order was not interfered with. At the same time, the liquidator was required to keep the corporate debtor as a going concern and, before sale of assets, explore revival-oriented measures such as a compromise or arrangement under Section 230 of the Companies Act, 2013. If revival failed, sale of the business as a going concern could be considered, with outright liquidation remaining a last resort.

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Issues: (i) Whether the liquidation order under the Insolvency and Bankruptcy Code called for interference. (ii) Whether, during liquidation, the liquidator was required to first explore revival measures, including a compromise or arrangement under the Companies Act, 2013 and continuation of the corporate debtor as a going concern.

Issue (i): Whether the liquidation order under the Insolvency and Bankruptcy Code called for interference.

Analysis: The liquidation order had been passed after expiry of the statutory period with no approved resolution plan on record. The challenge to initiation of corporate insolvency resolution process was not entertained, as that order was not under challenge. In the absence of a viable plan and after the expiry of 270 days, liquidation followed the statutory scheme.

Conclusion: The liquidation order was not interfered with.

Issue (ii): Whether, during liquidation, the liquidator was required to first explore revival measures, including a compromise or arrangement under the Companies Act, 2013 and continuation of the corporate debtor as a going concern.

Analysis: Liquidation under the insolvency framework is not to be treated as an immediate end-point where revival is still possible. The liquidator must act to keep the corporate debtor a going concern, verify and consolidate claims, take custody and control of assets, and before sale of assets, explore a compromise or arrangement under Section 230 of the Companies Act, 2013. If revival fails, the business may be sold as a going concern, and outright liquidation is to be a last resort.

Conclusion: The liquidator was directed to proceed first in accordance with revival-oriented measures, including action under Section 230 of the Companies Act, 2013, and only thereafter to proceed to sale or liquidation as permitted by law.

Final Conclusion: The appeals failed to secure interference with the liquidation order, but the liquidation process was directed to be conducted in a revival-oriented manner, with priority to compromise, arrangement, and sale as a going concern before final liquidation.

Ratio Decidendi: In liquidation proceedings under the insolvency law, revival-oriented steps must be explored first, including compromise or arrangement and sale of the corporate debtor as a going concern, and liquidation remains a last resort.

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