Liquidation must first explore revival under Section 230 and preserve the corporate debtor as a going concern before asset sale.

No interference was warranted with the liquidation order on allegations of material irregularity or bias because the resolution plan had already been rejected and the record disclosed no basis to disturb the process. In liquidation, the liquidator was required to explore revival-oriented measures first, including a compromise or arrangement under Section 230 of the Companies Act, 2013, and to endeavour to keep the corporate debtor as a going concern before resorting to piecemeal sale of assets. The challenge to the liquidation order was rejected, but directions were issued to pursue revival steps and preserve the business for as long as lawful and feasible.

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Issues: (i) Whether the liquidation order required interference on the allegation of material irregularity and alleged bias in the conduct of the resolution process; (ii) whether, in liquidation, the liquidator must first explore revival through compromise or arrangement under Section 230 of the Companies Act, 2013 and thereafter attempt sale of the corporate debtor as a going concern before selling assets piecemeal.

Issue (i): Whether the liquidation order required interference on the allegation of material irregularity and alleged bias in the conduct of the resolution process.

Analysis: The record did not establish any ground warranting interference with the liquidation order. The resolution plan had already been rejected, the commercial process had not resulted in an acceptable resolution, and the Court found no basis to disturb the order merely on the allegations raised against the Resolution Professional.

Conclusion: The challenge to the liquidation order was rejected and interference was declined.

Issue (ii): Whether, in liquidation, the liquidator must first explore revival through compromise or arrangement under Section 230 of the Companies Act, 2013 and thereafter attempt sale of the corporate debtor as a going concern before selling assets piecemeal.

Analysis: The Court applied the principle that liquidation under the Insolvency and Bankruptcy Code is not intended to end with immediate dissolution, but should first preserve the corporate debtor as a going concern where possible. It held that the liquidator must take steps consistent with revival, including action under Section 230 of the Companies Act, 2013, and only on failure of revival should sale of the business or assets proceed in the manner contemplated by the Code and the Regulations.

Conclusion: The liquidator was directed to proceed first under Section 230 and to endeavour to keep the corporate debtor running as a going concern.

Final Conclusion: The appeal was disposed of without disturbing the liquidation order, while issuing directions to the liquidator to pursue revival-oriented measures and to act in a manner that preserves the corporate debtor as a going concern for as long as lawful and feasible.

Ratio Decidendi: In liquidation, revival-oriented measures under Section 230 of the Companies Act, 2013 and sale of the corporate debtor as a going concern must be explored before resorting to outright asset liquidation, in furtherance of the Code's objective of maximising value and preserving the corporate debtor where possible.

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