Liquidation must begin with revival efforts through compromise or arrangement, with going-concern preservation preferred over breakup sale.

In liquidation under the insolvency framework, the liquidator must first explore a compromise or arrangement for revival under Section 230 of the Companies Act, 2013 before proceeding to sell the corporate debtor's assets. The statutory approach favours continuation and revival over immediate dissolution, so the business should be preserved as a going concern where possible. Sale of the corporate debtor as a whole is preferred, and breakup sale of assets is a last resort only after genuine revival efforts fail.

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Issues: (i) Whether, after commencement of liquidation, the liquidator is required to explore compromise or arrangement under Section 230 of the Companies Act, 2013 before proceeding to sell the assets of the corporate debtor. (ii) Whether, in liquidation, the business of the corporate debtor should be preserved as a going concern and sale of assets should be resorted to only after revival efforts fail.

Issue (i): Whether, after commencement of liquidation, the liquidator is required to explore compromise or arrangement under Section 230 of the Companies Act, 2013 before proceeding to sell the assets of the corporate debtor.

Analysis: The statutory scheme of insolvency places revival and continuation of the corporate debtor above dissolution by liquidation. Where no resolution plan has been approved and liquidation has commenced, the liquidator is not to straightaway proceed to sale. Instead, the liquidator must first take steps for compromise or arrangement in terms of Section 230 of the Companies Act, 2013, and only if such revival effort fails may the liquidation process move forward. This approach is consistent with the object of the insolvency law and the power of the tribunal to consider an arrangement beneficial to the corporate debtor and its stakeholders.

Conclusion: The liquidator must first proceed under Section 230 of the Companies Act, 2013 before sale of assets.

Issue (ii): Whether, in liquidation, the business of the corporate debtor should be preserved as a going concern and sale of assets should be resorted to only after revival efforts fail.

Analysis: Liquidation is not intended to be the immediate end of the corporate debtor if revival remains possible. The liquidator is expected to keep the company operational as a going concern so far as possible, verify claims, take custody of assets, and adopt measures that may facilitate revival. Sale of the corporate debtor as a whole is preferable, and partitioned sale of assets is only a last step if revival and going-concern sale do not succeed.

Conclusion: The liquidator should preserve the corporate debtor as a going concern and resort to asset sale only upon failure of revival measures.

Final Conclusion: The appeals did not disturb the liquidation order, but the liquidation was directed to proceed in a revival-oriented manner by first considering compromise or arrangement and by preferring going-concern treatment over immediate breakup sale.

Ratio Decidendi: In liquidation under the insolvency framework, the liquidator must first explore revival through compromise or arrangement under Section 230 of the Companies Act, 2013, and liquidation sale is a last resort after genuine revival efforts fail.

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