Liquidation and revival under insolvency law require section 230 compromise efforts before asset sale, while a later section 29A challenge failed.

In insolvency liquidation, the tribunal treated revival as the first objective and required the liquidator to explore compromise or arrangement under section 230 of the Companies Act, 2013 before any sale of the corporate debtor's assets. The process was to include verification of claims and custody of assets, with sale permitted only if revival efforts failed. The challenge based on rejection of the resolution plan and the later amendment to section 29A of the Insolvency and Bankruptcy Code, 2016 was not accepted, as the relevant rejection had occurred before the amendment and the statutory timeline had already expired.

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Issues: (i) Whether the appellant could challenge the liquidation order on the basis that its resolution plan was rejected as an alleged related party and that the later amendment to section 29A of the Insolvency and Bankruptcy Code, 2016 could be invoked; (ii) whether, in liquidation, the liquidator was required to explore revival through compromise or arrangement under section 230 of the Companies Act, 2013 before sale of the corporate debtor's assets.

Issue (i): Whether the appellant could challenge the liquidation order on the basis that its resolution plan was rejected as an alleged related party and that the later amendment to section 29A of the Insolvency and Bankruptcy Code, 2016 could be invoked.

Analysis: The rejection of the resolution plan had already taken place before the amendment dated 6 June 2018. The challenge to the related-party character was not entertained because the insolvency process had already crossed the statutory timeline of 270 days. The ruling proceeded on the basis that the appellant could not rely on the later amendment and that the issue of related party status need not be adjudicated further in the circumstances.

Conclusion: The challenge failed on this issue and was not accepted in favour of the appellant.

Issue (ii): Whether, in liquidation, the liquidator was required to explore revival through compromise or arrangement under section 230 of the Companies Act, 2013 before sale of the corporate debtor's assets.

Analysis: The decision relied on the principle that liquidation is a last resort and that the insolvency framework is intended to promote revival and continuation of the corporate debtor. The liquidator was directed to proceed in accordance with the earlier directions requiring verification of claims, custody of assets, and, before any sale of assets, to take steps under section 230 of the Companies Act, 2013 for a possible compromise or arrangement. Only upon failure of revival could sale of the business or assets proceed in the manner indicated.

Conclusion: The liquidator was directed to first explore revival measures under section 230 before proceeding to sale, and the liquidation order was upheld.

Final Conclusion: The appeal did not succeed in overturning liquidation, but the process was conditioned by mandatory steps aimed at possible revival through compromise or arrangement before any sale of the corporate debtor's assets.

Ratio Decidendi: In liquidation under the Insolvency and Bankruptcy Code, 2016, revival and continuation of the corporate debtor must be explored first through a compromise or arrangement under section 230 of the Companies Act, 2013, and liquidation remains a last resort when such revival fails.

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