Liquidation upheld as 330-day CIRP lapsed; third-party post-liquidation offer and belated Section 12A plea rejected

NCLAT dismissed the appeal and upheld the HC's order directing liquidation of the corporate debtor under the IBC. It held that the maximum period of 330 days of CIRP had expired without receipt or approval of any resolution plan, obligating the Adjudicating Authority to order liquidation. The appellant was neither a resolution applicant nor had it placed any valid proposal under s.12A prior to expiry of the CIRP period; its reliance on a post-liquidation third-party investment offer was rejected. The precedent cited by the appellant was distinguished as involving an early-stage liquidation decision within the permissible CIRP period.

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1. ISSUES PRESENTED AND CONSIDERED

(1) Whether, upon expiry of the maximum period of 330 days of the corporate insolvency resolution process without approval of any resolution plan, the Adjudicating Authority was justified in directing liquidation under Section 33 of the Insolvency and Bankruptcy Code.

(2) Whether a post-CIRP, post-liquidation-decision "higher offer" or settlement proposal, routed through the suspended director claiming to have an investor, obliged the Adjudicating Authority to defer or decline liquidation.

(3) Whether precedents concerning (a) consideration of higher offers during CIRP, and (b) Section 12A withdrawal even at or after the liquidation stage, required interference with the liquidation order in the present factual matrix.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Validity of liquidation order after expiry of 330 days of CIRP without an approved resolution plan

Legal framework (as discussed): The Court proceeds on the basis of the statutory maximum period of 330 days for completion of CIRP and the scheme of Section 33 of the Insolvency and Bankruptcy Code, 2016 (IBC) mandating liquidation where no resolution plan is approved within the prescribed period. The CoC minutes and the application under Section 33(1) form the basis for liquidation.

Interpretation and reasoning: The Court notes that the rebooted CIRP concluded upon expiry of the extended period on 22 December 2024, thereby exhausting the maximum 330 days. No resolution plan was received or approved within this period. Minutes of the CoC meeting in February 2025 recorded that the CIRP period had ended in December 2024 with no plan under consideration, leaving liquidation under Section 33(1) as the "only option" for the Resolution Professional. The Resolution Professional accordingly filed an application for liquidation, which was later ratified by the CoC, with the main financial creditor expressly approving liquidation. In these circumstances, the Adjudicating Authority's direction for liquidation is treated as a necessary and proper consequence of the statutory scheme once the maximum CIRP period has ended without a resolution plan.

Conclusions: The Court upholds the liquidation order, holding that upon expiry of 330 days of CIRP without approval of any resolution plan, the Adjudicating Authority rightly directed liquidation under Section 33 IBC and no legal error is disclosed.

Issue (2): Effect of a post-liquidation-decision "higher offer"/settlement proposal received through the suspended director

Interpretation and reasoning: The Appellant, a suspended director, asserted that in March 2025 he received a concrete offer from an investor to settle dues for Rs. 8 crore and filed an application on 15 May 2025 requesting that such higher offer be considered in the interest of value maximisation. The Court notes that: (i) this offer surfaced only after the CoC had, in February 2025, decided that liquidation should proceed following the expiry of the CIRP period; (ii) no resolution plan had been submitted by the Appellant during the CIRP; and (iii) the Appellant is not a "Resolution Applicant" whose plan was under consideration in the concluded CIRP. The Court rejects the contention that pendency of the Appellant's application compelled the Adjudicating Authority to halt or postpone liquidation proceedings, emphasizing that the statutory trigger for liquidation had already occurred and the process could not be re-opened on the basis of a belated, third-party-backed offer made after the CIRP period ended and after the CoC had resolved to liquidate.

Conclusions: The Court holds that a post-CIRP, post-liquidation-decision offer, routed through the suspended director and not forming part of any resolution plan during the CIRP, does not invalidate or inhibit the liquidation order. No interference with the liquidation order is warranted on that ground.

Issue (3): Applicability of precedents on higher offers and Section 12A withdrawal

Legal framework (as discussed): The Court examines: (a) a prior decision where higher offers of resolution applicants were directed to be considered while halting liquidation, and (b) a decision recognizing that even during liquidation, a proposal under Section 12A IBC may be considered, subject to Section 29A and 90% CoC approval. The Court also notes Regulation 2B of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, enabling submission of schemes during liquidation.

Interpretation and reasoning:

(a) Precedent on higher offers during CIRP: The Appellant relied on a decision where the Tribunal directed consideration of higher offers of two Resolution Applicants and stopped liquidation. The Court distinguishes that precedent on two principal grounds: (i) there was no indication that the maximum period of 330 days of CIRP had elapsed in that case; and (ii) the higher offers there came from existing Resolution Applicants whose plans were accepted to be considered by the CoC. In contrast, here the 330-day period has expired, the CoC decided on liquidation, and the Appellant is not a Resolution Applicant but a suspended director putting forward an investor's offer after the liquidation decision. On these facts, the rationale of that precedent is held inapplicable.

(b) Precedent on Section 12A during or after liquidation: The Appellant relied on a decision where, after 180 days of CIRP and a liquidation decision, the Tribunal nevertheless clarified that under Section 12A, even during liquidation any person not barred under Section 29A could satisfy the CoC's demand and seek withdrawal of the Section 7 application, subject to 90% CoC voting. The Court notes that in the cited case a resolution plan had been filed on the 178th day and the liquidation followed immediately thereafter, prompting the Tribunal's clarification regarding potential Section 12A relief. The Court holds that the present case is distinct because: (i) the Appellant has not made any Section 12A proposal; (ii) no formal 12A settlement or withdrawal application is before the Adjudicating Authority; and (iii) the proposal is merely an offer said to be received from an investor after expiry of 330 days and after a CoC decision favouring liquidation. Hence, the conditions under which the earlier Tribunal permitted consideration of a 12A proposal are not met here.

At the same time, the Court reiterates that, consistent with the IBC framework, during liquidation any interested person may still submit a scheme under Regulation 2B of the Liquidation Process Regulations, 2016, which can then be considered in accordance with law.

Conclusions: The Court holds that the precedents relied upon do not compel reconsideration of liquidation in the present factual setting. The earlier decision on higher offers involved ongoing CIRP and CoC willingness to consider competing plans from Resolution Applicants, unlike here. The decision on Section 12A does not assist the Appellant since no 12A proposal has been made and the offer arose only after expiry of 330 days and decision for liquidation. The appeal is dismissed, with the clarification that interested persons may pursue a scheme under Regulation 2B during liquidation if so advised.

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