Former resolution applicant's alleged plan default and s.33(3) liquidation bid-no right to notice or hearing; appeal dismissed.

The dominant issue was whether a former successful resolution applicant, alleged to be in default of plan implementation, was a necessary party entitled to notice and a right of hearing in an application under s.33(3) IBC for liquidation and appointment of a liquidator. NCLAT held that liquidation and liquidator appointment are matters between the creditor and NCLT concerning subsisting financial liability, plan implementation, and default warranting liquidation; the appellant's prior status conferred no enforceable right to be heard, and no evidence supported imputations against creditors. Non-issuance of notice was therefore valid, though limited intervention at final orders was permitted; the appeal was dismissed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the tribunal was required to issue notice to, or implead, the Successful Resolution Applicant in an application seeking liquidation/appointment of a liquidator on the ground of default in implementation of the approved resolution plan, and whether non-issuance of such notice violated principles of natural justice.

(ii) Whether, despite holding that the Successful Resolution Applicant is not a necessary party to liquidation proceedings, the Court should permit limited intervention at the stage of final hearing in the liquidation application, and the extent of such right of audience.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Necessity of notice/impleadment of the Successful Resolution Applicant in liquidation proceedings initiated due to default in plan implementation

Legal framework: The Court considered the tribunal's statutory power to proceed in liquidation matters, specifically noting the tribunal's powers under Section 33(3) of the I&B Code, 2016, in the context of an application seeking liquidation/appointment of a liquidator following default in implementation of an approved resolution plan.

Interpretation and reasoning: The Court treated the material facts as undisputed that the resolution plan required payment in seven instalments; only three instalments were remitted, and those were delayed, with subsequent instalments remaining unpaid and clearly overdue despite reminders. On this footing, the Court held that the default justified the creditor's filing of the liquidation application. It rejected the contention that the Successful Resolution Applicant's rights were necessarily affected so as to mandate a hearing at the stage of considering liquidation/appointment of a liquidator. The Court reasoned that appointment of a liquidator is "exclusively a matter between the creditor and the Ld. Adjudicating Authority" concerning whether financial liability existed, whether the plan was being implemented properly, and whether default necessitated liquidation. It further held that the Successful Resolution Applicant's earlier status did not create an enforceable entitlement to be heard at that stage, because liquidation/appointment of a liquidator "does not assign any specific role or legal right" to the Successful Resolution Applicant. Consequently, the Successful Resolution Applicant was not a "necessary party" whose presence was essential for effective adjudication.

Conclusions: The Court upheld the tribunal's view that there was no requirement to issue notice to the Successful Resolution Applicant or treat it as a necessary party in the liquidation/appointment proceedings, and held that non-issuance of notice could not be faulted, particularly given the admitted defaults and the tribunal's statutory powers.

Issue (ii): Limited intervention despite not being a necessary party

Interpretation and reasoning: While affirming that the Successful Resolution Applicant was not a necessary party, the Court nevertheless considered "interest of justice" factors, including the age of the insolvency process, the delay in implementation, and the ongoing liquidation application. Balancing these considerations, it allowed the Successful Resolution Applicant to participate only to a limited extent, without converting it into a party with full procedural rights. The Court expressly restricted the participation: no formal notice was required; the Successful Resolution Applicant would only have a limited right of audience as an intervener; it could be heard only at the final hearing stage; and it would not have liberty to file pleadings.

Conclusions: The appeal was rejected on merits as to the challenge against non-issuance of notice, but the Court carved out a narrow exception permitting limited intervention at the final hearing of the liquidation application, without pleadings and without requiring issuance of formal notice.

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