Time-bound CIRP and liquidation for prolonged delay upheld; adverse remarks against the resolution professional also sustained.

In CIRP, the NCLAT reaffirmed that insolvency proceedings must be completed within the statutory timeline and that liquidation is justified when delay in refiling, reconsideration after remand, and placement of the revised resolution plan causes the process to languish beyond the permissible period. It held that Sections 12 and 33 of the Insolvency and Bankruptcy Code support liquidation where no timely approved plan is available and delay erodes asset value. The Tribunal also declined to expunge adverse remarks against the erstwhile resolution professional, finding them supported by the record, including delayed meetings, no further extension sought, and prolonged delay in moving the approval application.

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Issues: (i) Whether the Adjudicating Authority was justified in rejecting the resolution plan and directing liquidation on account of delay in refiling and reconsideration after remand; (ii) Whether the adverse observations made against the erstwhile resolution professional were liable to be expunged.

Issue (i): Whether the Adjudicating Authority was justified in rejecting the resolution plan and directing liquidation on account of delay in refiling and reconsideration after remand.

Analysis: Section 12 of the Insolvency and Bankruptcy Code, 2016 requires completion of CIRP within the prescribed period, while Section 33 of the Insolvency and Bankruptcy Code, 2016 permits liquidation where the resolution process is not completed within the maximum permissible time or where the resolution plan is not received in time. The record showed that after remand, the first CoC meeting was held beyond the time fixed by the Adjudicating Authority, the revised plan was not placed within the stipulated period, and the application for approval remained delayed for several months. The Tribunal emphasised that insolvency law is designed for time-bound resolution, that delay erodes asset value, and that liquidation becomes appropriate where the process is allowed to languish without prompt action.

Conclusion: The rejection of the plan and the direction to proceed with liquidation were upheld and the issue was decided against the appellants.

Issue (ii): Whether the adverse observations made against the erstwhile resolution professional were liable to be expunged.

Analysis: The adverse remarks were founded on the chronology of events, including the delayed convening of meetings, the failure to seek further extension, and the prolonged delay in refiling the approval application. The Tribunal found that the observations were supported by the record and were not made without material basis.

Conclusion: The request to expunge the remarks was rejected and the issue was decided against the appellants.

Final Conclusion: The appellate challenge failed in entirety, and the liquidation order as well as the impugned observations were allowed to stand.

Ratio Decidendi: In CIRP, where delay beyond the permissible timeline is attributable to the resolution process participants and no prompt approved plan is placed for consideration, liquidation under Section 33 is justified; insolvency proceedings must remain time-bound and cannot be allowed to drift indefinitely at the cost of asset value.

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