TaxTMI 
TaxTMI 
2026 (9) TMI 745
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....ely challenge an order of the Adjudicating Authority ordering liquidation, dated 17.09.2025, passed in I.A.3629 of 2022, but for different reasons. In addition, the operational creditor challenges another Order I.A.1221 of 2025 which the resolution professional had filed for withdrawing the CIRP under Sec. 12A of the Code in C.A.1699 of 2025 and 1700 of 2025. 1.2 Besides his challenge to the Order in I.A.3629 of 2022, the resolution professional has on his part challenged another order passed in I.A.4924 of 2025 in C.A 1701 of 2025 and C.A.1702 of 2025. His grievance is that while passing the Order of liquidation, the Adjudicating Authority has appointed a liquidator of its choice and not him. It may however, be stated, that the need for deciding the appeals preferred by the resolution professional depends on the outcome of C.A.1699 of 2025 and C.A.1700 of 2025. 2. The facts are uncomplicatedly pointed and they run as below: a) the insolvency proceeding of the corporate debtor was heading for a successful resolution, when on 22.05.2022, the resolution plan of certain Shri. Digvijay Nath Tripathi was approved by the CoC, which was comprised only of the operational cre....
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....ularity, but on grounds of perceived unimplementability of the plan owing to the demise of the resolution applicant, the best option open to the tribunal was to order issuance of fresh Form G, and not liquidation. And, having chosen to reject the plan he should not have mechanically dismissed I.A.1221 of 2025 filed under Sec. 12A. When a settlement has been reached between the suspended director of the corporate debtor and the operational creditor, who constitute the one member the CoC, the Adjudicating Authority should have seized the opportunity to keep alive the corporate debtor rather than ordering liquidation. Discussion and Decision 5. Before considering the issue required to be resolved in this case, an ancillary issue makes compelling demands for an engagement in the deeper layers of insolvency jurisprudence as designed by the Code. The Adjudicating Authority, in our view, has over-simplified it, while the appellant is unconcerned about it as it has little relevance to his current pursuit. Hence this judgement is divided into two parts: Part A will deal with the issue on the effect of the death of the resolution applicant on the insolvency resolution process, and Part....
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....RP period no resolution plan is received; and (b) where, even though plans have been received and one of which has been approved by the CoC yet has been rejected by the Adjudicating Authority under Sec. 31. There is no third situation provided for ordering liquidation under Sec. 33(1) on the death of the resolution applicant. It may not therefore, be appropriate to read a condition that is not statutorily provided into Sec. 33(1). This would imply that the order of liquidation cannot be made or sustained under Sec. 33(1). b) Under the scheme of the Code, if liquidation is still contemplated as the only leftover choice, then it may be, and can be attempted only under Sec. 33(2), but this provision is CoC enabled. Therefore, the Adjudicating Authority may not have too many choices left with it than to send the plan back to the CoC with its observations, if felt necessary. Accordingly, any situation where a resolution applicant dies pending approval of the resolution plan by the Adjudicating Authority, the plan may have to be re-send to the CoC. 8. The Adjudicating Authority ought to have paused, no matter how it has chosen to deal with the resolution plan, for liquidation....
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.... the Code responds with two options to deal with it: either to restart the CIRP or to opt for liquidation, but both are time consuming, and the Code is acutely impatient and will be painfully restless. This is understandable. Even if it is compromised, still there is no assurance that when the CIRP restarts, someone might still show interest to buy the corporate debtor as a going concern. Therefore, why should it be believed that if the successful resolution applicant dies midway through the implementation, it will necessarily render the resolution plan unimplementable in all circumstances? 9.4 Whether the sustainability of a resolution plan is served by its inherent strength or the survival of its maker? Should it be presumed that where a resolution applicant is a natural person, his existence is an indispensable pre-requisite for the implementation of the plan? If ever it is believed any such presumption exists, its absurdity does not deserve any elaboration. The legislature that has enacted the Code symbolizes the collective wisdom of the citizens to lead the nation to light and not to lay the road to absurdity. 9.5 Is it not then necessary to explore the possibility of en....
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.... of the essence in the conclusion of the insolvency resolution process, but it cannot be more important than the attempt to preserve the corporate debtor as a going concern and its sale in a CIRP, though this may vary with the facts of individual cases. Sec. 12(3) signifies it. Sec. 33(1A) inserted vide IBC (Amendment)Act (Central Act 6 of 2026), which enables a reversal from liquidation to CIRP, reflects it. The unassailable basic premise therefore is, and should be, to pursue CIRP since the situation has arisen not due to human default but due to act of nature. 11. The point is, should the CIRP commence de novo from the stage of invitation of Expression of Interest, or is it possible to proceed with the resolution plan already approved by the CoC but within the statutory framework? This now leads to two issues: (a) Does the insolvency resolution framework under the Code depends on the heritability of the right of the resolution applicant; and (b) where to obtain the statutory support for it. 12. Dealing with the second aspect first, if there is no immediate solution in general principles of jurisprudence to deal with it, this tribunal cannot plead helplessness and resign, b....
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....udential conceptualization of a heritable right may not also be made applicable for a different reason. If the purpose behind an insolvency resolution process is to mobilize funds through preservation of business of the corporate debtor, then it is mandatory that such resolution applicant must have adequate knowledge, skill and experience in such business. This is also factored in while approving a plan. Therefore, the corporate debtor is made available in the resolution process, not to the one who opts to pay the maximum value but to the one who also has the greater prospects of running the said business, more so where the resolution applicant is a natural person. 15. However, here arises another issue. If suppose, a successful resolution applicant dies midway through the implementation of the resolution plan, and his heirs are willing to complete the implementation of the plan, and his estate is capable of supporting it, will the plan be recalled? The Code is silent on it. The Code that insists hard in running the corporate debtor as a going concern, does not provide for any mechanism to monitor if the successful resolution applicant holds on to his or its promise and runs the....
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....e Code: a) Focus may at the first instance be on the RFRP. If the RFRP provides for any contingency arising from the death of the resolution applicant, then such term of RFRP will automatically govern the situation. b) If, however, the RFRP is silent, then any term of the resolution plan will come for scrutiny. If the plan has made any provision for dealing with the death of a resolution applicant, and if the CoC has approved the resolution plan, then it may prevail. c) Where both the RFRP as well as the resolution plan do not provide for meeting a situation arising out of the death of a resolution applicant, then necessarily, inherent powers under Rule.11 have to be exercised to direct the CoC to consider if the plan can be sustained within the statutory framework even after the demise of the resolution applicant. 18. Allowing the heir of the resolution applicant to participate in the resolution process, however, cannot be absolute, for it has to still pass the test which the resolution applicant has established. Accordingly, once the resolution plan is send back to the CoC, it is required to ensure that (a) such heir of the deceased resolution applic....