TaxTMI 
TaxTMI 
2026 (10) TMI 577
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....Impugned Order") passed by the National Company Law Tribunal, Mumbai Bench-I ("Adjudicating Authority") in I.A. (I.B.C.) No. 2697 (MB) of 2026 in C.P. (IB) No. 3962 (MB) of 2018. Stakeholders' Consultation Committee (SCC) is the Respondent No. 1 herein. Gokul Anil Kumar, who is the Suspended Director of the Corporate Debtor, is the Intervenor, herein. 2. The present Appeal arises from the Impugned Order, whereby the application filed by the Appellant/Liquidator seeking extension of time and appropriate directions for undertaking and completing the sale of the Corporate Debtor as a going concern, pursuant to the liquidation order dated 21.02.2024, came to be dismissed. 3. The controversy in the present Appeal essentially concerns the legal effect of the Committee of Creditors' ('CoC') decision under Regulation 39C of the CIRP Regulations, the subsequent liquidation order dated 21.02.2024 expressly directing the Liquidator to endeavour to sell the Corporate Debtor as a going concern, the steps undertaken pursuant thereto, and the subsequent amendment to the Liquidation Regulations notified on 14.10.2025. 4. The Appellant submitted that the issue arising in the ....
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....the liquidation process. 7. It is the case of the Appellant that the principle applies with equal, and in the facts of the present case, direct relevance. In the present case, the CoC, in its 7th Meeting held on 31.08.2020, unanimously resolved with 100% voting share to liquidate the Corporate Debtor and simultaneously recommended, in terms of Regulation 39C, that upon commencement of liquidation, the Liquidator should first explore sale of the Corporate Debtor as a going concern. The recommendation was therefore not an afterthought or an independent decision subsequently taken during the liquidation process. It was a part of the liquidation decision itself. The Appellant elaborated that thus, the direction to explore sale of the Corporate Debtor as a going concern was not merely an internal decision of the CoC. It became an express part of the judicial liquidation order dated 21.02.2024. 8. The Appellant pleaded that this aspect assumes significance in view of the subsequent judgment in Company Appeal (AT) (Ins) Nos. 1138 and 1145 of 2026. There also, this Appellate Tribunal treated the CoC's decision under Regulation 39C, once noticed and accepted in the liquidation ....
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....s. Having acknowledged that the Appellant was restrained by an order of this Appellate Tribunal, the same period could not simultaneously be treated as a period demonstrating that no process of sale as a going concern had commenced. The Appellant stated that the subsequent dismissal of Company Appeal (AT) (Insolvency) No. 1047 of 2024 on 11.05.2026 merely permitted the liquidation proceedings to continue. It did not erase the liquidation order dated 21.02.2024, the CoC's recommendation under Regulation 39C, or the steps already undertaken pursuant thereto. 12. The Appellant elaborated that in the interregnum, the IBBI notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2025 on 14.10.2025, whereby Regulation 32A was omitted and clauses (e) and (f) of Regulation 32 were also omitted. The subsequent amendment, however, cannot be applied so as to retrospectively extinguish the legal effect of a liquidation process and judicial direction which had originated substantially prior to the amendment. 13. The Appellant brought out to our notice that the judgment in Company Appeal (AT) (Ins) Nos. 1138 and 1145 of 2026 also expre....
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.... constituted a judicial determination under Section 33 of the Code and expressly directed the Liquidator to endeavour to sell the Corporate Debtor as a going concern. The Appellant acted upon the said direction and undertook the process accordingly. 18. The Appellant submitted that the subsequent consideration by the SCC in its 11th Meeting dated 26.05.2026 further demonstrates that the issue was treated as continuation of the course of action originating from the liquidation order. The SCC was apprised of the original direction for sale as a going concern, the steps already undertaken, the effect of the judicial restraint and the subsequent regulatory amendment, and thereafter resolved that the Liquidator should approach the Adjudicating Authority for appropriate directions. Thus, the application filed by the Appellant was consequently not an attempt to initiate an altogether new mode of sale after 14.10.2025. It was an application seeking continuation and completion of the course of action already contemplated by and expressly directed under the liquidation order dated 21.02.2024. 19. Concluding arguments, the Appellants requested this Appellate Tribunal to set aside the Im....
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....("Liquidation Regulations"), or the sale of its business as a going concern under clause (f) thereof. 23. We note that on I.A. No. 2471 of 2020, the Adjudicating Authority by order dated 21.02.2024 ("Liquidation Order") directed liquidation of the Corporate Debtor under Section 33 of the Code and appointed the Appellant as Liquidator. Giving effect to the CoC's recommendation, the Adjudicating Authority directed in clause (f) of the operative part: "The Liquidator shall endeavour to sale the Company as a going concern during the liquidation in terms of Regulation 32A of the Liquidation Process Regulations. In case he is not able to do so within a period of 90 days from this date, he shall proceed in accordance with clauses (a) to (d) of Regulation 32 of the Liquidation Process Regulations." 24. It has been brought to our notice by the appellant. that pursuant to the Liquidation Order, the Liquidator constituted the SCC and in its First Meeting on 01.03.2024, the CoC's recommendation for sale as a going concern was placed before the SCC, and the assets and liabilities proposed to be included in the sale were discussed. In the Second Meeting of SCC held on 09.05.2024, ....
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....deration that by a separate order in I.A. No. 2682 of 2026, the Adjudicating Authority excluded, from the period of liquidation, the period during which the Liquidator remained restrained by judicial orders. 29. We note the arguments of the Appellant that the CoC's decision under Regulation 39C was a commercial decision taken after every attempt at resolution had failed, and that it stood incorporated into the Liquidation Order, which thereby became a binding judicial mandate to first endeavour a going-concern sale. According to the Appellant, liquidation by sale as a going concern commenced with the Liquidation Order itself, the liquidation commencement date under Section 5(17) of the Code being the date on which proceedings for liquidation commence under Section 33 of the code. 30. It is noted that neither the Code, the Liquidation Regulations nor the Amendment Regulations prescribe that such commencement occurs only on issuance of an auction notice or finalisation of an Asset Sale Process Document. It has been pleaded before us that the Adjudicating Authority, by so holding, imported a requirement not found in the law and gave retrospective operation to a prospective amend....
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....C of the CIRP Regulations and directing the Liquidator to endeavour a going-concern sale, or whether it commences only upon issuance of an auction notice or finalisation of an Asset Sale Process Document; and consequently whether the Impugned Order dated 03.07.2026 can be sustained. 35. We take into consideration that Section 33(2) of the Code empowers the CoC, at any time during the CIRP before confirmation of a resolution plan, to decide by a vote of not less than sixty-six per cent of its voting share to liquidate the corporate debtor. Section 5(17) of the Code defines the "liquidation commencement date" as the date on which proceedings for liquidation commence in accordance with Section 33 or Section 59 of the code, as the case may be. Before the Amendment Regulations, Regulation 39C of the CIRP Regulations provided that, while deciding to liquidate the corporate debtor under Section 33, the CoC may recommend that the liquidator first explore the sale of the corporate debtor as a going concern under clause (e) of Regulation 32 of the Liquidation Regulations, or sale of the business as a going concern under clause (f) thereof. Where such a recommendation was made, the CoC was....
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....idation, the Regulations must be examined as they stood on the date of the liquidation order, as held in Ashok Kumar Gulla v. State Bank of India, Company Appeal (AT) (Ins) No. 786 of 2023. 38. It is very pertinent and significant to note that the Garden Court (supra) is a decision of a Bench of three Members of this Appellate Tribunal. Judicial discipline and the need for certainty in the administration of insolvency law require that a co-ordinate Bench follow it, unless it can be shown to be distinguishable on facts or per incuriam. We are conscious, however, that a decision is an authority for what it decides and not for what may logically be deduced from it. We therefore examine, on first principles and on the facts of this case, whether the ratio of Garden Court (supra) governs, before recording our conclusion. 39. We consider it useful to reproduce the operative passages of Garden Court (supra) on which the Appellant relies, since it answers the question before us directly. This Appellate Tribunal held there: "...with Adjudicating Authority taking on record the decision of the Committee of Creditors under Regulation 39C to sell the Corporate Debtor as a going c....
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....5(17), that is, when proceedings for liquidation commence under Section 33. Once the liquidation order is passed, the corporate debtor is in liquidation, the Liquidator is in office, and the mode of realisation is to be governed by the order and the Regulations then in force. Where that order itself directs that the going-concern route be first explored, the liquidation has commenced by that mode from the same date. We find that it is exactly the position here. By the Liquidation Order, the Adjudicating Authority did not merely record a stray recommendation; it directed, in express terms, that the Liquidator shall endeavour to sell the Corporate Debtor as a going concern in terms of Regulation 32A, and prescribed the fall-back course to be followed only if he was unable to do so in ninety days. The going-concern sale was thus the primary, judicially ordered mode of liquidation from 21.02.2024. The case before us is, if anything, stronger than Garden Court (supra), because the direction here is not only recorded but operative. 42. We however find that the Adjudicating Authority adopted a different view that the commencement occurs only when the auction notice is issued or the Ass....
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....e CoC, liquidation order, constitution of the SCC, fixation of reserve price and of the marketing and auction strategy, publication of the notice, conduct of the auction and declaration of the successful bidder. They are links in one chain and cannot be split so as to locate the commencement only at the penultimate link. The process of sale as a going concern had therefore commenced well before 14.10.2025 on any view of the matter. 45. It is an undisputed fact that, by order dated 28.05.2024, this Appellate Tribunal restrained the Liquidator from issuing any auction notice pursuant to the Liquidation Order, and that restraint continued until Company Appeal (AT) (Insolvency) No. 1047 of 2024 was decided on 11.05.2026. The Liquidator was, during that entire period, legally disabled from taking the very step on which the Adjudicating Authority has relied to hold that the sale had not commenced. It is a settled principle that an act of the court cannot and should not prejudice any one and the law does not compel a person to do what is rendered impossible by an order of a competent court. To hold against the Liquidator, on the ground that he did not issue an auction notice in a perio....