NCLAT Chennai Rules, Mere Filing Of Closure Application By Liquidator Does Not Bar Tribunal's Inherent Powers To Modify Orders
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member), allowed an appeal filed by M/s. Sri Vethaa Dairy Private Limited and modified the impugned order passed by the Adjudicating Authority (NCLT, Chennai). The Appellate Tribunal held that the mere filing of an application for closure of liquidation proceedings by the liquidator does not restrict the Tribunal’s inherent powers to modify its earlier orders to meet the ends of justice, especially when such modification does not prejudice the rights of any party and is supported by the respondents.
The case pertained to M/s. GHO Agro Private Limited, which was ordered to be liquidated by the Adjudicating Authority. M/s. Sri Vethaa Dairy Private Limited emerged as the successful auction purchaser of the Corporate Debtor. The appellant approached the NCLT seeking a clarification that the sale permitted by the Tribunal should be recorded as a 'sale of the business of the Corporate Debtor as a going concern' instead of the 'sale of the Corporate Debtor as a going concern'. This request was made to reflect the resolution passed in the 10th Stakeholders Consultation Committee (SCC) meeting of the Corporate Debtor.
However, the NCLT rejected the request, casting doubt on the authenticity of the SCC meeting on the ground that the recorded date was erroneous. It also observed that since the Corporate Debtor had only one business, namely dairy processing, the modification sought was immaterial and unnecessary. The NCLT further noted that the sale had already been completed and a certificate issued, and since the liquidator had been directed to file the closure application, there remained no ambiguity to be clarified.
In appeal, the appellant contended that the meeting of the 10th SCC was held on 18.03.2024, not 18.03.2023 as mistakenly recorded in the resolution, and that this typographical error led to unwarranted doubts by the Adjudicating Authority. It was further argued that the SCC had duly approved the change in description of the sale, and the liquidator had signed off on the resolution. The appellant highlighted that even the NCLT’s earlier daily order dated 16.04.2024 acknowledged the SCC’s approval for a sale under Regulation 32(f) of the IBBI (Liquidation Process) Regulations, 2016. The appellant emphasized that various statutory filings were already made on that basis, and that failure to allow the modification would cause significant complications.
During the hearing, the respondents, including the liquidator and financial creditor, did not oppose the appellant’s request. They confirmed that they had no objection if the Tribunal permitted the sale of the business of the Corporate Debtor as a going concern, stating that such a clarification would not impact any legal rights or liabilities.
The Appellate Tribunal, after reviewing the record, found that the 10th SCC meeting was indeed held on 18.03.2024, and the earlier reference to 2023 was an inadvertent error. It held that the objections raised by the Adjudicating Authority concerning the date were unfounded. Importantly, the NCLAT underscored that a mere filing of an application for closure by the liquidator does not bar the Tribunal from exercising its inherent powers under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. The Bench observed that when there is consensus among parties and the relief sought causes no prejudice, the Tribunal is well within its authority to issue necessary clarifications.
Accordingly, the NCLAT allowed the appeal and quashed the order dated 06.01.2025, to the extent that it rejected the appellant’s clarification application. It held that the earlier order dated 02.09.2024 shall stand modified to reflect that the sale was of the business of the Corporate Debtor as a going concern, in accordance with Regulation 32(f) of the IBBI (Liquidation Process) Regulations.
Also Read: NCLAT Rules, Employment Contract Disputes Cannot Be Adjudicated By NCLT/NCLAT Under IBC
The NCLAT Chennai allowed the appeal filed by M/s. Sri Vethaa Dairy Private Limited and modified the earlier order passed by the Adjudicating Authority, holding that the tribunal’s inherent powers under Section 60(5) of the IBC are not curtailed by the filing of a liquidation closure application. The appellate tribunal directed that the sale be treated as a sale of the business of the Corporate Debtor as a going concern.
Appearance
For Appellant: Mr. PH Arvindh Pandian, Senior Advocate For Mr. K Pawan Jhabakh, Mr. Vikram Veerasamy, Mr. Vishnu Jayaram, Advocates
For Respondent: Mr. ML Ganesh, Advocate for R1 and R2
Cause Title: Sri Vethaa Dairy Pvt. Ltd. V. Jayashree S Iyer and Anr.
Case No: Company Appeal (AT) (CH) (Ins) No. 190/2025 ; IA Nos.532 & 533/2025
Coram: Justice Sharad Kumar Sharma [Member (Judicial)], Jatindranath Swain [Member (Technical)]
[Read/Download order]
