Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), New Delhi, has held that a resolution professional has no “vested right to be appointed as liquidator” and that replacing a liquidator midway through the process is inappropriate when it causes disruption, additional costs, and when the majority creditor has no objection to the incumbent continuing. A bench comprising Justice N. Seshasayee (Judicial Member), Arun Baroka (Technical Member) and Indevar Pandey (Technical Member) dismissed the appeal filed by Nipan Bansal, former Resolution Professional of Cheema Spintex Limited, who sought to challenge the National Company Law Tribunal (NCLT), Chandigarh Bench’s decision to appoint Arun Gupta as liquidator despite a Committee of Creditors (CoC) recommendation in his favour.

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Cheema Spintex was admitted into liquidation by the NCLT on July 12, 2024, based on a CoC vote. Bansal thereafter filed an application proposing liquidation and sought his continuation as liquidator under Section 34(1) of the Insolvency and Bankruptcy Code (IBC). However, on May 8, 2025, relying on an IBBI communication dated July 18, 2023, the NCLT appointed Arun Gupta instead, noting that the communication advised adjudicating authorities to consider appointing someone other than the resolution professional as liquidator where issues relating to independence or oversight may arise. Bansal initially challenged this decision before the Punjab & Haryana High Court, which dismissed the writ petition on May 19, 2025, directing him to pursue remedies under the IBC, resulting in the present appeal before the NCLAT.

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Before the NCLAT, Bansal argued that the tribunal’s ruling in Manish Jaju v. CoC & Ors (2025) had subsequently cleared the “cloud” regarding the IBBI communication by holding that the regulator could not override the CoC’s choice. He contended that once the communication lost validity, the adjudicating authority had no reason to deviate from the statutory mandate and that he alone was entitled to be appointed as liquidator. However, Gupta submitted that he had already taken significant steps in the liquidation process, including preparation of the liquidation estate, verification of claims, compilation of the asset memorandum, and initiating steps toward asset sale. IDBI Bank, holding more than 92% voting share of the CoC, expressly stated that it had no objection to Gupta continuing and warned that replacing him at this stage would delay liquidation and erode asset value.

After examining the records, the bench held that there is no legal entitlement for a resolution professional to automatically assume charge as liquidator and that such a position does not flow from Section 34(1) of the IBC. The tribunal observed that although the later judgment had eliminated the uncertainty surrounding the July 18, 2023 IBBI communication, that factor could not justify undoing progress already made under the liquidator presently in charge. It noted that the appointment of a liquidator is aimed at ensuring continuity and efficiency and should not result in “avoidable disruption, duplication of effort and financial burden” in the liquidation estate when there is no demonstrated cause to remove the incumbent.

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Therefore, the NCLAT concluded that “the appellant does not have any vested right to be appointed as the liquidator” and that “it may not be appropriate to change the liquidator in the middle of the liquidation process as there will be cost implications, more so when the 3rd respondent, with majority voting share far in excess of 66% is happy with the second liquidator.” Resultantly, the appellate tribunal found no ground to interfere with the NCLT’s decision and dismissed the appeal without costs, affirming Arun Gupta’s continuation as liquidator of Cheema Spintex Limited.

Appearance

For Appeallant: Advocates Rajansh Thukral, Sidharth Thukral

For Respondent: Advocates Anand Varma, Ayush Gupta and Priyanshi Goel for Respondent No 3; Advocates Gopal Jain, Shubham Gupta for Cheema Spintex.

Cause Title: Nipan Bansal, Former Resolution Professional, M/s Cheema Spintex Limited v Cheema Spintex Limited and Ors

Case No: Company Appeal (AT) (Ins) No.1020 of 2025

Coram: Justice N. Seshasayee (Judicial Member), Arun Baroka (Technical Member)