Pranav B Prem

The National Company Law Tribunal (NCLT), Chandigarh Bench comprising Harnam Singh Thakur (Judicial Member) and Shishir Agarwal (Technical Member), allowed the withdrawal of voluntary liquidation proceedings initiated by Enel Vayu (Project 2) Private Limited. The Tribunal held that even in the absence of a specific provision under the Insolvency and Bankruptcy Code (IBC), the withdrawal can be permitted by invoking the Tribunal's inherent powers under Rule 11 of the NCLT Rules, 2016, particularly where no rights of third parties are affected and all stakeholders have consented.

Also Read: NCLAT Rules, CIRP Cannot Be Sustained If Default Is Cured Before Admission Of Section 9 Application

Background of the Case

M/s Enel Vayu (Project 2) Private Limited, a wholly-owned subsidiary of M/s Enel Green Power India Private Limited, was incorporated on 26.06.2012 to carry out renewable energy business. With an authorised and paid-up share capital of ₹1,00,000, the company had no debts, claims, or pending litigations, nor did it have employees or dues towards workmen.

On 28.12.2022, the Board of Directors resolved to voluntarily liquidate the company, mainly to eliminate operational expenses. A special resolution was passed by shareholders on 23.01.2023 appointing Mr. Suman Kumar as the liquidator. A public announcement was made on 26.01.2023 in Financial Express and Jansatta, and uploaded on the relevant portal on 03.02.2023.

However, due to evolving market conditions and favorable prospects in the power sector, the management reconsidered its earlier decision. On 28.08.2023, the Board resolved to withdraw the voluntary liquidation, which was ratified by the shareholders on the same day through a special resolution. Importantly, the liquidator provided a no-objection letter confirming that no asset had been sold and that no application had been filed before the adjudicating authority. The applicant filed the present application under Sections 59, 60(5) and other applicable provisions of the IBC, 2016 read with the NCLT Rules, 2016 seeking withdrawal of the voluntary liquidation process.

Tribunal’s Observations and Reasoning

The Tribunal noted that although neither the IBC, 2016 nor the Voluntary Liquidation Regulations explicitly provides for withdrawal of a voluntary liquidation once initiated, this does not preclude the Tribunal from exercising its inherent powers under Rule 11 of the NCLT Rules. The bench emphasized that the liquidation in this case was not due to financial distress or any statutory requirement, but was a commercial decision made by the shareholders. The Tribunal highlighted that where such a decision is reversed with full consent and no prejudice is caused to stakeholders, especially when no irreversible actions like asset distribution have taken place, withdrawal should be allowed.

In its analysis, the Tribunal found the following key facts relevant:

• The company is a wholly-owned subsidiary.

• There were no creditors, claims, or workmen dues.

• No assets had been sold or distributed.

• The liquidator had unequivocally consented to the withdrawal.

• The shareholders had unanimously resolved to withdraw the liquidation.

• The applicant undertook to clear all fees and dues payable to the liquidator and others involved in the process.

The bench also referred to several precedents from coordinate benches supporting withdrawal of voluntary liquidation in similar circumstances. These included:

• Shawn Johny Mathew & Anr. v. Omprakash Joshi [C.P. (IB) No.35/BB/2023] [NCLT Bengaluru], where voluntary liquidation was withdrawn upon confirmation from the liquidator and no third-party rights being affected.

• M/s Anil Kumar Dua & Others v. Gulshan Kumar Gupta [(IB)-1179/60(5)/ND/2018], where the stakeholders expressed interest in reviving the company and the Tribunal allowed the withdrawal.

• Biocad India Pvt. Ltd [47/BB/2023], where the NCLT invoked Rule 11 to allow revival of the company when there was no objection from the liquidator.

The Chandigarh Bench specifically reiterated the principle that “where the liquidation was initiated voluntarily and is now sought to be withdrawn by the same consenting stakeholders, and no third-party rights are affected, this Tribunal is of the view that the inherent powers of the Tribunal under Rule 11 of the NCLT Rules, 2016 can be invoked to meet the ends of justice.”

Also Read: NCLAT Chennai Rules, Ratification Of IRP Fees By CoC Can Be Implied From Meeting Minutes And Conduct

Final Decision

In light of the above, the Tribunal exercised its inherent jurisdiction and permitted the withdrawal of the voluntary liquidation proceedings. It directed the liquidator to return the assets and management of the company to the Board of Directors after settling his dues. The applicant was also instructed to inform the concerned statutory authorities, including the Registrar of Companies, within two weeks of the order. The application was allowed and disposed of accordingly.

Appearance

For Applicant: Mr. Mohit Chaurasia, Mr. Ashutosh Gupta, Mr. Gaurav Rana & Mr. Ajitesh Kumar, Advocates

For Respondent: Suman Kumar Verma, Liquidator (In Person)

Cause Title: Enel Green Power India Private Limited v. Suman Kumar Verma

Case No: CP (IB) No. 3 (CH) 2024

Coram: Harnam Singh Thakur [Member-Judicial], Shishir Agarwal [Member-Technical]