NCLT Kolkata: Liquidator Cannot Be Penalized For Delays Caused By Judicial And Stakeholder Processes
Pranav B Prem
The National Company Law Tribunal (NCLT), Kolkata Bench, comprising Justice Bidisha Banerjee (Member–Judicial) and Cmde Siddharth Mishra (Member–Technical), allowed an application filed by the liquidator of Sasa Musa Sugar Works Private Limited, permitting the exclusion of time spent in complying with judicial orders and stakeholder directions. The bench observed that a liquidator cannot be penalized for delays arising from events beyond his control.
Background
The liquidation of Sasa Musa Sugar Works Private Limited commenced on 20.02.2025 following an order under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 (IBC). Mr. Manish Jain was appointed as the liquidator. Upon taking charge, he secured the corporate debtor’s assets and proposed a sale of the company as a going concern to maximize value.
In the 2nd meeting of the Stakeholders’ Consultation Committee (SCC) held on 29.03.2025, it was resolved to attempt a going-concern sale with a reserve price of ₹125 crores, inclusive of fixed deposit components. However, the e-auction held on 03.05.2025 failed due to lack of bids. Subsequently, on 01.05.2025, the NCLAT allowed the suspended directors to place a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013 before the liquidator. The scheme was first discussed in the 4th SCC meeting on 26.05.2025, where clarifications were sought and time was granted for submission of a revised plan. The revised scheme, dated 03.06.2025, was placed before the 5th SCC meeting on 09.06.2025, but it was rejected due to the absence of investor details, lack of credible funding sources, and an extended repayment plan of 36 months, which the creditors deemed impractical.
Application Before the Tribunal
Following the rejection, the liquidator approached the NCLT through I.A. (IB) No. 993/KB/2025, seeking permission to conduct up to three further e-auctions without dividing the assets into blocks. This prayer was allowed by the Tribunal on 24.06.2025. Thereafter, in the 6th SCC meeting on 30.06.2025, the liquidator was authorized to issue fresh e-auction notices.
In the 7th SCC meeting held on 28.07.2025, members unanimously resolved that the period from 01.05.2025 to 30.06.2025, during which judicial and stakeholder processes were underway, was beyond the control of the liquidator and should therefore be excluded from the liquidation timeline. Accordingly, the liquidator filed the present application seeking formal exclusion of the 61-day period from the liquidation period to prevent adverse inferences regarding delay.
Findings of the Adjudicating Authority
The bench noted that the period sought to be excluded was indeed spent in complying with judicial directions, considering the scheme under Section 230, convening SCC meetings, and obtaining tribunal leave for further auctions. The Tribunal emphasized that the liquidator could not have issued new auction notices until receiving both tribunal approval and SCC authorization.
It observed that Regulation 47 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which prescribes a model timeline, is directory in nature. The bench reaffirmed that judicial and appellate proceedings, or directions of stakeholder bodies, often necessitate exclusion of time to ensure that the liquidator is not penalized for events outside his control.
The bench further referred to Regulation 33 read with Schedule I, which governs the mode of sale of assets, stating that while auctions are to follow prescribed cycles, the regulations allow flexibility where judicial permission or SCC advice is required. In this case, the SCC itself resolved that the period consumed in such processes merited exclusion.
The NCLT held that the period from 01.05.2025 to 30.06.2025 stood justified for exclusion from the liquidation period. It noted that such exclusion does not prejudice any stakeholder but instead protects the integrity of the liquidation process by ensuring that the liquidator is not faulted for delays arising from judicial or procedural compliance. Accordingly, I.A. (IB) No. 1322/KB/2025 was allowed, and the period of 61 days was excluded from the liquidation period. The Tribunal directed the Registry to circulate copies of the order to all parties and counsels for necessary action.
Appearance
For Liquidator: Ms. Shreya Choudhary, Adv.
Liquidator in person: Mr. Manish Jain
For EPFO: Ms. Rashmi Bothra, Adv. Ms. Anjali Kedia, Adv.
Cause Title: Central Bank of India V. Sasa Musa Sugar Works Pvt. Ltd.
Case No: I.A. (IB) No. 1322/KB/2025 In Company Petition (IB) No. 157/KB/2021
Coram: Justice Bidisha Banerjee (Member–Judicial), Cmde Siddharth Mishra (Member–Technical)
