Suspended Director Cannot Halt Liquidation By Submitting Third-Party Settlement Offer After Expiry Of CIRP: NCLAT New Delhi
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), has held that a suspended director cannot halt or stall liquidation proceedings by submitting a third-party settlement offer after the expiry of the Corporate Insolvency Resolution Process (CIRP) period.
Background
The appeal arose from an order passed by the National Company Law Tribunal (NCLT), Kolkata Bench, which directed the liquidation of the Corporate Debtor, E.C. Bose & Company Pvt. Ltd., upon the expiry of the statutory CIRP period of 330 days. The suspended director of the company, Deborshi Sadhan Bose, challenged the NCLT’s order, contending that a higher settlement offer had been received from an investor and should have been considered before ordering liquidation. The appellant argued that he had submitted an application before the NCLT seeking consideration of the third-party offer of ₹8 crore received in March 2025, which was higher than the liquidation value and in line with the objectives of the IBC. It was contended that entertaining such a proposal would have maximized the value of the corporate debtor’s assets. However, the NCLT kept the application pending and proceeded to pass a liquidation order on the recommendation of the Committee of Creditors (CoC).
Appellant’s Submissions
The appellant argued that the NCLT erred in not considering the investor’s offer, despite its being more beneficial to the stakeholders. Reliance was placed on the NCLAT’s earlier decision in Gayatri Polyrub Pvt. Ltd. v. Anil Kohli & Anr. (Company Appeal (AT) (Insolvency) No. 650 of 2023), wherein the Tribunal had directed the consideration of a higher offer before proceeding with liquidation. The appellant contended that similar treatment should be extended in the present case, as the investor’s offer was bona fide and could have led to the revival of the corporate debtor.
Respondent’s Submissions
The Resolution Professional and Liquidator opposed the appeal, submitting that the CIRP period of 330 days had already expired and no resolution plan was received within the statutory timeframe. The CoC, in its meeting held in February 2025, had resolved to proceed with liquidation as per Section 33 of the IBC. It was further submitted that the appellant was not a resolution applicant but a suspended director, and the so-called “settlement offer” was neither routed through the CoC nor submitted within the CIRP period. The offer was received only after the decision for liquidation was taken, rendering it untenable.
Tribunal’s Observations
The NCLAT observed that the CIRP period of 330 days had expired without any resolution plan being received, and the CoC had accordingly voted for liquidation in its meeting held in February 2025. The appellant’s application was filed only in March 2025, i.e., after the expiry of the CIRP period and the CoC’s decision.
The Bench held that once the maximum period prescribed under the IBC for completion of the CIRP has lapsed and no resolution plan is received, the Adjudicating Authority has no option but to pass an order for liquidation under Section 33. Addressing the appellant’s reliance on Gayatri Polyrub Pvt. Ltd. v. Anil Kohli & Anr., the Tribunal distinguished the case by noting that in Gayatri Polyrub, the CIRP period had not expired, and the CoC had actively considered both resolution plans before taking a decision. In contrast, in the present case, the 330-day period had already lapsed and no valid plan was under consideration. The Bench observed: “The appellant is not a resolution applicant but a suspended director claiming to have received an investor’s offer after the expiry of the CIRP period. Such a post-facto offer cannot form the basis for halting the liquidation process duly approved by the CoC and directed by the Adjudicating Authority.”
The NCLAT further held that the appellant’s reliance on V. Navaneetha Krishnan v. Central Bank of India, Coimbatore & Anr. (Company Appeal (AT) (Insolvency) Nos. 288 & 289 of 2018) was misplaced, as that case involved a Section 12A settlement proposal submitted during the CIRP and before liquidation was ordered. Here, no such settlement proposal was made by the appellant prior to the conclusion of the CIRP.
Upholding the NCLT’s order, the Appellate Tribunal concluded that there was no error in directing liquidation once the CIRP period had expired and no resolution plan was pending consideration. It emphasized that allowing post-CIRP settlement offers from suspended directors or third parties would defeat the timelines prescribed under the IBC and undermine the discipline of the insolvency framework. Accordingly, the appeal was dismissed, and the liquidation order passed by the NCLT, Kolkata Bench, was affirmed.
Appearance
For Appellant: Mr. Arik Banerjee, Mr. Pujon Chatterjee, Advocates.
For Respondents: Mr. Tanish Ganeriwalla, Mr. Aishvary Vikram, Advocates for R-1. Mr. Aman Agarwal, Advocate for R-2.
Cause Title: Deborshi Sadhan Bose v. Rakesh Duggar, Liquidator of E.C. Bose & Company Pvt. Ltd. & Ors.
Case No: Company Appeal (AT) (Insolvency) No. 1267 of 2025
Coram: Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member)
