Mere Filing Of Closure Application By Liquidator Does Not Bar Tribunal's Inherent Powers To Modify Orders: NCLAT Chennai

Background

The Adjudicating Authority had ordered the liquidation of M/s. GHO Agro Private Limited, and M/s. Shri Vethaa Dairy Private Limited emerged as the Successful Auction Purchaser. The Adjudicating Authority, in its order, had allowed the sale of Corporate Debtor as a going concern. The appellant sought clarification from the Adjudicating Authority that it permits the 'sale of the business of the Corporate Debtor' instead of the 'sale of the Corporate Debtor as a going concern.' The appellant's request was in accordance with the resolution passed by the 10th Stakeholder's Consultation Committee (SCC) of the Corporate Debtor.

However, the NCLT doubted the genuineness of the 10th SCC meeting and held that the sale certificate had been issued and was final and there was no merit in the appellant's plea. The NCLT also observed that since the Corporate Debtor has only one business, hence, it would make no difference even if the title is changed to 'sale of business of Corporate Debtor' from 'sale of corporate debtor.' The Adjudicating Authority has also highlighted that the liquidator has been directed to file the closure application and there is no ambiguity that needs to be clarified.

Contention of the Parties

The appellant contended that the Adjudicating Authority had unnecessarily doubted the authenticity of the SCC meeting resolution. The SCC actually consented to the proposal of the change in the description of the sale to the 'Sale of Business of Corporate Debtor as a going concern' and the same has been signed by the liquidator. Also, the said resolution was in accordance with the IBBI (Liquidation Process) Regulations.

The appellant also highlighted that the NCLT in its earlier order had mentioned the term 'Sale of Business of Corporate Debtor as a going concern' under Rule 32(f) of the Regulations, and the same had been filed with the Ministry of Corporate Affairs, Income Tax Department, and other authorities, and if the impugned order is not set aside, then he will be put into great difficulty.

Lastly, the appellant argued that the impugned order of the NCLT and the filing of the closing application by the liquidator don't restrict the inherent power of the NCLT under Section 60(5) of the IBC to shape the liquidation proceedings by modifying the order.

The respondent didn't oppose the submission of the appellant and said that they will not have any objection if the forum will permit the sale of the business of the Corporate Debtor as a going concern, because such will only be a clarification of the impugned order.

NCLAT's Judgment

The NCLAT observed that the mere filing of the closure application by the liquidator doesn't curtail the inherent power of the tribunal to meet the ends of justice, specifically when it does not affect any right of the parties and when the respondents are in consensus that the modification being sought should be granted.

The bench noted that the sought modification was in line with the 10th SCC meeting, and there is nothing material to question the genuineness of the meeting. In light of these observations, the bench allowed the clarification and modified the impugned order.

Case Title: Sri Vethaa Dairy Pvt. Ltd. v. Jayashree S Iyer and Anr.

Case Number: Company Appeal (AT) (CH) (Ins) No. 190/2025 ; IA Nos.532 & 533/2025

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

Bench: Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical)

Judgment Date: 30/04/2025

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