Liquidator Cannot Challenge His Own Replacement: NCLAT Says No Locus as ‘Person Aggrieved’ Under IBC

Liquidator Cannot Challenge His Own Replacement: NCLAT Says No Locus as ‘Person Aggrieved’ Under IBC

Introduction

The National Company Law Appellate Tribunal (NCLAT) has held that a liquidator cannot maintain an appeal challenging his replacement under the Insolvency and Bankruptcy Code, 2016 (IBC), as removal from such a statutory assignment does not confer a vested right to continue in office.

A Bench comprising Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey observed that Section 61 of the IBC permits appeals only by a “person aggrieved,” and a liquidator whose statutory assignment has been replaced does not qualify as such in the absence of any independent civil or proprietary right being affected.

Factual Background

The appeal was filed by Ramachandran Subramanian, the erstwhile liquidator of Tecpro Systems Limited, challenging an order of the National Company Law Tribunal dated January 9, 2026 replacing him with Anil Kohli as the liquidator. Tecpro Systems Limited had entered liquidation on January 16, 2020 following failure of an approved resolution plan. Subramanian was appointed as the liquidator to oversee the liquidation proceedings. During the liquidation process, Edelweiss Asset Reconstruction Company Ltd. (EARCL), the dominant financial creditor, filed applications seeking replacement of the liquidator.

Procedural Background

The Stakeholders’ Consultation Committee (SCC) considered the issue of replacing the liquidator. In October 2024, the SCC voted with a majority exceeding 92% in favour of replacing Subramanian

Subramanian challenged the decision, arguing that if the vote of EARCL were excluded, the support for his removal would drop to approximately 59%, falling short of the statutory two-thirds threshold required under Regulation 31A(11) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations. He further contended that EARCL should have been treated as a related party under Section 5(24) of the IBC and therefore should not have been allowed to participate in the voting process. After the NCLT directed his replacement, Subramanian filed an appeal before the NCLAT.

Issues

1. Whether a liquidator can maintain an appeal under Section 61 of the IBC challenging his replacement.

2. Whether removal from the office of liquidator creates a vested right enabling the person to claim status as a “person aggrieved.”

3. Whether the replacement decision taken by the NCLT was legally sustainable.

Contentions of the Parties

The appellant contended that the resolution replacing him was invalid because the dominant financial creditor, EARCL, had participated in the voting process despite allegedly being a related party of the corporate debtor. According to the appellant, once EARCL’s vote was excluded, the support for his removal fell below the statutory threshold required for such a decision.

The respondents, including the newly appointed liquidator, argued that the office of liquidator is fiduciary and functional in nature and does not confer any personal or proprietary right to continue in the role. They submitted that the appellant therefore lacked locus to challenge his replacement.

Reasoning and Analysis

The NCLAT observed that the role of a liquidator is a statutory assignment entrusted by the adjudicating authority for the purpose of conducting the liquidation process. Such an appointment does not confer any vested or proprietary right upon the individual holding the office.

The Tribunal held that Section 61 of the IBC permits an appeal only by a “person aggrieved.” Removal from a statutory assignment, without affecting any independent civil or proprietary right, does not create a vested entitlement to continue in office. Consequently, the liquidator cannot be treated as a person aggrieved solely because he has been replaced.

The Bench also emphasised that the liquidation process remains under the supervision of the adjudicating authority. If the authority forms the view that continuation of a particular liquidator is not conducive to smooth completion of the liquidation process considering factors such as stakeholder confidence, conduct of proceedings, or persistent friction—it is well within its jurisdiction to order replacement.

The Tribunal further rejected the appellant’s argument that EARCL was a related party of the corporate debtor and found no illegality in the voting process leading to the decision to replace the liquidator.

Decision

The NCLAT dismissed the appeal and upheld the order of the NCLT replacing Ramachandran Subramanian as the liquidator of Tecpro Systems Limited.

In this case the appellant was represented by Advocate Gaurav Mitra, Mohit Singh, Garima Jain, Arushi Mishra.