Business Revival: NCLT Chandigarh Allows Withdrawal of Voluntary Liquidation

Business Revival: NCLT Chandigarh Allows Withdrawal of Voluntary Liquidation

Introduction

The National Company Law Tribunal (NCLT), Chandigarh Bench, has disposed of an application seeking withdrawal of voluntary liquidation proceedings, holding that it can permit such withdrawal by invoking its inherent power under Rule 11 of the NCLT Rules, 2016.

Factual Background

The applicant company, Enel Green Power India Private Limited, had initiated voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code (IBC), 2016, due to operating expenses. However, due to favorable market trends and projected business growth, the management resolved to revive its operations.

Procedural Background

The shareholders approved the decision to withdraw liquidation, and the Liquidator consented to the withdrawal. The Liquidator confirmed that no sale of assets had been made and no petition had been filed before the Adjudicating Authority.

Issues

The main issue was whether the NCLT can allow withdrawal of voluntary liquidation in the absence of any specific provision under the IBC.

Contentions of the Parties

Applicant’s Contentions:

• The liquidation was initiated voluntarily, and the stakeholders now wish to withdraw due to changed circumstances.
• No third-party rights are impacted, and the Liquidator consents to withdrawal.
• No significant transactions or asset sales occurred during liquidation.

Respondent’s Contentions:

• The Liquidator, Mr. Suman Kumar Verma, consented to the withdrawal.
• He confirmed that no assets were sold and no petition was filed.
• He agreed to hand over the assets and management back to the Board of Directors.

Reasoning & Analysis

The bench of Harnam Singh Thakur (Judicial Member) and Shishir Agarwal (Technical Member) held that, even without an explicit provision, the Tribunal may exercise its inherent jurisdiction under Rule 11 of the NCLT Rules, 2016, to meet the ends of justice. The Bench relied on Biocad India Pvt. Ltd., where voluntary liquidation was terminated mid-process.

Implications

This decision demonstrates the NCLT’s flexibility in using inherent powers to facilitate business revival and ensure proper procedure for voluntary liquidation withdrawal.

Final Outcome

The NCLT allowed the withdrawal and directed the Liquidator to hand over the company’s assets and management to the Board of Directors within two weeks.

In this case, the applicant was represented by Mr. Mohit Chaurasia, Mr. Ashutosh Gupta, Mr. Gaurav Rana, and Mr. Ajitesh Kumar, Advocates. The respondent Liquidator appeared in person.