NCLT Kolkata Permits Exclusion of Time Spent in Procedural Compliance in Liquidation Proceedings

NCLT Kolkata Permits Exclusion of Time Spent in Procedural Compliance in Liquidation Proceedings

Introduction

The National Company Law Tribunal (NCLT), Kolkata Bench, has permitted the exclusion of time spent in complying with judicial orders and directions of the stakeholder body in the case of Central Bank of India v. Sasa Musa Sugar Works Pvt. Ltd.

Factual Background

The liquidation order of Sasa Musa Sugar Works Pvt. Ltd. was passed, and a liquidator was appointed under Section 34(1) of the Insolvency and Bankruptcy Code (IBC). The liquidator attempted to sell the assets with a reserve price of Rs. 125 Cr, but the auction failed due to lack of bids. Subsequently, a scheme of compromise/arrangement was proposed under Section 230 of the Companies Act, 2013, but was rejected.

Procedural Background

The liquidator approached the NCLT seeking permission to conduct subsequent e-auctions, which was allowed. The Stakeholder Consultation Committee (SCC) decided to exclude the period between 01.05.2025 and 30.06.2025, citing that it was beyond the control of the liquidator.

Issues

The primary issue before the NCLT was whether the time spent in complying with judicial orders and directions of the stakeholder body should be excluded from the liquidation timeline.

Contentions of Parties

Applicant: The applicant contended that the 61-day period should be excluded, as it was spent in judicial and stakeholder processes beyond the liquidator's control.

Respondent: There is no reported contention from the respondent.

Reasoning & Analysis

The NCLT observed that:

• Time Spent in Judicial Process: The mentioned period was consumed in judicial process, consideration of scheme under Section 230, SCC meetings, etc.
• Liquidator's Limitations: The liquidator could not have published the fresh auction notice until the leave of the tribunal and SCC approval.
• Regulation 47: The model timeline prescribed under Regulation 47 of the liquidation regulations is directory.

The bench of Justice Bidisha Banerjee (Member-Judicial) and Cmde Siddharth Mishra (Member-Technical) held that the combined reading of Regulations 47 and 33, read with Schedule I, justifies the exclusion of the 61-day period.

Implications

This judgment highlights the importance of considering the circumstances beyond the control of the liquidator when calculating the liquidation timeline. It also underscores the need for flexibility in applying the model timeline prescribed under the liquidation regulations.

In this case the liquidator was represented by Ms. Shreya Choudhary, Advocate. Meanwhile EPFO was represented by Ms. Rashmi Bothra and Ms. Anjali Kedia, Advocates.