Bench clarifies that sale of corporate debtor as a going concern begins from liquidation order date; subsequent regulatory amendments cannot alter ongoing liquidation proceedings
In a significant ruling delivered on September 10, 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, clarified the legal position regarding the commencement date of liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC) and the impact of subsequent amendments to the Insolvency and Bankruptcy Board of India (IBBI) regulations on ongoing liquidation processes.
The appeals arose from two connected cases involving State Bank of India and Garden Court Distilleries Pvt Ltd, with Mr. Akhil Ahuja as a respondent in one. The primary issue was whether the liquidation commencement date should be considered as the date of the liquidation order or if subsequent amendments to the IBBI (Liquidation Process) Regulations, 2016 notified after the liquidation order, could retrospectively govern the liquidation process.
The impugned order by the Hon'ble NCLT Ahmedabad bench had rejected reliefs sought by the successful auction purchaser of the corporate debtor as a going concern, primarily on the ground that the amendments notified on October 14, 2025, applied to the liquidation process steps taken after that date. The appellant challenged this on the basis that the liquidation had commenced earlier, on October 10, 2025, and that the liquidation order explicitly stated it was effective from that date.
The NCLAT bench, led by Mr. Justice Yogesh Khanna, examined the provisions of Section 33(2) of the IBC and Regulation 39C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. It was highlighted that the Committee of Creditors (CoC), in its resolution, had directed the liquidator to first explore the sale of the corporate debtor as a going concern as part of the liquidation process. This decision was incorporated in the liquidation order dated October 10, 2025, which admitted the corporate debtor into liquidation effective from that date.
The Tribunal emphasized that the liquidation process, including the sale as a going concern, commenced on the date of the liquidation order, and subsequent amendments notified on October 14, 2025, could not retrospectively alter or invalidate the ongoing liquidation. The auction and sale steps were integral parts of the liquidation process initiated by the liquidation order and could not be treated as a fresh process governed by the amended regulations.
The NCLAT relied on its earlier precedent in Ashok Kumar Gulla vs State Bank of India, where it was held that the applicable regulations for liquidation matters are those prevailing on the date of the liquidation order. The ruling underscored the importance of protecting the commercial wisdom of the CoC, ensuring value maximization, safeguarding employment of over 800 employees, and protecting operational creditors such as local farmers dependent on the corporate debtor's operations.
Consequently, the NCLAT set aside the impugned order to the extent it misinterpreted the applicability of the amended regulations and remanded the matter to the NCLT to consider the reliefs and concessions due to the successful auction purchaser in accordance with law within two weeks.
This judgment clarifies the legal understanding of liquidation commencement date under IBC Section 33(2) and affirms that amendments to liquidation regulations do not have retrospective effect on liquidation processes already underway, thereby providing certainty to stakeholders in insolvency proceedings.
Bottom Line:
Liquidation commencement date is determined by the date of the liquidation order, and subsequent amendments to regulations cannot retrospectively alter the legal character or foundation of an already commenced liquidation process.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 33(2), Section 5(17); Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 Regulation 39C; Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2025
