Tribunal refuses six-month blanket extension despite Rs. 30.48 Crore adjudicated recovery; stresses Committee of Creditors' role in pursuing pending proceedings under Insolvency and Bankruptcy Code
In a significant decision dated October 7, 2026, the National Company Law Tribunal (NCLT), Ahmedabad Bench, presided over by Mr. Shammi Khan (Judicial Member) and Mr. Sanjeev Sharma (Technical Member), granted a limited 30-day extension for the liquidation process of Accord Industries Limited. The extension is specifically aimed at preserving, enforcing, and realizing an adjudicated recovery of Rs. 30.48 Crores with 12% interest, arising from fraudulent trading proceedings under Section 66 of the Insolvency and Bankruptcy Code, 2016 (IBC).
The liquidation of Accord Industries had been ongoing since June 19, 2020, with multiple extensions granted over six years due to the absence of tangible assets and pending recovery proceedings. The last extension expired on August 6, 2026. The Liquidator, Mr. Ravi Kapoor, filed an application seeking a six-month extension to complete the liquidation and pursue recovery actions following the recent order dated July 20, 2026, which held the erstwhile directors and promoters jointly and severally liable to contribute the Rs. 30.48 Crores to the liquidation estate.
The Tribunal carefully examined the facts, including the timing of the recovery order which was passed merely 17 days before the expiry of the liquidation period, and the failure of the Committee of Creditors (CoC) to approve a composite proposal involving assignment of recovery rights, pursuit of recovery proceedings, distribution of proceeds, and dissolution of the Corporate Debtor.
While acknowledging the necessity to avoid an open-ended continuation of liquidation, especially given the protracted six-year process, the NCLT recognized that immediate termination would frustrate the realization of a significant judicially adjudicated recovery. The Tribunal held that the failure of the CoC to approve the composite proposal does not extinguish the recovery right and emphasized the statutory role of the CoC in deciding the mechanism for pursuing recovery.
The NCLT ruled that the Liquidator is permitted to continue the liquidation proceedings only for a narrowly tailored protective period of 30 days to take consequential steps for enforcement and realization of the recovery. The CoC is directed to consider within 15 days the manner of pursuing the pending Section 66 proceedings and the distribution of proceeds in accordance with the IBC framework. The Liquidator must file two status reports within the 30-day period detailing the progress of recovery efforts.
Importantly, the Tribunal clarified that no Financial Creditor obtains an independent or unilateral right to take over or prosecute the pending Section 66 proceedings by virtue of its financial creditor status alone. Any assignment or transfer of economic benefit from the pending proceedings must comply strictly with the provisions of the IBC and Liquidation Regulations and require CoC approval.
This decision reinforces the balance between enabling the enforcement of adjudicated recoveries in liquidation and respecting the statutory role and commercial decisions of the Committee of Creditors under the Insolvency and Bankruptcy Code, 2016. It also underscores the limited scope of the Tribunal's inherent powers under Rule 11 of the NCLT Rules, 2016, which cannot override the statutory framework or substitute the CoC's commercial decisions.
The order serves as a precedent for similar cases where significant recoveries are crystallized late in the liquidation timeline and highlights the importance of harmoniously interpreting the IBC's provisions to maximize value for stakeholders while preventing protracted liquidation processes.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Liquidation - Where adjudicated recovery of Rs. 30.48 Crores with interest under Section 66 was crystallised only 17 days before expiry of liquidation period, liquidation could be continued only for a narrowly tailored protective period of 30 days to preserve, enforce and realise such recovery - Failure of CoC to approve composite proposal for assignment/recovery/dissolution does not extinguish adjudicated recovery - Tribunal cannot substitute CoC's commercial decision or authorise unilateral takeover of Section 66 proceedings by financial creditor.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 34(1), 54, 60(5), 66, 424(3); Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 Regulations 44, 44A; National Company Law Tribunal Rules, 2016 Rule 11
Ravi Kapoor, (NCLT)(Ahmedabad Bench) : Law Finder Doc Id # 2995444
