Tribunal grants three-month extension to complete liquidation, directs liquidator to realize assets and distribute proceeds under IBC; going-concern sale barred as per amended regulations.
The National Company Law Tribunal (NCLT), Ahmedabad Bench, chaired by Mr. Shammi Khan and Mr. Sanjeev Sharma, has recently passed a significant order in the liquidation proceedings of Cupid Estatecon Private Limited. The order extends the liquidation period by three months to enable the completion of the remaining liquidation process, while firmly disallowing the sale of the Corporate Debtor as a going concern under the amended Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
The case arose from an application filed by Mr. Paresh Chandulal Mehta, the Liquidator appointed for Cupid Estatecon Pvt. Ltd., seeking an extension of the liquidation period beyond the previously extended deadline of April 2, 2026. The applicant also sought condonation of a 12-day delay in filing the application. The sole financial creditor, Wellworth Apparels Pvt. Ltd., had earlier initiated insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
The Tribunal noted that no resolution plan was received during the Corporate Insolvency Resolution Process (CIRP), leading to liquidation ordered on October 3, 2024. During liquidation, the only identifiable realisable asset was a security deposit with Dakshin Gujarat Vij Company Limited, amounting to approximately Rs. 14.7 lakh, which was released and credited to the Corporate Debtor's bank account. However, the bank account faced a lien placed by the Income Tax Department, which delayed the liquidation process until the lien was removed by Tribunal's order in February 2026.
Wellworth Apparels Pvt. Ltd., the sole member of the Stakeholders Consultation Committee (SCC), had proposed sale of the Corporate Debtor as a going concern. An e-auction notice was issued on May 8, 2025, but the sale did not culminate in any successful bid or realization of consideration due to regulatory and compliance issues, including the non-availability of a dedicated liquidation bank account.
The Respondent contended that since the going-concern sale process had commenced prior to the October 14, 2025 amendment to the Liquidation Process Regulations, which disallowed such sales, the sale process should continue. The Tribunal, however, clarified that no vested right arose as the sale was not completed and the Corporate Debtor had no ongoing business or operational undertaking capable of being sold as a going concern.
Relying on Supreme Court precedents including Swiss Ribbons Pvt. Ltd. v. Union of India, Arun Kumar Jagatramka v. Jindal Steel & Power Ltd., and others, the Tribunal emphasized adherence to the statutory liquidation framework and the amendments that removed the option of going-concern sale during liquidation.
The Tribunal directed the Liquidator to focus on realization of all assets, including those listed in the balance sheet such as land and investments, and distribute the proceeds strictly in accordance with Section 53 of the IBC. The Liquidator was also ordered to submit detailed reports on asset realization efforts and provide information on the Corporate Debtor's directors and related legal proceedings.
The extension granted is intended solely to complete asset realization, statutory compliances, and dissolution formalities. The Tribunal expressly prohibited continuation or revival of the going-concern sale process.
This judgment reaffirms the stringent application of amended IBBI regulations and underscores the priority of asset realization and equitable distribution to creditors under the liquidation regime of the IBC.
Bottom Line:
Insolvency and Bankruptcy Code - Liquidation period extended for completion of remaining liquidation process - Going-concern sale disallowed under amended regulations - Liquidator directed to focus on asset realization and statutory compliance for dissolution.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 35(1)(n), 60(5)(c), 53; Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (including Regulation 44(2), amended Regulations of 2025); National Company Law Tribunal Rules, 2016 Rules 11, 15, 51, 153.
