Despite Pending Legal Proceedings and Unrelinquished Secured Assets by SBI, Tribunal Permits Dissolution Under Amended Insolvency Code with Provisions for Continuation of Pending Proceedings
In a significant decision dated October 7, 2026, the National Company Law Tribunal (NCLT), Ahmedabad Bench, comprising Judicial Member Sh. Shammi Khan and Technical Member Sh. Sanjeev Sharma, allowed the dissolution of Siddhi Vinayak Logistic Limited ("Corporate Debtor") after the completion of its liquidation process under the Insolvency and Bankruptcy Code, 2016 ("IBC" or "Code"). The application for dissolution was filed by Mr. Dushyant C Dave, the appointed Liquidator.
The corporate insolvency resolution process (CIRP) against Siddhi Vinayak Logistic Limited was initiated in September 2017 on a petition by Punjab National Bank. Following the failure to revive the corporate debtor, liquidation proceedings commenced in November 2018, with Mr. Dave appointed as Liquidator.
Over the years, the Liquidator successfully realized assets valued at over Rs. 148.61 crore through auctions and private sales, and distributed Rs. 123.26 crore to secured financial creditors and government dues. The liquidation estate's accounts, including the Final Report, Compliance Certificate in Form H, and audited receipts and payments, were submitted to the Tribunal. The Liquidator also complied with all statutory and procedural requirements, including public announcements, stakeholder consultations, and periodic reporting.
A notable complexity in the liquidation was the provisional attachment of 6,170 vehicles by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002. While 4,826 vehicles were released back to the Liquidator, 1,344 vehicles remained under attachment, which the ED retained authority over. Furthermore, certain assets remained under security interest held by the State Bank of India (SBI), which did not relinquish these interests and opted to enforce its security rights under the SARFAESI Act, 2002.
The Liquidator clarified that these unrelinquished secured assets did not form part of the liquidation estate and thus could not be sold by the Liquidator. The Tribunal confirmed that such assets lie outside the liquidation estate and shall be dealt with independently by SBI in accordance with law.
The dissolution application was initially dismissed in April 2024 as premature due to outstanding assets held by SBI. However, subsequent developments, including SBI's confirmation that it would enforce security interests without obstructing dissolution, allowed the Liquidator to renew the dissolution application.
Further, the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which came into effect in May 2026, introduced provisions under Section 54 allowing dissolution notwithstanding pending proceedings under Sections 54(1A) and 54(1B), provided mechanisms for continuation of such proceedings are in place.
Following the Tribunal's directive, the Committee of Creditors (CoC) convened in September 2026 and passed a resolution authorizing certain banks to oversee and continue pending legal proceedings on behalf of the corporate debtor after dissolution, including substitution of the Liquidator in those proceedings. The CoC's resolution received substantial support with over 71% votes in favor.
The Tribunal examined all records, including the final liquidation accounts, procedural compliance, pending litigations, and the CoC's resolution on continuation of proceedings. It held that the liquidation process had reached substantive completion, and dissolution was warranted.
Key directions issued by the Tribunal include:
- - Siddhi Vinayak Logistic Limited stands dissolved under Section 54(2) of the IBC with immediate effect.
- - The Liquidator's Final Report, Compliance Certificate, and audited accounts are taken on record.
- - The Liquidator shall complete statutory compliances post-dissolution and preserve liquidation records as mandated.
- - Pending proceedings under Sections 54(1A) and 54(1B) may continue in accordance with the Code and relevant forum orders, supervised by the authorized banks.
- - The unrelinquished secured assets remain outside the liquidation estate to be dealt with by SBI per the SARFAESI Act.
- - Registry to notify the Registrar of Companies, Insolvency and Bankruptcy Board of India, and Principal Chief Commissioner of Income Tax regarding the dissolution.
The dissolution order marks the formal closure of Siddhi Vinayak Logistic Limited, while ensuring that ongoing legal and recovery proceedings continue under appropriate oversight. The decision balances the need for corporate closure with protection of creditor interests and statutory compliance.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Dissolution of corporate debtor - Dissolution can be granted where liquidation estate has been fully dealt with, notwithstanding pendency of proceedings falling within Sections 54(1A) and 54(1B), provided statutory mechanism for continuation of such proceedings is addressed - Assets over which secured creditor has not relinquished security interest do not form part of liquidation estate for realization by Liquidator.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 7, 33, 36(4)(b), 52, 53, 54(1A), 54(1B), 54(2), 54(3), SARFAESI Act, 2002 Section 13(9), Prevention of Money Laundering Act, 2002 Section 5(1), IBBI (Liquidation Process) Regulations, 2016 Regulations 12, 13, 15(1)(b), 21A, 31, 31A, 33, 34, 37(7), 37A, 45, 45A, Liquidation Regulations (Fourth Amendment), 2026
