Tribunal exercises inherent jurisdiction under IBC Section 60(5) to terminate liquidation, emphasizing revival over dissolution in line with Supreme Court's Swiss Ribbons ruling
In a landmark decision dated October 12, 2026, the National Company Law Tribunal (NCLT), Bengaluru Bench, has allowed the withdrawal of liquidation proceedings against M/s Alpine Wineries Private Limited, thereby restoring the company's management to its erstwhile Board of Directors. The judgment, delivered by Mr. Sunil Kumar Aggarwal, Judicial Member, and Mr. Radhakrishna Sreepada, Technical Member, highlights the tribunal's exercise of inherent jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 ("IBC") read with Rule 11 of the NCLT Rules, 2016.
The case arose after the Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (CIRP) on December 17, 2019, and subsequently ordered to be liquidated on December 22, 2021. The erstwhile Director and shareholder, Mr. Raghavendra Gowda, filed the application seeking recall of the liquidation order following a One-Time Settlement (OTS) with the Financial Creditors - Prithvi Asset Reconstruction and Securitization Company Limited ("PARAS") and Jammu & Kashmir Bank - which led to full discharge of dues amounting to Rs. 49 crores approximately.
The Applicant had settled Rs. 39 crores with PARAS and Rs. 10 crores with Jammu & Kashmir Bank, the latter having issued a No Dues Certificate post-payment. PARAS also confirmed full settlement and expressed no objection to the withdrawal of liquidation proceedings. The Liquidator maintained a neutral stance and deferred the decision to the tribunal, thereby underscoring the unique circumstances of the case.
The NCLT emphasized the Supreme Court's ruling in Swiss Ribbons Pvt. Ltd. v. Union of India (2019), which underscored that the primary objective of the IBC is revival and continuation of the Corporate Debtor as a going concern, with liquidation being a last resort. The tribunal held that continuing liquidation despite full settlement of financial creditors' dues would defeat the purpose of value maximization and revive the Corporate Debtor.
The judgment further clarified that the withdrawal of liquidation does not extinguish the claims of operational creditors, statutory authorities, employees, or other creditors. The restored management was directed to settle all admitted and verified liabilities within three months and to complete all outstanding statutory and tax filings within the same timeframe. Special care was mandated for the wine inventory, requiring testing by independent laboratories before any release for consumption.
The Liquidator was ordered to hand over custody and management of the Corporate Debtor's assets and documents to the restored Board within one month and file a final liquidation report, after which he would be discharged from the assignment but remain available to assist with statutory compliance related to the CIRP and liquidation period.
This decision marks a significant recognition of the flexible and rehabilitative approach envisioned by the IBC, balancing the interests of creditors, the Corporate Debtor, and other stakeholders, and preventing unnecessary dissolution when financial creditors have been fully compensated.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - After liquidation order, where dues of both financial creditors stood fully settled under OTS, creditors expressed no objection, and continuation of liquidation would defeat value maximization and revival of corporate debtor, NCLT can exercise jurisdiction under Section 60(5) read with Rule 11 to terminate liquidation and restore management, while safeguarding claims of operational creditors and statutory liabilities.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 33, Section 60(5), Section 12A; National Company Law Tribunal Rules, 2016 Rule 11
Raghavendra Gowda v. Ravindranath Narayan Rao, (NCLT)(Bengaluru) : Law Finder Doc Id # 2999871
