In a landmark ruling, the Tribunal directs Resolution Professional to invite fresh resolution plans emphasizing integrated revival of the corporate debtor within 120 days, underscoring the Insolvency and Bankruptcy Code's objective of value maximisation over immediate liquidation.
Chandigarh, 28 September 2026: In a significant decision impacting corporate insolvency resolution processes, the National Company Law Tribunal (NCLT), Chandigarh Bench, has ruled in favor of granting one final, strictly time-bound opportunity to SEL Textiles Limited to revive its operations before ordering liquidation. The ruling arises from the dispute between Rajeev Sharma, Resolution Professional (RP) of SEL Textiles Ltd., and the suspended management represented by Neeraj Saluja.
SEL Textiles Ltd., a corporate debtor comprising four commercially interdependent manufacturing units-three yarn production plants located at Lambi (Punjab), Neemrana (Rajasthan), and Hansi (Haryana), and a terry-towel manufacturing unit at Nawasahar/Rahon (Punjab)-was undergoing Corporate Insolvency Resolution Process (CIRP) initiated in August 2023 after Central Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
During the CIRP, multiple resolution plans were invited through Form G announcements, with the Committee of Creditors (CoC) receiving several bids. However, all submitted plans were rejected by the CoC as they offered values substantially below the liquidation value of the company. Subsequently, the CoC resolved to liquidate the company and authorized the RP to file an application under Section 33 of the IBC for liquidation.
The suspended management contested the liquidation application, arguing that the Corporate Debtor's value lay in its integrated and commercially interdependent units, whose fragmentation through liquidation would cause value erosion detrimental to stakeholders, including employees and creditors. They contended that alternative revival mechanisms, such as compromise or arrangement under Section 230 of the Companies Act, 2013, should be explored before liquidation.
The NCLT carefully examined the submissions, the commercial interdependence of the units, the regulatory amendments to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations effective from 14 October 2025, and the recent legislative amendment via the Insolvency and Bankruptcy Code (Amendment) Act, 2026. The amendments had removed provisions enabling sale of the corporate debtor or business as a going concern during liquidation, increasing the importance of exploring revival before liquidation.
Importantly, the Tribunal noted that Section 33(1A) of the IBC, introduced by the 2026 amendment, allows restoration of the CIRP before liquidation to provide a final opportunity for revival. This legislative change signals that failure of initial resolution processes does not preclude further attempts at resolution.
The Bench observed that given the integrated nature of SEL Textiles' manufacturing units and the previous interest shown by multiple prospective resolution applicants-even after the initial timelines expired-a renewed and focused market exercise could attract viable resolution plans that preserve the corporate debtor as a going concern and maximize stakeholder value.
Consequently, the NCLT directed the Resolution Professional to issue a fresh Form G for inviting Expressions of Interest and Resolution Plans, emphasizing integrated resolution of the corporate debtor as a whole. This process is to be completed within 120 days from the date of the order. Post completion, the RP must file a status report and seek appropriate orders based on the outcome, whether approval of a resolution plan or liquidation.
The liquidation application filed by the RP under Section 33 was dismissed at this stage, with liberty reserved to seek further orders after the fresh resolution attempt. The application by the suspended management opposing liquidation was also disposed of accordingly.
This ruling reinforces the IBC's overarching objective of insolvency resolution through reorganization and value maximization, designating liquidation as a measure of last resort. It highlights the judiciary's role in balancing the commercial wisdom of the CoC with statutory mandates and the broader policy of preserving viable enterprises.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Before ordering liquidation, one final and strictly time-bound opportunity can be granted for revival of the corporate debtor where the corporate debtor is an integrated industrial undertaking, earlier resolution processes had attracted market interest, and immediate liquidation may cause fragmentation and value erosion - RP directed to issue fresh Form G and complete process within 120 days.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 7, Section 33 (including sub-section 1A), Section 34; Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Regulations 32, 32A, 39B, 39BA, 39C, 39D); Companies Act, 2013 Section 230; Insolvency and Bankruptcy Code (Amendment) Act, 2026.
