NCLT Kolkata Allows Exclusion of 61 Days from Liquidation Timeline for Sasa Musa Sugar Works
Judicial and Stakeholder Processes Recognized as Grounds for Timeline Extension; Liquidator's Efforts to Maximize Value Preserved
In a significant decision, the National Company Law Tribunal (NCLT) Kolkata bench has allowed the exclusion of a 61-day period from the liquidation timeline of Sasa Musa Sugar Works Private Limited. The tribunal, comprising Member (Judicial) Smt. Bidisha Banerjee and Member (Technical) CMDE Siddharth Mishra, ruled that the time consumed in compliance with judicial directions and stakeholder deliberations should not penalize the Liquidator for delays beyond their control.
The liquidation process for Sasa Musa Sugar Works commenced on February 20, 2025, with the appointment of Mr. Manish Jain as the Liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016. Aiming to maximize value, the Liquidator sought to sell the Corporate Debtor as a going concern. However, the process encountered delays due to judicial orders and stakeholder approvals.
The period from May 1, 2025, to June 30, 2025, was particularly crucial, as it was spent in compliance with the Hon'ble NCLAT's order allowing suspended directors to propose a Scheme of Compromise/Arrangement under Section 230 of the Companies Act, 2013. Despite efforts, the scheme was rejected by the stakeholders due to concerns over investor details and funding sources.
The tribunal acknowledged that the Liquidator was not at liberty to proceed with fresh auction notices until judicial and stakeholder approvals were obtained. Regulation 47 of the Liquidation Regulations, which prescribes a model timeline, was deemed directory in nature, allowing for exclusions in cases of judicial or stakeholder-induced delays.
Furthermore, Regulation 33 read with Schedule I governs the mode of asset sale, permitting deviations from strict auction cycles when necessary. The NCLT’s decision ensures the Liquidator is not penalized for timeline extensions resulting from external processes, safeguarding the integrity of the liquidation process.
This decision underscores the tribunal's commitment to ensuring fair proceedings in insolvency cases, prioritizing value maximization while acknowledging the complexities involved in compliance with judicial and stakeholder processes.
Bottom Line:
Exclusion of the period consumed in judicial and stakeholder-mandated processes from the liquidation timeline under the Insolvency and Bankruptcy Code, 2016, is permissible to ensure that the Liquidator is not penalized for delays beyond their control.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 60(5), Regulation 47 of the Liquidation Regulations, Regulation 33 read with Schedule I
