The National Company Law Appellate Tribunal clarified that a subsequent amendment to insolvency regulations cannot alter the legal character of a liquidation process already commenced under the prevailing regime. The Tribunal emphasized that rights and obligations in liquidation are fixed as of the date of the liquidation order, and any later regulatory change cannot disturb completed steps taken pursuant to that order.
Background & Facts
The Dispute
The dispute arose from the liquidation of M/s Honest Derivatives Private Limited (Corporate Debtor) under the Insolvency and Bankruptcy Code, 2016 (IBC). The successful auction purchaser, State Bank of India (SBI), sought reliefs and concessions for implementing the sale of the Corporate Debtor as a going concern. The National Company Law Tribunal (NCLT), Ahmedabad Bench, rejected the application by impugned order dated 17.06.2026, prompting the present appeals.
Key Facts
- The Corporate Debtor was admitted into liquidation under Section 33(2) of the IBC by the NCLT Ahmedabad order dated 10.10.2025, which expressly stated that liquidation shall be effective from the date of that order.
- The liquidation order dated 10.10.2025 recorded the Committee of Creditors’ Resolution No. 5, directing the Liquidator to first explore the sale of the Corporate Debtor as a going concern under Regulation 32(e) of the IBBI (Liquidation Process) Regulations, 2016, in accordance with Regulation 39C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations).
- The IBBI (Liquidation Process) (Second Amendment) Regulations, 2025 were notified on 14.10.2025, after the liquidation had already commenced on 10.10.2025.
- The Liquidator proceeded with the auction and sale as a going concern, steps undertaken in implementation of the liquidation order dated 10.10.2025 and the Committee of Creditors’ decision under Regulation 39C.
- The impugned order dated 17.06.2026 rejected SBI’s application for reliefs and concessions, treating the post-notification amendments as governing the liquidation process.
Procedural History
- 10.10.2025: NCLT Ahmedabad passed liquidation order admitting Corporate Debtor into liquidation under Section 33(2) IBC, effective from that date.
- 14.10.2025: IBBI (Liquidation Process) (Second Amendment) Regulations, 2025 notified.
- 05/AHM/2025: Resolution Professional filed application under Section 33 of IBC placing Committee of Creditors’ Resolution No. 5 before Adjudicating Authority.
- 17.06.2026: NCLT Ahmedabad passed impugned order (I.A. No. 678/AHM/2026 in C.P.(IB) No. 269/AHM/2023) rejecting the auction purchaser’s application for reliefs and concessions.
- Company Appeal (AT)(INS) No. 1138/2026: Filed by State Bank of India challenging the impugned order.
- Company Appeal (AT)(INS) No. 1145/2026: Filed by Garden Court Distilleries Pvt Ltd (Corporate Debtor) challenging the same order.
- 10-09-2026: Judgment delivered by the National Company Law Appellate Tribunal (Principal Bench, New Delhi).
Parties' Positions
- Appellant/Petitioner (State Bank of India): Contended that the liquidation process commenced on 10.10.2025 under the then-existing Regulations; the subsequent amendment notified on 14.10.2025 could not retrospectively invalidate steps already taken in pursuance of the liquidation order and the Committee of Creditors’ decision under Regulation 39C.
- Respondents (Garden Court Distilleries Pvt Ltd and Liquidator Mr. Akhil Ahuja): Argued that the impugned order correctly applied the amended Regulations, asserting that the auction and sale as a going concern occurred after the notification date and thus fell under the new regime.
Relief Sought
SBI sought: (a) setting aside of the impugned order dated 17.06.2026; (b) remand to the NCLT to examine reliefs and concessions, if any, to be granted to the successful auction purchaser in accordance with law; (c) costs of the appeal.
The Legal Issue
The central question was whether the IBBI (Liquidation Process) (Second Amendment) Regulations, 2025, notified on 14.10.2025, could be applied retrospectively to affect a liquidation process that had already commenced under the earlier regulatory regime on 10.10.2025, particularly concerning the validity of steps taken pursuant to the liquidation order and the Committee of Creditors’ direction under Regulation 39C of the CIRP Regulations.
Arguments Presented
For the Appellant/Petitioner
SBI relied on the principle that substantive rights in insolvency proceedings are determined as of the date of the liquidation order. It cited Ashok Kumar Gulla vs State Bank of India & Ors., Company Appeal (AT)(Ins) No. 786 of 2023, where the Tribunal held that regulations prevailing on the date of the liquidation order must be applied to avoid altering accrued rights. SBI argued that the liquidation order dated 10.10.2025 expressly fixed the commencement date and incorporated the Committee of Creditors’ Resolution No. 5 under Regulation 39C, making the subsequent exploration and sale as a going concern integral to the existing liquidation. It contended that applying the post-notification amendment would disturb settled legal relationships and prejudice creditors and operational stakeholders.
For the Respondent/State
The respondents contended that the impugned order correctly interpreted the amended Regulations as governing all steps taken after the notification date. They argued that the auction and sale as a going concern were initiated after 14.10.2025, thus falling within the scope of the Second Amendment Regulations, and that the liquidator could not rely on a pre-amendment direction to claim benefits under the old regime. They emphasized the prospective nature of statutory amendments unless expressly made retrospective.
The Court's Analysis
The Tribunal began by noting that the liquidation order dated 10.10.2025 is a substantive order admitting the Corporate Debtor into liquidation under Section 33(2) IBC, effective from that date. It emphasized that the order recorded the Committee of Creditors’ Resolution No. 5, directing the Liquidator to first explore sale as a going concern under Regulation 32(e) of the Liquidation Regulations, 2016, in accordance with Regulation 39C of the CIRP Regulations.
"The liquidation order dated 10.10.2025 records the decision of the Committee of Creditors taken under Regulation 39C, inter-alia, as follows: ‘....XXI. Further, in terms of Resolution No. 5, the CoC resolved that the Liquidator shall first explore the sale of the Corporate Debtor as a going concern under Regulation 32(e) of the IBBI (Liquidation Process) Regulations, 2016, in accordance with Regulation 39C of the IBBI (Resolution Process for Corporate Persons), Regulations 2016....’"
The Tribunal held that rights and obligations arising from the liquidation process must be determined with reference to the regulations prevailing on the date of the liquidation order. It relied on its earlier judgment in Ashok Kumar Gulla vs State Bank of India & Ors. (Company Appeal (AT)(Ins) No. 786 of 2023), which expressly stated that while deciding issues arising during liquidation, the Tribunal must examine the Regulations "as they stood on the date when the liquidation order was issued."
The Tribunal further observed that the liquidation order itself expressly declared that liquidation shall be effective from the date of the order, thereby fixing the legal character of the process. Consequently, the subsequent amendment notified on 14.10.2025 could not retrospectively alter the legal foundation or disturb steps already taken in implementation of the liquidation order and the Committee of Creditors’ direction.
The Tribunal rejected the respondents’ contention that the post-notification steps fell under the new regime, noting that the auction and sale were undertaken pursuant to the pre-existing liquidation order and the Committee of Creditors’ resolution, which had been placed on record and expressly recognized by the Adjudicating Authority.
The Verdict
The appeals by State Bank of India and Garden Court Distilleries Pvt Ltd are allowed. The impugned order dated 17.06.2026 passed by the NCLT Ahmedabad Bench is set aside. The matter is remanded to the Ld. NCLT to examine the reliefs and concessions, if any, to be granted to the successful auction purchaser in accordance with law, within two weeks of receipt of this order. Pending applications, if any, are also disposed of.
What This Means For Similar Cases
Liquidation Rights Fixed at Commencement
Practitioners must ensure that any claim for reliefs or concessions in a liquidation proceeding is evaluated against the regulatory regime prevailing on the date of the liquidation order. Subsequent amendments cannot disturb accrued rights or alter the legal character of steps already taken pursuant to that order.
Committee of Creditors’ Directions Are Binding
Where the Committee of Creditors has resolved, under Regulation 39C of the CIRP Regulations, that the Liquidator shall first explore sale as a going concern, such direction becomes part of the liquidation order once incorporated by the Adjudicating Authority. Any later regulatory change cannot invalidate actions taken in compliance with that direction.
Remedy Lies in Remand for Concessions
When an impugned order erroneously applies a post-notification amendment to an ongoing liquidation, the appropriate remedy is to set aside the order and remit the matter to the Adjudicating Authority for consideration of reliefs and concessions under the correct legal framework, rather than attempting to rewrite the substantive outcome at the appellate stage.
