NCLAT Delhi Says Resolution Applicant's Death Is Not Liquidation Ground, Revives Genius Exports CIRP
On 9 September, the National Company Law Appellate Tribunal (NCLAT), New Delhi held that the death of a resolution applicant before approval of a resolution plan does not, by itself, justify liquidation of the corporate debtor, particularly when a withdrawal application under Section 12A of the Insolvency and Bankruptcy Code, 2016 (IBC) based on a settlement is pending.
A Bench comprising Judicial Member Justice N Seshasayee and Technical Member Indevar Pandey set aside the liquidation order passed against Genius Exports Pvt. Ltd. and revived its Corporate Insolvency Resolution Process (CIRP). The Tribunal held:
“The Adjudicating Authority ought to have paused, no matter how it has chosen to deal with the resolution plan, for liquidation is amputation of the corporate assets for free sale in the market whereas CIRP requires preserving the soul of the corporate debtor by saving its body and life - the business of the corporate debtor. And, the Code stands for the latter and it recommends liquidation only when it has become imminent and unavoidable, a feature of the Code that frequently gets echoed through the judgements in this genre.”
The insolvency proceedings of Genius Exports were progressing towards resolution when its Committee of Creditors (CoC), comprising a sole operational creditor, approved a resolution plan submitted by Digvijay Nath Tripathi on 22 May 2022. While the plan was pending before the NCLT for approval, Tripathi died on 3 September 2024. The Resolution Professional (RP) informed the NCLT about his death.
Thereafter, the operational creditor and the suspended director of the corporate debtor reached a settlement. On 25 January 2025, the creditor informed the RP about the settlement. At the 25th CoC meeting, the CoC passed a resolution to withdraw the CIRP under Section 12A of the IBC (IBC). The RP subsequently filed an application seeking withdrawal.
The application seeking approval of the resolution plan was also pending. On 17 September 2025, the NCLT rejected the plan, holding that the resolution applicant's “office and obligations” were non-heritable, and ordered liquidation under Section 33(1). It also dismissed the Section 12A withdrawal application as infructuous.
The operational creditor challenged the liquidation order before the NCLAT, arguing that the plan had not been rejected for any illegality but because of the resolution applicant's death. It submitted that the proper course was to issue a fresh Form G and invite new resolution plans instead of ordering liquidation. It further argued that after the parties reached a settlement, the NCLT ought to have kept the corporate debtor alive rather than ordering liquidation.
The Tribunal rejected the NCLT's view that a resolution applicant holds an “office” carrying non-heritable obligations. It noted that, unlike a resolution professional or liquidator, a resolution applicant is more akin to “a promisor in a contract through an invitation to offer as in an auction” and is not an office-holder.
It further held that Section 33(1) permits liquidation in two circumstances: where no resolution plan is received within the CIRP period, or where a resolution plan approved by the CoC is rejected under Section 31. It noted that the death of a resolution applicant is not a statutory ground for liquidation. It observed:
“Therefore, the Adjudicating Authority may not have too many choices left with it than to send the plan back to the CoC with its observations, if felt necessary. Accordingly, any situation where a resolution applicant dies pending approval of the resolution plan by the Adjudicating Authority, the plan may have to be re-send to the CoC.”
The Bench added that “when death is an inevitable and inescapable incidence of every life, should the objective of the Code to keep alive the business of the corporate debtor be sacrificed merely because the Code has left a blank space in negotiating the death of the resolution applicant? It will be a startling, if not a baffling experience, in law and logic if the Code were to be understood as enabling any such extravagant interpretation.”
The Tribunal described the issue as a “blind spot” and “a jurisprudential quagmire in the IBC terrain”, observing that it could not be reduced to “a kindergarten story of an 'Elephant and Five blindmen'.”
It held that where the Request for Resolution Plan (RFRP) and the resolution plan do not provide for a situation arising from the death of a resolution applicant, the plan should be remitted to the CoC to consider alternatives, including heirs or other applicants.
The Bench also held that even if the rejection of the resolution plan was sustainable, the NCLT erred in dismissing the Section 12A application as infructuous. It noted that the settlement between the operational creditor and the suspended director provided a legitimate exit route and held that the withdrawal application filed by the RP could be pursued.
Accordingly, the NCLAT set aside the liquidation order dated 17 September 2025, revived the CIRP of Genius Exports Pvt. Ltd., and directed the NCLT to consider the Section 12A withdrawal application.
For Applicants: Advocate Deep Bisht and Astitwa Kumar
For Respondents: Advocate Sujal Bhatt for R2