Liquidator Cannot Appeal His Own Replacement As He Is Not 'Person Aggrieved' Under IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) on Tuesday held that a liquidator cannot maintain an appeal challenging his replacement under the Insolvency and Bankruptcy Code (IBC), ruling that removal from such a statutory assignment does not create a vested entitlement to continue in office.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey observed,

“It is well settled that once the Adjudicating Authority, for reasons recorded, directs replacement of a Liquidator, he cannot claim continuation as a matter of right. Section 61 permits an appeal by a 'person aggrieved'. Removal from a statutory assignment, without affecting any independent civil or proprietary right, does not automatically create a vested entitlement to continue and such a person cannot be treated as 'person aggrieved' and would therefore have no locus to maintain an appeal before this tribunal merely on the ground of replacement,”

The ruling came in an appeal filed by Ramachandran Subramanian, the erstwhile liquidator of Tecpro Systems Limited, challenging a January 9, 2026 order of the National Company Law Tribunal (NCLT), Delhi Bench, replacing him with Anil Kohli.

Tecpro Systems entered liquidation on January 16, 2020, after the failure of an approved resolution plan. Subramanian was appointed as the liquidator to conduct the liquidation process.

During the liquidation proceedings, Edelweiss Asset Reconstruction Company Ltd. (EARCL), the dominant financial creditor, filed applications seeking his replacement. In October 2024, the Stakeholders' Consultation Committee (SCC) voted with an overwhelming majority of over 92% in favour of replacing the liquidator.

Subramanian challenged the decision, arguing that an independent voting exercise conducted under the supervision of Justice (Retd.) Sunil Gaur excluding EARCL's vote, secured only around 59% support for his removal. He said this fell short of the statutory two-thirds threshold under Regulation 31A(11) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations.

He also argued that EARCL should be treated as a related party of the corporate debtor under Section 5(24) of the IBC and therefore should not have been allowed to participate in the voting process. According to the appellant, once EARCL's vote was excluded, the resolution to replace him could not have been validly passed.

The respondents, including the newly appointed liquidator, countered that a liquidator does not possess any personal or proprietary right to continue in the liquidation process and therefore cannot challenge a lawful decision replacing him.

The appellate tribunal agreed with the respondents, holding that the office of liquidator is fiduciary and functional in nature and does not confer any vested right to continue once the adjudicating authority directs replacement.

The tribunal also emphasised that the liquidation process remains under the supervision of the adjudicating authority.

“The liquidation process remains under the supervision of Adjudicating Authority. If the Authority, on overall consideration of stakeholder confidence, conduct of proceedings and repeated friction, forms an opinion that continuation of the Liquidator is not conducive to smooth completion of liquidation, it is within its jurisdiction to direct replacement,” the bench said.

The tribunal also rejected the contention that EARCL was a related party of the corporate debtor.

Finding no illegality or jurisdictional error in the NCLT's decision, the appellate tribunal dismissed the appeal.