NCLT Bengaluru Terminates Alpine Wineries' Liquidation After Settlement Of ₹49 Crore Debt

The National Company Law Tribunal (NCLT), Bengaluru, on 12 October permitted termination of the liquidation proceedings against Alpine Wineries Private Limited after its financial creditors' dues were settled under one-time settlement agreements.

A Bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada allowed an application filed by Raghavendra Gowda, erstwhile director and shareholder of Alpine Wineries, seeking termination of the company's liquidation proceedings. It held:

“Where, however, the Financial Creditors have received the amounts agreed under the settlement and there is no subsisting commercial claim of the principal Financial Creditors requiring further liquidation of the Corporate Debtor's assets, continuation of liquidation merely as a matter of form would serve little purpose and may, in the facts of the present case, defeat rather than advance the objective of value maximization.”

Pridhvi Asset Reconstruction and Securitisation Company Limited (PARAS) initiated insolvency proceedings against Alpine Wineries in 2019 over an alleged default of Rs. 115.63 crore. The Tribunal admitted the petition and ordered liquidation in December 2021.

During liquidation, Gowda entered into one-time settlement agreements with the company's two financial creditors, PARAS and Jammu & Kashmir Bank, for Rs. 39 crore and Rs. 10 crore, respectively. He submitted that the settlement amounts and the corporate insolvency resolution process (CIRP) and liquidation costs had been fully paid. Jammu & Kashmir Bank had also issued a no-dues certificate.

Gowda sought termination of the liquidation proceedings, stating that the company's financial debts had been cleared and that it could resume its wine manufacturing business. He also undertook to discharge other creditors' admitted liabilities, subject to verification.

The liquidator informed the Tribunal that PARAS had confirmed receipt of its settlement dues and expressed no objection to termination of the liquidation proceedings.

The Bench noted that both financial creditors, whose exposure had formed the basis of the insolvency proceedings, had received their settlement amounts and did not oppose the company's revival. Relying on the Supreme Court's decision in Swiss Ribbons Pvt. Ltd. v. Union of India, the Bench reiterated that the IBC primarily seeks to revive and continue corporate debtors, with liquidation being a measure of last resort.

The Tribunal clarified that Section 12A of the IBC, which operates within the corporate insolvency resolution process (CIRP) framework, could not be mechanically invoked to withdraw proceedings after liquidation had commenced. It noted that the application instead invoked the Tribunal's inherent jurisdiction under Section 60(5) of the Code read with Rule 11 of the NCLT Rules. It held:

“We cannot remain shackled with the procedural paradigm and lead the Corporate Debtor to doom and getting its tangible/intangible assets wiped off as against retaining its corporate entity and allowing it to stand-up and bloom in the hands of its creator who has been able to suitably meet and satisfy its major financial liabilities and contribute to the national economy.”

Further, the Bench observed that continuing liquidation could reduce the company to a mere shell despite the settlement of substantial financial claims and the availability of factory infrastructure, statutory licences and assets capable of supporting its business.

It cautioned that settlement of financial creditors' dues would not extinguish the legitimate claims of other stakeholders. Although no operational creditor had opposed the application, the Bench emphasised that their interests had to be protected.

Accordingly, the NCLT terminated the liquidation proceedings and directed the liquidator to hand over the company's remaining assets, properties, records and documents to its erstwhile Board of Directors against proper receipts. The liquidator must submit a final liquidation report within one month, after which he will stand discharged.

For Applicant: Sumukh B Ram