NCLT Ahmedabad Allows Accord Industries 30 Days To Recover ₹30.48 Crore From Ex-Promoters

The National Company Law Tribunal (NCLT), Ahmedabad, on 7 October permitted the liquidation proceedings of Accord Industries Limited to continue for 30 days to enable the Liquidator to pursue recovery of Rs. 30.48 crore from the company's erstwhile directors and promoters, whom the Tribunal had held liable for fraudulent and wrongful trading.

A Bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma declined the Liquidator's request for a six-month extension, clarifying that the limited continuation would not amount to a fresh blanket extension of six months or an unrestricted continuation of the liquidation process. It observed:

“It is further clarified that the limited continuation granted herein shall not be understood as conferring upon any Financial Creditor an independent or unilateral right to take over or prosecute the pending Section 66/recovery proceedings.”

The Tribunal ordered the liquidation of Accord Industries in June 2020. During the first Stakeholders' Consultation Meeting, the Liquidator informed the stakeholders that the company's secured assets had already been disposed of under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, and no tangible assets remained.

Despite the absence of tangible assets, the Liquidator pursued proceedings under Section 66 of the Insolvency and Bankruptcy Code, 2016 (IBC). By an order dated 20 July 2026, the NCLT allowed the application, holding that the depletion and disposal of stock valued at Rs. 30.48 crore constituted fraudulent and wrongful trading. It directed the erstwhile directors and promoters to jointly and severally contribute the amount, along with interest, to the liquidation estate.

The Bench observed that immediately closing the liquidation proceedings could leave this substantial, judicially adjudicated recovery unrealised. It also noted that its inherent powers under Section 60(5) of the IBC read with Rule 11 of the NCLT Rules could be exercised in limited circumstances to preserve the recovery and facilitate lawful consequential steps.

It also considered the decision in Bharat S. Patel v. JM Financial Asset Reconstruction Company Ltd., Company Appeal (AT) (Ins.) No. 1877 of 2025, in which the National Company Law Appellate Tribunal (NCLAT) recognised the substitution of a financial creditor in place of the liquidator to pursue an application under Section 66.

However, the Tribunal clarified that the decision did not confer an unrestricted unilateral right on a financial creditor to take over pending proceedings without following the applicable statutory and regulatory mechanism. It observed:

“The aforesaid decision does not, however, confer an unrestricted unilateral right upon a Financial Creditor to take over or prosecute a pending Section 66 proceeding without following the applicable statutory and regulatory mechanism. Any such assignment, substitution or transfer must therefore be considered in accordance with the provisions applicable to the present liquidation.”

The Bench declined to grant the six-month extension sought by the Liquidator, noting that Accord Industries had already remained under liquidation for more than six years.

Accordingly, the NCLT permitted the liquidation proceedings to continue for 30 days.