Pending Interlocutory Applications Do Not Bar Liquidation Of Corporate Debtor: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai Bench, has held that pending interlocutory applications concerning the affairs of a Corporate Debtor do not prevent liquidation proceedings from commencing.

Such applications can instead be pursued by the Liquidator in accordance with law.

“Though certain interlocutory applications relating to the affairs of the Corporate Debtor are stated to be pending, the same would not preclude the commencement of liquidation proceedings and may be pursued by the Liquidator in accordance with law,” Judicial Member Vinay Goel and Technical Member Charanjeet Singh Gulati observed.

The observation came while the court ordered liquidation of European Projects & Aviation Limited under Section 33(2) of the Insolvency and Bankruptcy Code, 2016.

The insolvency proceedings began after Dabir Developers Private Limited, the financial creditor, filed a petition under Section 7 of the IBC against the company on September 16, 2024. The petition was admitted on March 27, 2025, and Interim Resolution Professional Manoj Kumar Jain was appointed.

Resolution Professional Laxmikant Yeshwant Desai was subsequently appointed in place of Jain.

The court noted that the company had no business revenue or income since financial year 2012. It had no employees or staff, fixed assets or patents, and had received no interest from any Prospective Resolution Applicant.

The CoC approved initiation of liquidation proceedings at its fourth meeting on August 25, 2025. At its fifth meeting on September 9, 2025, it resolved to initiate liquidation and authorised the Resolution Professional to file the necessary application. The resolution was approved with 100% voting share.

The Resolution Professional sought liquidation of the company and also requested his appointment as Liquidator.

The court explained the distinction between Sections 33(1) and 33(2) of the IBC. Section 33(1) applies where no resolution plan is received before the expiry of the CIRP period, or where a resolution plan is rejected for failing to meet the statutory requirements. In such circumstances, the Adjudicating Authority has to order liquidation.

Section 33(2) applies where the CoC decides to liquidate the Corporate Debtor during the CIRP and before approval of a resolution plan. Such a decision requires at least 66% of the voting share. Once the Resolution Professional communicates the decision, the Adjudicating Authority is required to pass a liquidation order.

The court observed that the requisite CoC resolution is therefore a statutory precondition for liquidation under Section 33(2), but no such requirement exists under Section 33(1).

In this case, the court held that the company was liable to be liquidated under Section 33(2).

The court noted that the insolvency process had ended without any resolution plan, while the company had already stopped operations and was no longer a going concern. The creditors had also unanimously voted for liquidation.

The court also declined to appoint Resolution Professional Laxmikant Yeshwant Desai as Liquidator, in view of the law amended in May 2026, which prevents the same Resolution Professional from taking over as Liquidator of the company.

It instead appointed Insolvency Professional Sandeep D. Maheshwari as Liquidator. He was directed to take charge of the company's assets, deal with any pending proceedings, and make the required public announcement. He must also submit a preliminary report within 30 days.

For Applicant/Resolution Professional: Advocate G. Aniruth Purusothaman