The NCLAT confirmed that post-liquidation settlements must follow a Section 230 scheme of the Companies Act, ruling that Section 12A cannot apply after liquidation proceedings have initiated. This reinforces the integrity of the liquidation process.
NCLAT Rules on Post-Liquidation Settlement Procedures
The National Company Law Appellate Tribunal (NCLAT) reaffirmed that any settlement following liquidation must adhere to a Section 230 scheme under the Companies Act, 2013. This ruling came in response to a challenge to the Bank of Baroda's initiation of the liquidation process.
The tribunal explicitly stated that the provisions of Section 12A of the Insolvency and Bankruptcy Code, which allow withdrawal of insolvency proceedings, are not applicable once liquidation has started. This reiteration emphasizes that insolvency resolutions must align with statutory mandates to ensure fairness and adherence to legal frameworks.
These conclusions arise from the need to maintain a structured resolution process under corporate law, thereby protecting the rights of stakeholders involved. Failure to follow the prescribed legal pathways would undermine the integrity of the liquidation process as specified in various articles, including those relating to creditor rights.
For practitioners, this ruling clarifies the pathways for managing insolvency cases and reinforces the importance of adhering strictly to statutory provisions when responding to liquidation proceedings.
Citations
- Bank of Baroda (2026) NCLAT Order
