NCLT approves voluntary liquidation under Section 59 IBC but holds directors liable for future contingent dues despite debt settlement.
NCLT Approves Voluntary Liquidation With Post-Liquidation Liability Clause
The National Company Law Tribunal (NCLT) approved a voluntary liquidation petition under Section 59 of the Insolvency and Bankruptcy Code (IBC), while explicitly holding the company's directors liable for contingent liabilities arising after liquidation, despite full settlement of declared debts from a ₹14.99 lakh fund.
The tribunal emphasized that approval of liquidation does not absolve directors of obligations under other statutes or future claims such as environmental damages, employee benefits, or tax liabilities.
"Voluntary liquidation does not operate as a blanket discharge of personal liability,"the order clarified, citing Section 277(1) of the Companies Act, 2013.
Practitioners advising on voluntary liquidation must now conduct comprehensive liability risk assessments. Directors seeking to exit corporate structures should obtain indemnity clauses and consider extended liability insurance, as the IBC process does not extinguish personal exposure under civil, tax, or regulatory regimes.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 59
- Companies Act, 2013, Section 277(1)
