The NCLT held that pending winding-up proceedings do not preclude initiation of CIRP under IBC if no irreversible steps toward liquidation have been taken.
Pending Winding-Up No Bar to CIRP Admission: NCLT Rules
The National Company Law Tribunal (NCLT) has ruled that the mere pendency of winding-up proceedings does not constitute a bar to the admission of a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), provided no irreversible steps have been taken toward liquidation. The order came on a plea filed by a financial creditor claiming a default of ₹1,526 crore.
"The initiation of winding-up proceedings under the Companies Act does not ipso facto disentitle a creditor from initiating CIRP under Section 7 of the IBC, especially where no order for liquidation has been passed,"
The NCLT emphasized that the objective of IBC is revival and rescue, and the existence of earlier winding-up proceedings must be assessed for substance rather than form. The tribunal found that since no liquidator had been appointed and no assets disbursed, the corporate debtor remained amenable to CIRP. This decision reinforces the primacy of IBC over other insolvency mechanisms once initiated in accordance with procedural timelines.
