NCLT ruled that pending winding-up proceedings do not preclude CIRP if liquidation has not reached irreversible stages, admitting a ₹1,526 crore insolvency petition.
Pending Winding-Up Proceedings Don’t Block CIRP: NCLT Rules
The National Company Law Tribunal (NCLT) admitted a ₹1,526 crore CIRP petition despite existing winding-up proceedings, holding that the latter do not constitute a bar if no irreversible steps toward liquidation have been taken.
The Tribunal distinguished between nominal proceedings and substantive liquidation actions, citing Section 238 of the IBC, which gives the Code primacy over conflicting laws. It observed that where administrative control remains with the company and no liquidator has been appointed, CIRP remains a viable remedy. The decision aligns with Swiss Ribbons Pvt. Ltd. v. Union of India, affirming the IBC’s remedial objective.
This clarification ensures that creditors can invoke timely insolvency resolution even when legacy proceedings exist. Practitioners must assess the actual stage of winding-up rather than its mere pendency when advising on CIRP filings.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 238
- Swiss Ribbons Pvt. Ltd. v. Union of India
