Small Industries Development Bank of India Vs Ishfi Raj Silicon Private Limited (NCLT Jaipur)
Summary: The National Company Law Tribunal, Jaipur Bench, comprising Judicial Member Reeta Kohli and Technical Member Kavita Bhatnagar, allowed IA (IBC)(Liq.) No. 3/JPR/2026 and ordered the liquidation of Ishh Raj Silicon Private Limited under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The application was filed by Resolution Professional Kamal Kumar Jadwani following a unanimous decision of the Committee of Creditors (CoC) to liquidate the Corporate Debtor. The Tribunal held that the CoC’s decision, supported by Small Industries Development Bank of India (SIDBI), the sole financial creditor holding 100% voting share, satisfied the statutory requirements for liquidation. It further clarified that a resolution offer falling below liquidation value does not automatically constitute an independent statutory ground for rejection and that assessment of commercial feasibility and viability ordinarily falls within the CoC’s commercial wisdom. Applying amended Section 34(4) of the Code, effective from 26 May 2026, the Tribunal declined to appoint the existing Resolution Professional as Liquidator and instead appointed Ms. Nisha Banshal, subject to statutory compliance.
Background and Commencement of CIRP
The Corporate Insolvency Resolution Process (CIRP) commenced pursuant to the Adjudicating Authority’s order dated 12 December 2025. Kamal Kumar Jadwani was appointed as Interim Resolution Professional and subsequently confirmed as Resolution Professional.
The Interim Resolution Professional published Form A on 14 December 2025, inviting claims from creditors. Only one claim was received, from SIDBI. Consequently, SIDBI constituted the entire CoC, with 100% voting rights.
At the first CoC meeting held on 12 January 2026, SIDBI confirmed the appointment of the Resolution Professional and approved the appointment of registered valuers, eligibility criteria for prospective resolution applicants and other procedural requirements. The CoC also approved the publication of Form G to invite expressions of interest from potential resolution applicants.
Resolution Efforts and Rejection of Commercial Offers
The Resolution Professional published Form G on 15 January 2026. Four expressions of interest were initially received, although only one prospective resolution applicant ultimately submitted a resolution plan.
The applicant, Ms. Nidhi Jain, initially offered ₹1.45 crore, comprising ₹1 crore payable within 30 days of approval and ₹45 lakh payable within 90 days.
The CoC considered the offer inadequate in view of the Corporate Debtor’s debt exposure and anticipated recovery. The applicant subsequently revised the offer to ₹2.11 crore, inclusive of CIRP costs.
At the adjourned fifth CoC meeting on 29 April 2026, the applicant submitted a further revised offer of approximately ₹2.25 crore. The CoC nevertheless rejected the proposal and unanimously approved publication of a revised Form G to explore additional resolution opportunities.
The valuation information recorded in the order was as follows:
| Particulars | Approximate value |
|---|---|
| Initial resolution offer | ₹1.45 crore |
| First revised offer | ₹2.11 crore |
| Final revised offer | ₹2.25 crore |
| Fair value | ₹3.30–₹3.39 crore |
| Liquidation value | ₹2.61–₹2.89 crore |
The final offer was below the reported liquidation-value range. However, the Tribunal specifically distinguished this commercial consideration from an independent statutory ground for rejecting a resolution plan.
Fresh Invitation for Resolution Plans and CIRP Extension
Following rejection of the revised offer, the Resolution Professional published another Form G on 1 May 2026, initially fixing 16 May 2026 as the deadline for expressions of interest. The deadline was subsequently extended to 28 May 2026.
Two expressions of interest were received during the extended period. However, only one prospective resolution applicant remained in the final list, and that applicant withdrew after examining the Information Memorandum and evaluating the Corporate Debtor’s assets.
The Resolution Professional reported that no acceptable resolution plan remained available for consideration.
Meanwhile, the CoC approved a proposal seeking extension of the CIRP by 90 days, up to 8 September 2026. The Adjudicating Authority subsequently allowed the extension application by its order dated 3 July 2026.
The Tribunal observed that the extension order did not invalidate the earlier liquidation decision because Section 33(2) permits the CoC to decide upon liquidation at any time during CIRP, provided the decision precedes confirmation of a resolution plan.
CoC’s Unanimous Decision to Liquidate
At its seventh meeting held on 25 June 2026, the CoC considered the absence of a commercially acceptable resolution plan despite successive invitations, revised offers and extensions.
SIDBI, being the sole CoC member, approved liquidation with 100% voting share.
The Tribunal examined Section 33(2), which permits liquidation where the Resolution Professional intimates the Adjudicating Authority of a CoC decision approved by not less than 66% of the voting share before confirmation of a resolution plan.
The Bench found that the decision was not taken prematurely or without attempting resolution. The CoC had considered multiple commercial offers, allowed revisions, issued a second invitation for expressions of interest and provided additional opportunities to prospective applicants.
Accordingly, the statutory voting threshold and procedural conditions stood satisfied.
Commercial Wisdom and Resolution Offers Below Liquidation Value
An important aspect of the decision concerns the relationship between liquidation value and the CoC’s commercial assessment.
The Tribunal observed that the final offer of approximately ₹2.25 crore was below the liquidation value reported by the Resolution Professional. Nevertheless, it expressly clarified that an offer below liquidation value does not, by itself, constitute an independent statutory ground requiring rejection of a resolution plan.
The decision to accept or reject a commercially compliant resolution plan primarily rests with the CoC, subject to the provisions of the Insolvency and Bankruptcy Code.
The Adjudicating Authority is not required to replace the CoC’s commercial assessment with its own merely because a different commercial outcome might have been possible.
For an application under Section 33(2), the Tribunal’s examination principally concerns whether the CoC approved liquidation with the prescribed voting share and whether the statutory conditions were fulfilled.
The Tribunal therefore accepted the unanimous liquidation decision without undertaking a fresh commercial evaluation of the rejected offer.
Amended Section 34(4) Prohibits Appointment of Existing RP as Liquidator
The CoC had proposed that Kamal Kumar Jadwani, the existing Resolution Professional, should act as Liquidator. His written consent was also placed on record.
However, the Tribunal considered the amendments introduced by the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which, as recorded in the order, became effective on 26 May 2026.
Under amended Section 34(4), an insolvency professional who acted as Resolution Professional during the CIRP cannot be appointed Liquidator of the same Corporate Debtor.
Consequently, notwithstanding the CoC’s approval and the Resolution Professional’s consent, the Tribunal declined the proposed appointment.
Instead, it appointed Ms. Nisha Banshal as Liquidator, subject to compliance with the applicable statutory requirements.
This part of the decision demonstrates that the CoC’s commercial authority does not override an express statutory prohibition governing the eligibility or appointment of an insolvency professional.
Forensic Audit and Avoidance Proceedings to Continue
The Resolution Professional informed the Tribunal that a forensic/transaction audit of the Corporate Debtor was underway.
The Tribunal directed that commencement of liquidation would not, by itself, prevent initiation or continuation of appropriate proceedings concerning potentially avoidable transactions or fraudulent or wrongful trading.
It referred to Sections 43, 45, 49, 50 and 66 of the Code, subject to the applicable statutory requirements.
The Resolution Professional was directed to preserve and transfer all relevant records, including the transaction audit report, to the Liquidator.
The Liquidator was directed to examine the material and take appropriate steps wherever warranted, including considering the status of IA No. 145 of 2026 filed under Section 19(2) concerning cooperation and information from the Corporate Debtor’s management.
The Tribunal expressly refrained from expressing any opinion on the merits of possible avoidance or fraudulent-trading proceedings.
Liquidation Costs, Management Cooperation and Statutory Directions
The Tribunal also considered the question of estimated liquidation costs and contributions towards any shortfall under Regulation 39B of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Although the CoC had approved a proposal in principle, the application did not clearly disclose the estimated liquidation costs, available liquid assets or final contribution amount.
The Tribunal therefore directed that relevant particulars be made available to the Liquidator, who would take appropriate steps in accordance with the Code and Regulations.
The liquidation directions further provided that:
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Liquidation would commence from 12 October 2026, and the moratorium under Section 14 would cease to operate.
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Legal proceedings during liquidation would be governed by Section 33(5) and other applicable provisions.
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The powers of the Board of Directors and managerial personnel would cease or stand transferred in accordance with Section 34.
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Promoters, former directors and management personnel must cooperate with the Liquidator and provide records, financial statements, banking information and other documents.
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The Resolution Professional must hand over custody and control of the Corporate Debtor’s records and materials within three days of the Liquidator’s appointment.
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The Liquidator must issue the prescribed public announcement, deal with claims, administer and realise the liquidation estate and comply with statutory reporting requirements.
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The Registry must communicate the order to the IBBI, Registrar of Companies, Resolution Professional and SIDBI.
Final Decision and Legal Significance
The NCLT Jaipur Bench concluded that the CoC’s decision to liquidate Ishh Raj Silicon Private Limited satisfied Section 33(2), as it was approved unanimously before confirmation of any resolution plan.
Accordingly, IA (IBC)(Liq.) No. 3/JPR/2026 was allowed and the Corporate Debtor was ordered to be liquidated in accordance with Chapter III of Part II of the Code and the applicable Liquidation Process Regulations.
The ruling is significant on three distinct issues: the permissible timing of a CoC liquidation decision, the distinction between liquidation value and the statutory grounds for rejecting a resolution plan, and the effect of amended Section 34(4) on appointment of a Liquidator.
It also reinforces that liquidation does not automatically extinguish the need to investigate suspect transactions, recover assets or pursue legally maintainable proceedings arising from the earlier CIRP.
