Vinod Singh Vs Chandra Prakash Jain (NCLAT Delhi)
NCLAT Rules on Corporate Debtor’s Right to Replace Voluntary Liquidator
The National Company Law Appellate Tribunal (NCLAT) in New Delhi heard two appeals, Company Appeal No. 800 of 2025 and Company Appeal No. 801 of 2025, filed by Vinod Singh, the Managing Director of the Corporate Debtor, Transmissions International India Private Limited (TIIPL). The appeals challenged two orders from the National Company Law Tribunal (NCLT) in Ahmedabad. The core issue was whether the NCLT had the authority to interfere with a Corporate Debtor’s decision to replace a liquidator during a voluntary liquidation process.
The Corporate Debtor, TIIPL, had initiated a voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code (IBC). Initially, Mr. Umesh Ved was appointed as the liquidator. Subsequently, the shareholders replaced him with Mr. Chandra Prakash Jain, the first respondent. A dispute arose when the Corporate Debtor’s board and shareholders, dissatisfied with Mr. Jain’s conduct, passed a resolution on February 28, 2025, to replace him with a new liquidator, Respondent No. 6. Mr. Jain then filed an application with the NCLT (IA No. 450 of 2025) challenging his removal.
On March 28, 2025, the NCLT passed an interim order directing a “status quo” be maintained with respect to the liquidator, effectively keeping Mr. Jain in his position. This order was challenged in the first appeal, CA (AT) (Ins) No. 800 of 2025. Subsequently, on April 29, 2025, the NCLT de-reserved its earlier order for judgment in Mr. Jain’s application, citing procedural defects in the replies filed by the appellant and other shareholders. This de-reservation order was challenged in the second appeal, CA (AT) (Ins) No. 801 of 2025, as it was seen to prolong the status quo.
Arguments and Judicial Precedents
The appellant, through his counsel, argued that the NCLT had no jurisdiction to interfere with the Corporate Debtor’s decision to replace the liquidator. He contended that the voluntary liquidation process under Section 59 of the IBC, along with the IBBI (Voluntary Liquidation Process) Regulations, 2017, is a self-contained statutory framework. Regulation 5 of these regulations explicitly allows a Corporate Debtor to replace a liquidator by a simple resolution, without needing NCLT approval. The appellant further submitted that the NCLT’s orders were contrary to the statutory provisions and stalled the time-bound liquidation process.
