Canara Bank Vs Sri Krishna Stockist & Traders Pvt Ltd (NCLT Amaravati)
Summary : The NCLT Amaravati Bench dismissed the resolution professional’s application for a 227-day extension of the corporate insolvency resolution process (CIRP) of Sri Krishna Stockist & Traders Private Limited and ordered its liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016. CIRP had commenced on 20 August 2025 on Canara Bank’s Section 7 petition, with Mr. Chillale Rajesh appointed as interim resolution professional and subsequently confirmed as resolution professional (RP). Canara Bank, IFCI Limited and IDBI Bank Limited constituted the committee of creditors (CoC), holding voting shares of 69.8%, 19% and 11.2%, respectively. The applications concerned both liquidation and extension of CIRP from 16 February 2026 to 30 September 2026.
The RP reported that inventories had already been sold before CIRP and two immovable properties mortgaged to IDBI Bank had been sold under SARFAESI. Of a remaining land parcel measuring 9,196 square yards, 3,678.40 square yards had been acquired for public purposes, leaving 5,517.60 square yards, with legal issues affecting approximately 500 square yards. Four auctions had failed for want of bidders. The CoC unanimously resolved on 16 October 2025 to liquidate the company, considering further resolution steps an unnecessary expenditure of time and costs. When the Tribunal required reconsideration using updated financial statements, the CoC reaffirmed that liquidation would provide better value than continuing CIRP. The financial disclosures and asset discrepancies nevertheless required further scrutiny.
The liquidation proceedings were delayed over compliance with the requirements for recommending an eligible liquidator. The CoC initially recommended an insolvency professional from the South Zone panel, although the Tribunal held that the Amaravati Bench fell within the East Zone under the applicable IBBI guidelines. The earlier liquidation application was disposed of with liberty to file afresh. The CoC subsequently recommended Mr. Mannava Divakara Sarma, whose name appeared in the eligible East Zone panel and whose authorisation for assignment remained valid until 31 December 2026. An application seeking exclusion of time was withdrawn, following which the CoC approved the request for a 227-day CIRP extension with 69.8% voting share; the remaining 30.2% abstained.
Considering Section 12 and Regulation 40, the Tribunal held that the proposed extension was not intended to resolve the corporate debtor. It arose from failures to place the necessary resolutions under Regulations 39B, 39BA and 39D and to propose a liquidator in accordance with law. Since the CoC had already decided on liquidation and that application was being considered, no useful purpose would be served by extending CIRP merely to keep it alive. The extension application was therefore dismissed. With no approved resolution plan and no extension granted, the Tribunal ordered liquidation under Section 33(1), although the liquidation application had been presented under Section 33(2).
The Tribunal separately examined the asset figures. Its comparative table showed total assets falling from ₹143.50 crore as at 31 March 2018 to ₹23.33 crore as at 20 August 2025, including a decline in the tangible-asset figure from ₹125.34 crore to ₹23.33 crore. The suspended directors’ explanation for freehold land of ₹21.77 crore comprised book value of ₹2.66 crore, revaluation of ₹15.58 crore and land-development expenditure of ₹3.53 crore. The Tribunal noted the absence of a corresponding revaluation reserve or surplus and required detailed examination of possible transactions attracting Sections 43, 45, 50 and 66. These observations required investigation; they did not constitute a final finding that an avoidable or fraudulent transaction had occurred.
The CoC had approved estimated liquidation costs of ₹5 lakh for 12 months, but the value of liquid assets and a plan for meeting any shortfall had not been submitted. The Tribunal directed CoC members to meet any shortfall in proportion to their voting shares. It noted the CoC’s decision to continue exploring compromise or arrangement while the liquidation application remained pending. On liquidator fees, it recorded that the earlier proposal to leave approval to the stakeholders’ consultation committee had not been replaced by a subsequent CoC resolution after the 2026 amendments. The liquidator’s fee would be governed by the applicable Board-specified basis.
Mr. Mannava Divakara Sarma was appointed liquidator. The Section 14 moratorium ceased and a fresh moratorium under Section 33(1)(b)(iv) commenced. The liquidator was directed to issue the public announcement, prepare an audited balance sheet as at liquidation commencement and reconcile assets with valuation reports and liabilities with those considered in liquidation, filing these with the first progress report. The CoC could consider a transaction audit; if that audit or further examination disclosed transactions prima facie attracting Sections 43, 45, 50 or 66, the liquidator was to file appropriate applications. Proceedings by the liquidator on behalf of the company required the Tribunal’s leave. Subject to the directions concerning costs, fees and statutory compliance, the liquidation application was allowed and disposed of.
