NCLAT Upholds Liquidation, Holds Section 31(4) Approval Timeline Is Mandatory, Not Directory [Read Judgment]

The National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, comprising Justice N. Seshasayee (Judicial Member) and Arun Baroka (Technical Member), has observed that the Insolvency and Bankruptcy Code, 2016 is intended to maximise value through a time-bound resolution process and cannot permit indefinite delays in implementing an approved resolution plan, while dismissing an appeal filed by Taguda Pte. Limited, Singapore, against the liquidation of Ushdev International Limited.

The Corporate Insolvency Resolution Process of Ushdev International Limited had commenced on 17.05.2018, and Taguda's revised resolution plan, offering ₹227 crore, was approved by the National Company Law Tribunal, Mumbai Bench on 03.02.2022 after the Committee of Creditors cleared it with 91.06% votes. However, despite the constitution of an Interim Monitoring Agency, the plan remained unimplemented for over three years as Taguda failed to obtain requisite regulatory approvals, including from the Reserve Bank of India, for its foreign investor.

State Bank of India, the lead lender, subsequently moved the NCLT seeking implementation, which directed Taguda on 08.12.2023 to implement the plan within two months. When Taguda failed to comply and instead filed an appeal, the NCLAT dismissed it on 30.05.2025 and directed the NCLT to decide the pending liquidation application within three months. Taguda's further challenge before the Supreme Court was dismissed on 23.07.2025, with the Court recording that the plan remained unimplemented even after three years since approval.

The NCLT thereafter passed the impugned order on 16.10.2025, allowing liquidation of the Corporate Debtor and dismissing an interlocutory application filed by Taguda proposing a one-time, unconditional payment of the entire resolution plan amount. Taguda contended before the NCLAT that it was denied a hearing on this proposal and that it had already secured the funds, including deposits and pay orders, to discharge the full plan value.

Rejecting this contention, the Tribunal held that the application was filed only after arguments in the liquidation application had concluded and orders were reserved, observing, "The timing of the filing of the IA by the Appellant - after the NCLT had extensively heard the Liquidation Application and had reserved orders therein- itself betrays the lack of bona fides and reinforces that the alleged proposal was a belated afterthought." The Bench further held that the appeal was barred by finality and res judicata, since the core pleas had already been rejected in Taguda's earlier appeal and by the Supreme Court.

On the merits, the Tribunal held that Section 31(4) of the Code casts a mandatory obligation on a Successful Resolution Applicant to secure all approvals within one year of plan approval, and that mere pendency of an application before the RBI does not amount to compliance. It observed, "The Appellant may be making efforts but we note that these were not effective steps towards implementation of the resolution plan despite categorical directions by the Ld. NCLT vide the December Order and also this Appellate Tribunal's orders."

The Tribunal also took note of developments after the impugned order. Pursuant to its own directions, Taguda submitted a fresh offer to creditors on 07.04.2026, which was placed before the Stakeholders Consultation Committee. The Committee rejected the offer with an overwhelming 81.778% majority, citing Taguda's consistent pattern of delay, failure to deposit actual funds beyond scanned copies of pay orders, lack of clarity on the source of funds, and its reliance on the Corporate Debtor's own cash balances to fund the payout.

Dismissing the appeal, the Tribunal held that Taguda's conduct reflected "a pattern of delay rather than bona fide efforts towards implementation" and relied on the Supreme Court's ruling in State Bank of India v. Consortium of Murari Lal Jalan and Florian Fritsch to hold that resolution cannot be pursued endlessly to the detriment of stakeholders. Recording that the Appellant had wasted judicial time through multiple appeals and misused the judicial process, the Tribunal imposed a cost of ₹5 lakh on Taguda, payable to the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund.

Appearances: Mr. T. Gowthaman, Senior Advocate with Mr. Vivek Jain, Mr. Sadiq Noor, Mr. Angad Pathak, Mr. Mehul Khare, Mr. Padmesh Mishra and Ms. Ginni Med, Advocates, appeared for the Appellant. Mr. Krishnendu Datta, Senior Advocate with Mr. Yugal Jain, Mr. Vaijyant Paliwal, Ms. Charu Bansal, Mr. S. Biswas and Ms. Kirti Gupta, Advocates, appeared for Respondent No. 1/SBI. Mr. Kumar Shubham and Mr. Arpan Behl, Advocates, appeared for Respondent No. 2. Mr. Eshaan S., Advocate, appeared for the Corporate Debtor.

Case Title: Taguda Pte. Limited vs. State Bank of India & Anr.

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