26 Oct 2026
The Trilegal Disputes team advising on this matter was led by Partner: Chitra Rentala; and supported by Senior Associate: Khyati Mehrotra; Associates: Treenok Guha and Shravani Maddirala.
Matter Overview | The appeal arose from the order dated 23 July 2026 (Liquidation Order) passed by the National Company Law Tribunal, Mumbai Bench (NCLT), rejecting the application under Section 33(1A) of the Insolvency and Bankruptcy Code, 2016 (IBC) and directing the liquidation of Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Private Limited (Corporate Debtor). The Committee of Creditors (CoC) had, by a unanimous vote of 100% of its voting share, resolved to seek restoration of the Corporate Insolvency Resolution Process (CIRP) under the newly inserted Section 33(1A) of the IBC (Restoration Resolution). Section 33(1A), in force from 26 May 2026, enables the adjudicating authority, before passing a liquidation order, to consider an application approved by not less than 66% of the voting share of the CoC for restoration of the CIRP for a period not exceeding 120 days. Phoenix ARC Limited (Phoenix ARC), a secured financial creditor and member of the CoC, challenged the Liquidation Order before the National Company Law Appellate Tribunal, New Delhi (NCLAT).
On behalf of Phoenix ARC, it was submitted that Section 33(1A) of the IBC permits restoration of the CIRP before an order of liquidation is made. Further, it was submitted that the Liquidation Order proceeded on an erroneous construction of the provision and substituted the NCLT’s assessment for the commercial decision of the CoC, and that the CoC’s unanimous decision was preceded by the rejection of four resolution plans and was followed by fresh expressions of interest received after the Restoration Resolution was passed, and that the NCLT had recorded no procedural irregularity or mala fides in respect of the Restoration Resolution.
The NCLAT allowed the appeal and set aside the Liquidation Order. It held, that discretion under Section 33(1A) of the IBC must be exercised judicially on relevant considerations and in accordance with the object of the provision. It further held that, on the facts of the case, the reasoning that the Corporate Debtor’s arbitral award could also be pursued in liquidation did not furnish a sufficient basis for declining restoration. NCLAT also clarified that it was not laying down a general rule that the adjudicating authority can never order liquidation contrary to the recommendation of the CoC, and that each restoration application ought to be decided on its own merits. The Liquidation Order was accordingly set aside with the parties being directed to appear before the NCLT for further proceedings in accordance with law.
Matter Significance | The judgment is particularly significant as an early appellate interpretation of Section 33(1A) of the IBC, introduced in May 2026, to permit restoration of CIRP before liquidation in appropriate cases. The NCLAT clarified that the discretion of the adjudicating authority under the provision is a real one, but must be exercised judicially, on relevant considerations, and consistently with the resolution-first and value-maximisation objectives of the IBC. It further held that where the CoC’s decision is unanimous or exceeds the statutory threshold, more cogent and specific reasons are required to decline it, and that the mere availability of liquidation as an alternative route for realising an asset does not, without a comparative assessment of realisable value, timelines and cost, suffice to displace such a decision.
The NCLAT also took into account the relevance of indicators of resolution viability, including the expressions of interest received initially, the resolution plans submitted thereafter, and the market response after fresh issuance of invitations for expressions of interest.
Please find enclosed the order for your kind perusal.
About Trilegal
Trilegal is a leading full-service law firm in India with over 25 years of experience, trusted for its in-depth expertise and client-centric approach. The firm advises a diverse set of clients, including Fortune 500 companies, global investment funds, major Indian conglomerates, domestic and international banks, technology and media giants, family offices, and high-net-worth individuals. Operating under a distinctive lockstep model, Trilegal is the largest equity partnership in the country, with offices across Mumbai, Delhi, Gurugram, Bengaluru, Chennai, Pune, and GIFT City.
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