Death of resolution applicant cannot by itself trigger liquidation; NCLAT revives CIRP and orders consideration of settlement

Genius Exports Private Limited was undergoing CIRP. The Committee of Creditors, consisting solely of the operational creditor, approved on 22.05.2022 a resolution plan submitted by Shri Digvijay Nath Tripathi, and the resolution professional sought approval of the plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 (“IBC”).

The resolution applicant died on 03.09.2024 while the plan was pending before the Adjudicating Authority.

Subsequently, the suspended director and the operational creditor negotiated a settlement. The sole-member CoC approved withdrawal of the CIRP, and the resolution professional filed an application under Section 12A of the IBC, being I.A. No. 1221 of 2025.

The Adjudicating Authority rejected the resolution plan on the ground that the obligations of the deceased individual resolution applicant were neither transferable nor heritable and therefore the plan had become incapable of implementation. It consequently ordered liquidation under Section 33(1) and dismissed the Section 12A application as infructuous.

Arun Kumar Singh challenged the liquidation order and dismissal of the Section 12A application in Appeals Nos. 1699 and 1700 of 2025. The erstwhile resolution professional, Parag Singhal, separately challenged the liquidation order and the appointment of another person as liquidator in Appeals Nos. 1701 and 1702 of 2025.

Whether the death of an individual resolution applicant, after approval of the resolution plan by the CoC but before its approval under Section 31, automatically renders the plan unimplementable and justifies liquidation under Section 33(1) of the IBC?

Whether, in such circumstances, the Adjudicating Authority could order liquidation without first remitting the plan to the CoC for consideration of its continued viability and implementation?

Whether the pending application for withdrawal of CIRP under Section 12A could be dismissed as infructuous merely because liquidation had been ordered?

Whether the appeals concerning the appointment and continuation of the resolution professional required consideration after revival of the CIRP?

The Tribunal applied Sections 31, 33(1), 33(2), and 12A of the IBC. Section 33(1) permits liquidation where no resolution plan is received within the CIRP period or where a plan approved by the CoC is rejected by the Adjudicating Authority under Section 31; it does not expressly create a separate ground of liquidation merely because the resolution applicant dies.

Where liquidation is contemplated on account of the failure of the resolution process, Section 33(2) is CoC-enabled and requires consideration within the statutory framework.

The Tribunal relied on Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd., (2022) 2 SCC 401, for the principle that a resolution plan approved by the CoC is part of a statutory insolvency process and cannot be treated as an ordinary contract capable of unilateral withdrawal or modification.

However, the death of a resolution applicant does not by itself establish that the plan is incapable of implementation. Where the RFRP and the resolution plan are silent, the Adjudicating Authority may invoke its inherent powers under Rule 11 of the NCLT Rules to direct the CoC to reconsider whether the plan can be sustained, including by examining the eligibility, competence, and willingness of the deceased applicant’s heir, subject to Section 29A and the plan’s conditions.

The Code’s primary objective is preservation of the corporate debtor as a going concern, with liquidation being a last resort.

The Tribunal held that the Adjudicating Authority proceeded on an erroneous premise that a resolution applicant occupied an “office” carrying non-heritable obligations. A resolution applicant is instead in the nature of a promisor responding to an invitation to offer, and the Code contains no specific provision making death, pending Section 31 approval, an independent ground for liquidation under Section 33(1).

The death of the applicant did not necessarily destroy the inherent viability or implementability of the plan. Since the plan had already been evaluated and approved by the CoC, the appropriate course was to return it to the CoC for reconsideration, including whether an heir or other eligible person could undertake implementation, whether such person possessed the necessary knowledge, skill and experience, and whether the requirements of Section 29A were satisfied.

The Tribunal further found that liquidation was especially unjustified because the sole-member CoC had approved a settlement and the Section 12A application was pending. Section 12A constituted an available statutory exit route from CIRP and could not be rendered futile by mechanically ordering liquidation.

Since the liquidation order could not be sustained, the CIRP had to be revived and the Section 12A application considered in accordance with law.

The Adjudicating Authority was directed to consider the pending Section 12A application, I.A. No. 1221 of 2025, in accordance with law.

The appeals filed by the erstwhile resolution professional, Company Appeal (AT) (Insolvency) Nos. 1701 and 1702 of 2025, were closed as unnecessary following revival of the CIRP. The Tribunal made no order as to costs.