NCLT Recalls Order Following Karnataka High Court Decision To Maintain Status Quo On IBBI Recommendation

The National Company Law Tribunal (NCLT), Chennai Bench, comprising Ravichandran Ramasamy (Technical Member) and Jyoti Kumar Tripathi (Judicial Member), has recalled its earlier order due to a directive from the Karnataka High Court. The High Court had ordered maintaining the status quo on the Insolvency and Bankruptcy Board of India's (IBBI) recommendation regarding the appointment of a liquidator other than the Insolvency Resolution Professional (IRP)/Resolution Professional (RP) in certain liquidation cases. IBBI's directive, issued through notification Liq12011/214/2023-IBBI/840, aimed to appoint a different Insolvency Professional as the liquidator, challenging the previous practice where the RP automatically assumed the role unless replaced by the Adjudicating Authority. This recommendation faced legal scrutiny in the case of Ravindra Beleyur vs Insolvency and Bankruptcy Board of India in the Karnataka High Court, resulting in an interim order to maintain the status quo pending further proceedings under Section 34(4)(b) of the Insolvency and Bankruptcy Code (IBC). As a result, NCLT Chennai recalled its appointment of Mr. GS Sudhir as the Liquidator in compliance with the High Court's directive.