Authority: National Company Law Appellate Tribunal, Chennai (Justice N. Seshasayee - Member (Judicial) and Jatindranath Swain - Member (Technical))
Order Date: 03.08.2026
Case Overview
The National Company Law Appellate Tribunal (NCLAT) at Chennai heard two connected appeals (Company Appeal (AT) (CH) (Ins) No. 217/2026 and Company Appeal (AT) (CH) (Ins) No. 245/2026) arising from the liquidation process of M/s. Sarda Agro Oils Limited. The appeals were filed by the Liquidator, G. Madhusudhan Rao, and the scheme proponent, Prakash Oil Depot, against the rejection of a scheme submitted under Section 230 of the Companies Act, 2013, read with Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016.
The scheme had received 100% approval from secured financial creditors and overall approval of more than 77% of creditors. However, the Adjudicating Authority (NCLT) rejected the scheme primarily on the ground that the liquidator had failed to divide the creditors into multiple classes as required under the regulations.
The appellants argued before the NCLAT that the division of creditors into classes serves only a limited purpose of nominating representatives for participation in stakeholders' meetings and is essentially a rule of convenience rather than a substantive requirement.
Final Outcome
The NCLAT adjourned the matter to 07.08.2026 at 2:00 PM for final hearing. The tribunal directed the appellants to submit one consolidated note of facts and notes on law and allocated 30 minutes for oral arguments. The interim order granted on 16.04.2026 in Company Appeal (AT) (CH) (Ins) No. 217/2026 will continue to operate until the next date of hearing.
Topics: Insolvency Proceedings, Liquidation Scheme, Creditor Classification