Authority: National Company Law Appellate Tribunal, Chennai Bench (Justice N Seshasayee - Member (Judicial) and Jatindranath Swain - Member (Technical))

Order Date: 17 September 2026

Case Overview

The appeal was filed by Kasi Srinivas, the Liquidator of two sister concerns - Ethnic Tobacco Ltd (Company Appeal No. 495/2026) and Ind Tob International Pvt Ltd (Company Appeal No. 496/2026). The Adjudicating Authority (NCLT) had passed an order on 08 September 2026 directing the Liquidator to refund all remuneration drawn during the three-year liquidation process, with the refund required to be completed by 18 September 2026 and a compliance memo to be filed within 15 days.

The Adjudicating Authority's dissatisfaction stemmed from the Liquidator's failure to sell any assets of either corporate debtor over three years, despite submitting 56th and 55th progress reports respectively for the two companies. The Liquidator argued through Senior Advocate Mr. PH Arvindh Pandian that the asset sale faced significant challenges: the corporate debtors' units were situated on the personal property of promoters leased to the companies, creating complications. The Stakeholders Consultation Committee (SCC) had instructed the Liquidator not to sell assets pending the Adjudicating Authority's decision on Section 95 petitions against the promoters.

Further complications arose when proceedings against personal guarantors transitioned to bankruptcy with a different trustee, creating coordination issues. Promoters obtained a stay order on asset auction on 04 February 2026, which was only vacated on 03 June 2026. During this period, the Liquidator attempted five separate auctions, with the last attempt on 30 July 2026, but received no bidders. The Liquidator contended that the Adjudicating Authority passed the refund order without proper notice and without hearing the SCC, whose instructions the Liquidator was bound to follow.

Final Outcome

The NCLAT granted an interim stay on the operation of the Adjudicating Authority's order dated 08 September 2026 that directed refund of remuneration. However, the tribunal specifically noted that there would be no stay on the auction process itself. The appellate tribunal issued notice to respondents State Bank of India & 3 Others (in Ethnic Tobacco case) and State Bank of India (in Ind Tob International case), listing the appeals for next hearing on 03 November 2026.

Topics: Insolvency Proceedings, Liquidator Remuneration, Asset Sale Challenges